Capital One Review

When it comes to picking the best brokerage account for your needs, the type of trader you are is crucial in your decision. Capital One is an online broker that is part of the same parent company as ING.

Capital One was created to make automatic online investments through automated withdrawals from your existing accounts so that your savings will grow automatically.

What’s all that really mean?

You don’t have to sit and worry about which day you’re going to invest money. You set up an automated plan, sit back, and watch your retirement account grow without a lot of checking in from you. It’s an easy, low-hassle way of starting to invest.

It’s very similar to the way that an IRA or 401(k) is managed by your financial advisor. Instead of investing once or twice per year, you build up a habit through consistent investments.

This is also a great way to start investing for new investors who have never traded stocks or invested in mutual funds. You are taking the thinking out of investing.

Set the plan, engage the automatic investments, and go back to worrying about the rest of your life.

Before we jump into the details of Capital One, you should also look into other great investing options before you make your final decision. Check out these in-depth reviews for more details:

Betterment Review

Ally Invest Review

Empower Review

E*TRADE Review

Automated Withdrawals With Capital One

Automated withdrawals can be used to your advantage in many different ways. For example, if you have ever owned a 401(k) or IRA, you may have noticed the deduction when you received your pay stub at the end of your pay period.

Your financial advisor set this up so that the deduction goes straight into your IRA or 401(k), which is typically a collection of mutual funds.

These mutual funds are all made up of individual securities which commonly are shares of common stock. What Capital One has created allows you to do the same thing except you are in control of your investment activities.

You can set up this automated withdrawal from either an existing checking account, a deduction from your paycheck, a wire transfer, or by simply mailing a check.

Upon setting up your account, you get to decide the frequency as well as the amount of these withdrawals, which will be automatically transferred into your ShareBuilder account.

For example, if you receive a $ 1,000 check bi-weekly, you can opt for $200 to be automatically invested into Capital One.

ShareBuilder will take your funds and purchase shares in whatever stock, ETF or mutual fund of your choosing and automatically invest the dollar amount. This gives you the opportunity to buy partial shares so that you can put the entire $200 in your account to good use immediately.

At the most simplistic level, this is essentially creating your own IRA or retirement fund that you personally manage. The fees that you will be assessed depend on the account level you sign up for.

Different Accounts That Capital One Offers

Capital One offers two different account levels. They offer a Basic Plan and a subscription-based Advantage Plan.

The Basic Plan has a $15 monthly fee, so it’s free to start. When using the automated investment method with the Basic Plan, you will be assessed a $4 fee for every automated transaction, as well as $9.95 for all real-time trades. You can trade Options with the Basic Plan as well for $9.95 per trade + $1.50 per contract.

With the automatic investing option, you can limit the cost of your trades for stocks and ETFs to just $4 per investment. That is among the lowest in the industry.

The next step up is the Advantage Plan. With the Advantage Plan, you pay $12 per month and receive 12 automated investment transactions per month for free. All automated transfers after 12 per month will be assessed a fee of $1.

If you need to make a real-time trade (rather than on an automated schedule), the fee will drop to $7.95 ($2 less than on the Basic Plan). Option pricing also drops $2 to $7.95 per trade plus $0.75 per contract.

Capital One also kicks in premium research from S&P, such as the S&P Morning Brief and a list of research team upgrades/downgrades on stocks.

Essentially, if you plan to regularly invest funds more than 3 times per month, then it makes a lot of sense to switch to the Advantage Plan. Three automatic transactions under the Basic Plan would cost $12.

With the Advantage Plan, you get 9 additional automatic transactions for free compared to the Basic Plan. It’s like paying $1 per trade — a price that cannot be beaten by any other broker.

Both account types allow you to invest in mutual funds. The trade costs range from $0 (yes, free) for No Transaction Fee Funds to $19.95 for other mutual funds.

Capital One Account Options and Pricing Comparison

ACCOUNT TYPE	COST	AUTOMATED TRANSACTIONS	REAL-TIME TRADES	OPTIONS TRADING	STOCK/ETF AUTOMATED INVESTING	MUTUAL FUNDS
Basic Plan	$15 per Month	$4 per Trade	$9.95 per Trade	$9.95 per Trade + $1.50/Contract	$4 per Trade With Automated Investing	Ranging From $0 (No Transaction Fee Funds) To $19.95
Advantage Plan	$12 per Month	12 Free per Month	$7.95 per Trade	$7.95 per Trade + $0.75/Contract	N/A	Ranging From $0 (No Transaction Fee Funds) To $19.95

Excellent Research

Like any other broker, Capital One offers a variety of tools to its customers. They offer screening options for mutual funds, ETFs, and, of course, stocks.

