I’m really not the hugest fan of ShareBuilder, but it seems to be pretty successful. Right now, in partnership with Costco, they are offering a $50 bonus and 10% rebate on transaction fees to Gold/Business Members, and a $75 bonus and 25% fee rebate to Executive Members that open up a new account and make one transaction (trade). Make sure you use the promo code ‘COSTCOEP50’ or ‘COSTCOEP75’ to get this promotion.
I’m going to open up an account, but not as my main brokerage account. Since this is free money, I’m going to put it in something fun and risky! Here’s my plan:
1. Go to the ShareBuilder website and apply. Be sure to enter the correct promotional code in the blank.
2. Deposit $50 of my own money (to make the 1st trade).
3. Pick the Basic Plan with no monthly maintance fees and $4 trade.
4. Buy $46 of any stock or ETF. $4 will go towards the trade.
5. Wait the 4-6 weeks for my $50 bonus.
6. Withdraw my $50 bonus. Net cost to me: nothing!
7. Don’t touch the account or make any more trades for 20-30 years. Hopefully they last that long.
Why? This is free money, they don’t even run a credit check when you open the account. If you want to sell a stock, they charge $15.95. That cuts into the bonus so much it’s not worth the effort just to get some bonus money. On the other hand, why not invest in something with a high potential return and take advantage of their lack of maintenance fees?
Emerging Markets are an asset class that invests in the performance of the world’s major emerging markets, including South Korea, South Africa, China, Taiwan, India, Russia, Brazil, and over 200 others. It is characterized as being risky, but with a high overall average annual return over time of about 17%! Of course, it is very volatile in the meantime. You should not put a lot of your portfolio in this stuff.
But with free money, why not? $46, invested at an 17% average rate, over 20 years, is $1062! Over 30 years, it’s $5109! Yes, inflation will devalue the final amount, and you’ll pay capital gains when you finally sell, but it’s not bad for 10 minutes and loaning out $50 for a month. I think Sharebuilder automatically reinvests dividends, but not sure, I’ll have to check again.
Now you could to this ‘plan’ with any volatile stock, but I like the index since it’s very very very unlikely to go completely belly-up, unlike some random pharmaceutical company. Thoughts welcome! I haven’t made the trade yet, I’ve opened the account and am waiting for it to fund.
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Follow-up: Dividend reinvestment for partial shares is FREE at ShareBuilder! Nice. But you must be sure to to Manage your Account > Account Profile > Dividend Reinvestment Preferences > Click ‘Yes’. I think Yes is the default option but I would make sure.
There is the risk that ShareBuilder will begin charging inactivity fees or other fees that will eliminate the bonus. That could be something to consider. It sounds like a good deal, though. I’m not a Costco member, so I suppose I can’t participate.
Yes, that is a risk, but if it happens I won’t have lost anything. I thought about that, but it is also the whole business model of ShareBuilder, so I think it’s unlikely in the near future. So that gives it a chance to grow.
Thanks for reminding me about posting other offers, I forgot about that. I keep thinking everyone goes to Costco 😉
$30 Bonus for Black Enterprise Members (anyone can do it)
$20 + 2,500-10,000 Alaska Air Mileage Plan frequent flyer miles.
Hey, I found another $50 ShareBuilder bonus (code: IPLANGIFT). I opened up my account and will fund $50 for a $46 purchase (after fee) for a telecom sector ETF (not hot now, but I think telecom will still be important in the long run). I never received a message saying the promotion was invalid, so I’m assuming I’ll be receiving a $50 bonus several weeks after the account is funded.
Follow-up: the promotion code has been accepted:
That shouldn’t be a problem.
Excellent! Good find. I was just going to post that they should e-mail you with confirmation of the promotional code. I’m happy to see someone else is trying this. =)
Hey fellas, I’m in too. See you in 20-30 years in Hawaii, celebrating our smart move.
Are there any issues with withdrawing the $50 bonus?
Marc – Not that I am aware of, ShareBuilder has been offering bonuses for a while. You can transfer the $50 out electronically to the same checking account you funded the account with.
doh. i already have an account there from long ago, its just been idling.
I wonder can I open another one. I dont recall ever getting any bonus. maybe a $25 one.
I dont really like their buying in bulk method.. or however they want to call it.
Hey thanks for the info. I’m with you. I’ll try it.
I’m in too. We’ll see how it goes.
I’m taking my shot, too. Thanks for the info.
Hi,
I got this email:
Thank you for participating in our promotion. We have just credited your ShareBuilder Account.
You can invest the extra money in your Money Market Cash Balance by modifying your ShareBuilder Plan. Under the “How do you want to fund your plan?” section, select the “Money Market Cash Balance” option. Be sure that the total investment amount is not more than the available cash balance in your account.
