Capital One Investing is one of the oldest online brokerage firms. One could say that Capital One Investing and I go way back. In fact, it was the first equity trading account that I ever opened in my investment career. I have since opened accounts for two of my three children.
Since I have had a good bit of experience with Capital One Investing, I’d like to share some of this experience with you all today so that you can decide if Capital One Investing is right for you.
According to an email directly from Capital One Investing, their primary goal is the same; “To provide a straightforward, transparent investing experience that helps you feel confident about your financial picture”.
If you have an account with them, your experience isn’t expected to change. They promise to continue providing the same products and services you use today. In addition, Capital One 360® customers will keep the shared benefits they have now.
Capital One Investing History
The founding of Capital One Investing (previously Sharebuilder) traces its routes back to 1996 when NetStock Direct was founded in Bellevue, Washington.
The company was acquired by ING Direct in 2007, and was recently sold again to Capital One. In 2012 Capital One revamped the service and added these new features. Finally, the company launched an online trading platform called Capital One Investing and finalized the name change in June 2015.
- Free iPad App – Trade on the go
- Video News – Get the latest financial stories from the Wall Street Journal
- Bond Fund Center – Search for the best fixed income investments
- More Order Types – More flexibility in trades with trailing stops, up to six order at once, and stop-limit orders
- Additional Research – One rating combined from 19 research providers that includes: Morningstar, Argus, and MarketGrader.com
Capital One Investing Account Types
Currently, I have a total of two custodial investment accounts with Capital One Investing. Having said that, the service offers the following types of investing accounts and investment options:
- Individual and joint taxable investment accounts
- Traditional and Roth IRAs
- Custodial/Coverdell Education Savings Accounts (ESA)
- 401k Rollovers and Small Business 401k’s
Not every broker offers a custodial account. Since the accounts I personally opened are for my children, this was one of the best brokers I could find that met that requirement.
ShareBuilder Investment Options
- Stocks / Equities
- Exchange Traded Funds (ETFs)
- Mutual funds – Be sure to understand the fees. Capital One Investing only offers certain “No-Transaction-Fee” mutual funds. Most mutual funds have a higher expense ratio. In today’s investment universe you might get better terms with a broker which offers commission free ETFs.
- Options and Initial Public Offerings (IPOs) – Typically, for only more advanced investors.
Capital One Investing Features
|Options Trades||$6.95 + $0.75/contract|
|Mutual Funds||$0 Online or $19.95|
|Accounts Available||Traditional IRA, Roth IRA Rollover IRA, Custodial, Coverdell, Individual and Joint|
|Mobile App||Yes — Apple iOS and Google Android|
|Customer Service||Phone, Live Chat, and Branch Office|
|Promotions||See Capital One Investing Promotions Page|
Up until now, Capital One Investing is pretty much like your standard online brokerage investment firm. They offer the typical account types and investment vehicles. An inspection of their fee schedule is a key step in determining whether Capital One Investing is a suitable match for you. A summary of the key points can be seen below.
This is one of the strong points of Capital One Investing, as there are NO account minimums (except for minimums imposed by specific mutual funds that you decide to purchase), and they do not charge an annual inactivity fee.
Previously Capital One Investing’s fee schedule was somewhat confusing, but they have since simplified their pricing options.
Automatic investments is where Capital One Investing’s service shines and is what makes them unique. If you like DCA (Dollar Cost Averaging), where you make monthly deposits, this is the real advantage of using Capital One Investing. Their automatic investment service will make an investment on a scheduled basis.
In the past, Capital One Investing offered two kinds of plans — Basic and Advantage. Although they still show these available on their site, the features seem to be discontinued.
Traditional brokers like: TradeKing charges $4.95 a trade, while OptionsHouse is $3.95 a trade. ShareBuilder is no longer one of the most expensive brokers to trade with. Their new pricing now puts them squarely in the middle of the pack.
Automatic Investments – Fee $3.95
- Automatic Investments are when an investor selects which securities he or she wants to buy, and then the actual trade will not be executed until a set time (once a week – sometime on Tuesday).
- Obviously, there is a big disadvantage here in that you have to wait to buy your securities for at most a week after placing the request, in order to take advantage of the “reduced” pricing.
- Important Note: You cannot sell securities using automatic investments. In this way, Capital One Investing makes it more costly to exit a stock than to purchase.
Real Time Investments – Fee Varies
- For real-time trading of stocks and ETFs, the cost is $6.95.
- For day-to-day online trading of most mutual funds, there is a $0.00 commission.
- Capital One Investing also offers 70 No-Transaction-Fee Mutual funds that do not incur this trading cost. However, in investigating the funds offered, the expense ratios were generally higher than equivalent mutual funds you can find at Vanguard or Fidelity.
- Example – Capital One Investing offers the Dreyfus S&P 500 Index Mutual Fund (expense ratio 0.51%) at no-commission. However, the Vanguard S & P 500 Index Mutual Fund carries an expense ratio of only 0.18%.
Online Account User Experience
Overall, the web site is very easy to navigate. Their trading screen is one of the easier ones to use, and their service seems to focus on the beginner investor. All of this is quite good.
Not to be outdone by the other brokers, a welcome addition in 2013 was their native iPad app. You can pretty much perform all of the web site functions via the tablet. The powerful feature, which is also slightly confusing, is the ability to customize the iPad screen layout.
Current Asset Allocation and Account Navigation
A couple of things that I really like about the Capital One Investing interface is 1) that it is easy to navigate, using the various tabs at the top of the screen, and 2) that I can easily view my current asset allocation in the pie chart in the middle of the screen, which is based upon the different securities I own.
You can break down your investments to make sure you are fully diversified per: asset type, sector, region and market cap. This feature is similar to Morningstar’s X-ray service, but not as powerful.
One of the other things that particularly attracted me to Capital One Investing when I was just learning to invest was that they simplify investing by offering a handy PortfolioBuilder tool. They recently improved on the PortfolioBuilder and made it much more like a robo-advisor service.
The PortfolioBuilder tool allows the investor to input certain specifications, such as investment goals, time horizon, risk tolerance, tax rate, current net worth, and anticipated monthly investment, to generate a suggested portfolio of low-cost ETFs. In this way, you can get an idea of the type of investment classes to research. You can select from popular ETFs from firms like Charles Schwab, iShares, and Vanguard to create your portfolio.
Overall, they offer various tax-deferred and individual account options that one would expect from a popular brokerage firm. Their automatic investing service is the primary reason you would want to use Capital One Investing.
Since Capital One has acquired Capital One Investing, they have made some incremental updates. If you are an existing Capital One customer, you might be more inclined to use their service. Their iPad app is a welcomed improvement for investors who like to trade on mobile devices. Capital One Investing has improved their research offerings, though I personally prefer using a more in depth third-party service.
Capital One Investing’s new cost per trade puts them squarely in the middle of the pack. If you are looking for a no-frills discount broker with lower fees, TradeKing might be a better fit.
Advanced traders might get frustrated with their service. There are very few tools for options traders. More than likely you would want to look at other brokers such as: OptionsHouse.
For beginning investors looking for the same easy-to-use interface Betterment is a better fit. Not only is Betterment lower in overall annual fees, but it also does what most investors fail at when using a traditional broker — create a good asset allocation mix for your portfolio.