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The Internet has radically changed the nature of investing, giving rise to low-cost online brokerages that cut out the middleman and allow nonprofessional retirement investors to buy and sell stocks, bonds, mutual funds, exchange traded funds, options, futures, and commodities. Capital One Investing, formerly ShareBuilder and now a subsidiary of Capital One 360, is one such brokerage. It’s been in continuous operation for more than 20 years – an impressive run for an all-digital trading platform.

Like other online brokerages, Capital One Investing is a Securities Investor Protection Corporation (SIPC) member. SIPC is a public corporation that compensates investors for losses of cash and securities in the event that their brokerage declares bankruptcy. It provides $250,000 in insurance for cash balances held in your brokerage account, and $500,000 in insurance for securities, with a total insurance cap of $500,000 in combined cash and securities.

History of Capital One Investing

Seattle-based Capital One Investing, originally known as NetStock Direct, was founded in 1996. From the beginning, the service was envisioned as an efficient intermediary through which retail investors and investment professionals could buy and sell securities without using a human broker to place the trade. Customers are entirely self-directed, performing their own research and executing their own trades.

In late 2007, ING Direct, an online banking subsidiary of the ING Group, bought the company – then known as ShareBuilder – for more than $200 million. When Capital One Financial Corporation purchased ING Direct in 2012, ShareBuilder was included as part of the deal. It now serves as Capital One 360’s online investing platform, complementing the full range of banking and lending services offered by Capital One 360.

You Might Also Like: Many Americans know Capital One as a credit card issuer. They’re not wrong. The company has a lively credit card stable that includes two of my favorites: Capital One Quicksilver Cash Rewards Credit Card and Capital One Venture Rewards Credit Card. They routinely make our lists of the best cash back credit cards and best travel rewards credit cards, respectively.

Key Features

New Account Bonuses

Like many online brokerages, Capital One Investing offers account bonuses for investors who open new brokerage or retirement accounts with the company.

Capital One Investing’s bonuses increase on a graduated scale:

Available Investment Products & Pricing

Capital One Investing has a wide variety of investment products:

• Stocks: You can trade exchange-listed and over-the-counter U.S.-listed stocks on Capital One Investing’s platform.
• ETFs: ETFs are baskets of equities or other securities listed on exchanges. They’re more liquid (and thus easier to trade) than mutual funds. Like mutual funds, they typically carry expense ratios ranging from less than 0.1% to more than 1% annually.
• Mutual Funds: Capital One Investing offers access to hundreds of of mutual funds from major issuers like Vanguard. Low-expense index and bond funds feature prominently here, as do actively managed funds. Many funds have no transaction fees, though expense ratios may cut into your returns.
• Options: You can write covered calls and trade calls and puts in select equities through Capital One Investing’s options trading portal. Check out the platform’s options page for more information and remember that options aren’t suitable for all investors.

The standard commission is $6.95 per online trade for stocks, ETFs, and options. Options trades carry an additional $0.75 per contract charge. Mutual fund commissions vary widely, but many have no transaction fees at all – check each fund’s prospectus for specific information. Broker-assisted phone trades cost $19.95 each. Dividend reinvestment (opt-in) is free for most securities.

Note: These investment products are all available to self-directed investors. Higher net worth investors using Capital One Advisors Managed Portfolios (see below) may be offered access to other types of investment products. Check with your advisor for more details.

General Investing Accounts

Capital One Investing’s general investing account types include:

• Individual Brokerage Account: This is a traditional, non-tax-advantaged brokerage account held in your name. If you’re choosing to self-direct your investments, you have sole control over the account and all decisions related to its management.
• Joint Brokerage Account: Joint brokerage accounts are ideal for couples who’ve chosen to merge finances after marriage. The account comes with joint rights of survivorship, meaning sole custody transfers to the surviving account holder without going through probate.

Retirement Accounts

Capital One Investing’s retirement account options include:

• Traditional IRA: Traditional IRA contributions are tax-deductible in the current tax year, up to an annual maximum of $5,500 for younger investors and $6,500 for those aged 50 and over. Check with the IRS or a licensed financial professional for specific rules around the timing and size of withdrawals, as too-large or -early withdrawals can incur significant financial penalties.
• Roth IRA: Roth IRAs are tax-advantaged upon withdrawal, provided the withdrawals (or distributions) meet certain conditions. Generally, withdrawals of funds held in the account longer than five years are tax-free after age 70.5. Check with the IRS or a licensed financial professional for specifics.
• Small Business 401(k): Capital One’s Spark vertical offers the Spark 401(k), a small business retirement account option that includes up to 20 fund options and five model portfolios. If you’re not sure where to start, speak with a Capital One financial advisor for more details – you won’t automatically be locked into a managed portfolio relationship. Check current IRS regulations for contribution limits and other plan restrictions.

Capital One Investing accepts qualifying employer plan rollovers and existing-account transfers from other brokerages. The rollover process is pretty straightforward, even for non-experts. Check Capital One Investing’s rollover and transfer page for more details.

Custodial & Education Accounts

Capital One Investing offers custodial and educational accounts for minor children, youths, and their parents:

• Custodial Account: You can set up a custodial account for your child or minor ward under the Uniform Transfer to Minors Act. As the custodial account holder, you have full discretion over the account until the minor account holder reaches the age of majority. Custodial accounts aren’t tax-advantaged like retirement accounts, but their gains and income may be subject to taxation at different rates than adult individual brokerage accounts. Regardless, they’re great for teaching kids about money.
• Education Savings Account: You an open an ESA (commonly known as a Coverdell ESA) to help a young beneficiary save for college tuition and other qualifying higher education expenses. ESA earnings are tax-advantaged, but there’s a relatively strict annual contribution limit: $2,000.

