Just to update my quick calculation from yesterday I did a whole review how I fared with Sharebuilder so far.
I come more and more to the conclusion I should take my losses and pull all the money from my Sharebuilder account. Even if that means spend another $20 to sell these two positions.
Last year I opened an account with Sharebuilder. Since I am also a Costco Member I got a $55 sign up bonus and a 10% (quarterly) transaction discount on the $4 fee for each invested amount. Sharebuilder is now part of ING but they still offer the Costco Discount and the $4 transaction fee but they lowered the price for selling shares to now $9.95.
For the first couple of months I invested $50/month and then $100 but after I did some calculations I found out this is pretty stupid.
Lets do some calculations:
1. Transferred $100 to the Sharebuilder account.
2. Now, if I had just left the $100 in the Cash Account that is also a money market account (currently 4.11% 7day average) for a year I could have had $104+ at the end of the year.
3. But I invested that amount and because their is a $4 fee the actual investment into Shares/Mutal fund is only $96.
4. Quick calculation: (8/96)*100 = 8.34% This is the percentage my $96 investment has to gain before I will have just as much money as in the ~4% money market account !
If you now consider that the average long-term return on Stocks is between 8-10% then investing a small amount as $100 with Sharebuilder is a bad investment. It is much worse of course for $50 or less.
I am now considering to accumulate at least $1000 in the Cash Account before making an investment, then the $4 I will be only 0.4% of the total amount and I can make some money with the money market account before I reach the investment amount.
