I've had an ING Direct account since January 2006. It is fantastic as I'm sure most of you know. High interest, great website design, easy to use, easy to move my money around. Now you can even order check books which you used to not be able to. Yes, I'm very happy with ING Direct.
I've been debating opening a ShareBuilder account for a few years now, ever since they first offered it in fact. ShareBuilder is ING's brokerage service. From what I understand you can purchase fractional shares, they charge low commissions, and even lower commissions if you invest automatically.
I've avoided it because I've never had much money saved up, so I've never wanted to tie my meager savings up in stocks. I've definitely had the goal of building a portfolio but I've also been liquidity constrained for most of my adult life. This, in turn, is because I've been a spendypants. Since my conversion to Mustachianism I'm not as much of a spendypants though I'll still be relatively liquidity constrained because of my massive looming student loan debt.
Here is my dilemma:
I got an email from ING that if I open a ShareBuilder account before 12/23/2011 and deposit at least $100 (and have the appropriate promotion code), they will credit $75 to my account. Pretty sure I also have to make at least one trade. According to the fine print my ShareBuilder money won't be available for withdrawl until 120 days from the date it's deposited; I assume that applies to my $100 as well as their $75. If I were to deposit $100 and then wait three months and then withdraw $175, I'd feel kind of dirty since I'm deliberately cheating the system. And although that is a massive return, the securities could lose value, again assuming I need to make a trade to get the $75.
The other option is roughly equivalent to taking a $100 step in the wrong direction from paying off my student loans. Drop the $100, wait for the $175, and then buy shares of stock I'd be interested in owning anyway. Get a head start on investing. I don't like taking my eye off the prize though. $100 in the context of $31,000 doesn't seem like much, but 6% guaranteed returns (the rate on my loans) is hard to beat.
I have a similar situation involving my retirement account. I've already reduced my 401(k) contributions from 7% of my salary to 5% of my salary — the minimum I need to get all my company's matching contributions. Why not turn it down to zero? Because that would be stupid. I would be leaving a 4%-of-my-salary matching-contribution-sized pile of money on the table.
Then, is foregoing ShareBuilder leaving money on the table as well? I'm not so sure. First, I'm pretty sure there will be similar ShareBuilder promotions in the future. ShareBuilder may not be the best brokerage for me, though I'm leaning that direction at this point. Honestly, $175 isn't a lot of money to start investing with. Definitely small potatoes.
In the end I don't know that I'll be opening a ShareBuilder account this month. I need to keep throwing money at my student loans until they go away. What do you think?