They have your normal market mover and watch list options as well. You can also research option chains, and there is a calendar of upcoming IPOs so you can track which ones you want to invest in.

Capital One also offers easy tax applications to keep track of your gains/losses throughout the year, which you can easily export to typical tax software programs. If you trade a lot, having clear and concise tax records is a huge benefit when it comes time to file your taxes.

Building a Diverse ETF Portfolio With Capital One

Whether you are a new investor just trying to figure out how to invest each month or a seasoned investor looking to lower your investment options, Capital One is a solid choice. Here are two examples of how you can use Capital One to grow your portfolio automatically.

New Investor: Open a Roth IRA

The best time to start investing is right now. The longer you wait to begin investing, the more you have to save in order to hit your retirement goals.

If you are a new investor who is just trying to figure out how to budget for your retirement, starting with Capital One’s Basic Plan is a great place to look.  

By opening a Roth IRA you are investing after-tax income from your paycheck. IRS rules limit you to investing $7,000 per year into a Roth IRA. But even if you don’t have $7,000 (that’s $541.67 per month), any amount will help grow your account. Learn more about the Roth IRA contribution limits here.

Let’s assume you have just $100 per month to save for a Roth IRA. To make things simple, we will invest 75% of your money into Vanguard’s Total Stock Market ETF (VTI) and 25% into Vanguard’s Total Bond Market ETF (BND). If you are just starting out, you don’t need to worry about asset allocation as much as you need to worry about actually investing money for your future.

Here are the steps to take to set up that portfolio:

1. Open a Basic Plan account with Capital One and get a $50 account bonus

2. During the account opening process, make sure you select “Open a Roth IRA.”

3. During the investment selection process, choose Automatic Investment

4. Search for VTI (the total stock ETF from Vanguard) and choose to invest $75 per month with 1 automatic transfer per month

5. Then search for BND (the total bond ETF from Vanguard) and choose to invest $25 per month with 1 automatic transfer per month

6. Sit back and relax, you’re done!

That’s all it takes to get started with investing. You will pay $4 per automatic transfer (so $8) for your two investments each month.

As time goes on, you can increase how much you invest or upgrade to an Advantage Plan to increase the number of transactions you have each month.

Seasoned Investor: Lower Your Trading Costs

If you’re a seasoned investor, Capital One can still be a big help by reducing your automatic investment costs. (If you are a day trader, that is not the plan or broker for you.)

Here are the steps to take to cut down on your investing costs:

1. Open an Advantage Plan account with Capital One and get a $50 account bonus

2. During the account opening process, choose whichever account you need, whether it is a Roth IRA, Traditional IRA, or a normal trading account

3. During the investment selection process, choose Automatic Investment

4. Search for your investments and how much you want to invest in each

5. Make sure you choose at least 4 automatic investments each month, otherwise, the Basic Plan would be the same or lower cost (3 trades x $4 = $12, which is the cost of the Advantage Plan each month)

6. Sit back and relax, you’re done!

This plan can save you significantly compared to other brokers. 

Conclusion: Capital One Overview

If you consider yourself to be a day trader, then Capital One is not the online broker for you. Their real-time trades, as well as options fees at $9.95 (or $7.95 with the Advantage Plan), are not attractive relative to other online brokers.

However, Capital One is a great option if you want to set up an easy automatic investing plan in ETFs, Equities, or No Transaction Fee Mutual Funds.

By picking these quality investment tools, you will be able to set up automated withdrawals from a variety of sources to have your account grow steadily while only paying transaction fees ranging from $1 to $4, depending on which plan option you choose.

By setting up your account with Capital One, you will be able to theoretically replace your financial advisor using your own skills and Capital One’s easy automated system to steadily save for retirement without the approximate 1% fee given to your advisor on an annual basis.

Setting up your ShareBuilder account will take no more than 20 minutes and requires no extra paperwork than any other financial account.

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