Of course, I will withdraw the money. Nice that there’s an email notification. Did you get yours?
I tried this with the iplangift new account bonus. (still $50) Since I can’t be bothered to pull my money back out I just deposited $100 and bought 6.2136 shares of pbw (alternative energy ETF) on 8/16. Fallout from Katrina has driven it up >13% since then…
No bonus deposited yet but they tell me it’s coming. Once it is I will probably invest it in either the emerging markets ETF you mentioned or something else relatively risky.
Aside from that Sharebuilder is sort of an evil thing. The target market is people who only have at most a couple hundred to invest each month. @ $4 a trade that is a pretty large commission percentage… I think it’s a much better deal to park your funds in either a brokerage money market or even savings account (Virtualbank, HSBC or wherever) and let it grow until you can invest a larger amount of money. That is assuming of course that you’ve already maxed your Roth IRA out. (Sadly I and my wife are not eligible… :/)
Is it really necessary to fund new account (code: IPLANGIFT) with $50 to get $50 bonus? I don’t see any restrictions. Can’t I fund it with $5 and buy only $1 worth of something and then just withdraw my $50 bonus?
“invested at an 17% average rate . . . over 30 years”
Wow, that’s pretty optimistic. Where did you get this statistic from?
Optimistic? Most definitely 🙂 I am not betting my retirement on these numbers, just some free money.
But I believe I got the numbers from historical returns of Emerging Markets from around 1970-2000. I can’t find it right now, but given that small-cap US stocks returned 13 or 14% during the same period, it doesn’t seem too unrealistic for historical returns.
Quick followup: I followed Jonathan’s suggestion to buy EEM, opened Sharebuilder Account in April with $35, then deposited $3000, bought 34+ shares EEM at $87+, got my $65 promotion bonus, and now have an account balance on 7/27/06 of $3366 on a $3035 initial investment. This is “fun” money that I am trying not to look at or follow the progess of only maybe once in a while–so far it has been indeed fun!
You can open up more than one account. I wonder if you can use the same promotion code on more than one account. So far I have 3 accounts with them. Only got the $50 once for ENTERTAIN50
do you think taxes will apply once you withdraw your initial deposit?
You -CAN- buy VWO. If you do a search for it, it won’t show up. However, if you go to the “Top ETFs” tab and scroll down, it is there and you can buy it.
Your selection of eem was right on the money. Do you think that you can show in your blog, maybe a five year sharebuilder chart of eem, so that your subscribers may see?
Following a long term buy & hold stratagy like you suggest, as used by Warren Buffett & Mark Mobius, shows your projections to have been conservative.
Anytime you own the strongest companies in the fastest growing countries, you cannot help but earn the true value of capital. Whenever someone is born, the widest diversified indexes must prosper. One trend we know for sure. Population will increase.
The sharebuilder plan itself is fantastic. The fee is not so much for brokering the deal, but for the convience, of helping wealth builders accumulate a fortune. A sharebuilder plan in eem should be a part of any wealth building strategy. New traders should read, “The richest man in Babylon,” for the essence of how wealth building works using a sharebuilder accumulation account.
Anyone who trades anything should compare there holdings to eem. Add to anything that can stay above eem, dividends reinvested, on a five year chart. There is no sense in holding anything out performed by eem, because you can always just buy eem and forget it.
My record is all over the web. I hold Emerging Market Closed-end funds.
GoldTrader
I’ve been lurking and enjoying this site very much…decided to sign up for ShareBuilder but when I typed in SHARE50 code I ended up with $25, not $50 (don’t have Costco). Since this thread has been running for a long time, I have a coupla questions for people who have been recently doing this:
1. Which is the best link to click thru to the site and the current codes that actually get you $50?
2. Can we still open new accounts periodically (not one right after the other) and use the codes? How often are you opening a new one?
3. I was thinking of doing this for Xmas gifts for family members; if I sign up different people can I use the same log-in or does each different person need a different email address?
Thanks for any updated info on this ShareBuilder strategy.
GIFT50 and SHARE50 should both work. (I just used GIFT50 myself.) You don’t need to click through any links to use them. I can’t verify if they get you $50 or $25 as I’m waiting for initial trades to complete.
Note that it may be worth the hassle to set up an ING Direct Orange savings account first, as transfers from other financial institutions carry a transaction fee that will further inflate the up front cost. (Of course, thirty years later that hardly matters.)
Also, it’s worth mentioning that EEM is up to $146.80 as of today. In 2005 when the original post was made, EEM was @ ~$51. (In June 2003 it was at $40.) Nice pick for the long haul!