Sharebuilder has been around for years. It is now owned by ING DIRECT. They have built their business based on helping people invest regularly at low rates. Sharebuilder allows you to set up regular stock or mutual fund purchases on a weekly, bimonthly or monthly basis and pay just $4.00 per purchase. If you prefer to diversify your investments, they have a plan that allows you to schedule up to 12 different purchases for just $12.00. I have not seen another plan that can beat that price.

So why should you invest regularly?

Steady stream of investment

Let’s face it. It is one thing to decide that investing money every month would be a good idea and quite another to act on it. Sharebuilder takes care of this for you. When you schedule the dollar amount you wish to invest, it will automatically be invested for you in the security you specified. Scheduled investments always seem to occur on Tuesdays. You can set up an automatic monthly payment into your Sharebuilder account and watch your investments accumulate. No more forgetting to invest.

Less temptation to spend the money on something else

We all have emergencies that seem to appear out of the blue. We all have birthdays or special occasions we didn’t remember until the last minute. Don’t be tempted to spend the money you designated for your future on immediate needs. You should be putting money away into an emergency fund for those occasions, investing for the future should be a separate budget item. Keep them separate by automating the process.  Sharebuilder has no account minimum. So get started now.

Dollar cost averaging

The benefit of investing regularly is that you won’t be tempted to time the market. If you have chosen the stocks you would like to own, you can build your position in them over time. Let us say you designate $200 per month to purchase shares in stock A. If stock A happens to cost $50 per share in the first month, you will purchase 4 shares. Now assume that the price went down to $40 during the second month. That means that you will purchase 5 shares that month. So now you own 9 shares at an average price of $44.44. Obviously you chose a stock that you believe will rise in value over time, so let us assume the price went back up to $50 the third month, then you will buy another 4 shares at $50, so now you own 13 shares at an average cost of $46.15. At this point if you had set a fixed number of shares to purchase, let us say 4 to keep it comparable, you would now own 12 shares of stock A at an average price of $46.67. Assuming your stock has a positive trend over time, dollar cost averaging is a great way to build up your position.

What if you discover that the stock you chose isn’t a good long term investment. You can sell your stock in real time. The fees for this are reasonable. With Sharebuilder you will want to consider, how you intend to withdraw funds from the account when the time comes. Some of the methods of withdrawing funds come with significant fees attached. Now that they are owned by ING DIRECT, there does seem to be a free method of accessing your funds. You can open a free account with ING DIRECT and transfer money in and out of your Sharebuilder account with it. The withdrawal fees were my major objection to Sharebuilder in the past, but this seems to solve that problem. So start investing today.