PortfolioBuilder

Capital One Investing’s PortfolioBuilder is a tool for self-directed investors who need a little extra help putting their portfolios together – and who don’t mind paying a bit extra for it.

PortfolioBuilder lets you select and bundle six to eight name-brand ETFs into a single bulk-bought tranche. Each PortfolioBuilder portfolio costs $18.95 to assemble and another $18.95 to sell.

PortfolioBuilder doesn’t include rebalancing or automatic investing. If you want to add to or rebalance your holdings, you need to execute those transactions manually, at the standard $6.95-per-trade commission.

Capital One Advisors Managed Portfolio Accounts

If you don’t have the time or inclination to manage your own portfolio, talk to a Capital One Advisors team member about building one on your behalf. Though this is a more expensive option than robo-advisor services from the likes of Wealthfront and Betterment, it comes with a human touch that the machines can’t (yet) match.

Capital One Advisors Managed Portfolios are diversified baskets of ETFs – similar to PortfolioBuilder portfolios, but more personalized to your risk tolerance and investing goals. All trades, including rebalancing, are handled by software-assisted human advisors.

This vertical’s minimum portfolio size is $25,000, so it’s not for investors just starting out. The annual management fee is a flat 0.9% of assets under management, plus commissions and expenses. Note that you can’t just turn up a Managed Portfolio overnight – you’ll need to speak with an advisor and answer some questions about your objectives and risk tolerance, then evaluate and approve your investment plan before putting your money to work.

Research Tools

Capital One Investing has a slew of research tools for self-directed investors:

• Investment Screener: This feature subjects equities and funds to a slew of subjective and quantitative criteria to determine their overall suitability and potential performance. Criteria include sector, market cap, price, dividend yield, and options availability.
• Fund Evaluator: This is a fund-specific tool that shows historical performance, expense ratio, Morningstar rating, and other helpful data points, plus head-to-head and multi-point comparisons with other funds identified as comparable (and potentially more suitable) by Capital One Investing.
• Heat Map: This is a snapshot-in-time displaying individual securities’ performance over short, medium, and long timeframes. It’s useful for active traders looking to take the market’s pulse on any given day.
• What If I Had Invested: This is a retrospective calculator with a self-explanatory name. Plug in securities on your watchlist to see what you might have missed (or what bullets you might have dodged). Just remember: Historical analysis is useful, but past performance doesn’t predict future results.
• Investment Comparison Tool: This tool lets you compare up to five securities at once: performance, fundamentals, yield, and more.
• Watch List: Use this tool to keep track of stocks and funds you’re watching, with financial details and other pertinent information available at a glance.
• Market Movers: This is a roundup of they day’s major gainers and losers. Like Heat Map, it’s a useful tool for active investors – not to much for passive investors prone to nausea at the slightest hint of market volatility.
• Tracking Alerts: These alerts, available by email and SMS, keep you on top of your watch list equities (and other securities you’re watching) without having to log into your Capital One Investing account or even pull up the app on your phone.
• Retire My Way: This is an interactive retirement calculator that shows roughly how much income you can expect to have when you retire – and what you can do to change that, hopefully for the better. It’s a DIY alternative for investors leery of paying 0.9% AUM each year for a managed portfolio with Capital One Advisors.

ShareBuilder Plan

The ShareBuilder Plan (or ShareBuilder Investment Plan) is an automatic investing feature that lets you schedule automatic investments in more than 7,000 stocks, ETFs, and mutual funds for a cut-rate commission of $3.95 per trade – a savings of 40% on the regular per-trade commission of $6.95.

After selecting your preferred security (or securities), determine the dollar amount that you’d like to invest, choose a market or limit price order, and specify whether you’d like to invest on a weekly, monthly, or one-time basis. All automatic ShareBuilder trades are executed on Tuesdays. If you don’t have sufficient funds to complete an order at the specified time, you won’t incur a penalty – the order just won’t be executed.

Express Funding Option

Capital One Investing’s Express Funding tool is unusual among online brokerages. It allows you to make purchases for an individual, joint, or retirement account without first depositing the funds necessary to back it up.

Once you make your purchase, Capital One Investing draws the funds from a checking or savings account that’s tied to your brokerage account. If the tied account lies outside of the Capital One 360 ecosystem, Express Funding trades cost an extra $6.95. This comes on top of the $6.95 commission for non-automatic trades, bringing the total cost of the trade to $13.90. Express Funding transactions that use Capital One 360 checking or savings accounts don’t include this additional charge.

Capital One Investing allows you to have $5,000 in outstanding Express Funding trades at any given time. Once each transaction posts, its value drops off of this outstanding balance, freeing up space for additional trades. Transactions placed before 5pm Eastern generally post on the same business day.

Access to IPOs

Capital One Investing allows regular investors to get  in on IPOs (initial public offerings), which are  the first share offerings of newly listed companies. The platform’s IPO Center serves as a clearinghouse and research center for upcoming offerings. Check it periodically to see what’s coming around the bend – pending IPOs are usually added soon after they’re announced.

Capital One Investing is careful to note that the mere presence of the IPO Center doesn’t guarantee that its customers will actually be able to purchase IPO shares, since pricing on these transactions tends to be extremely volatile and traders must act quickly to adjust their offers on the day of the IPO. For alert traders who have a high tolerance for risk, this can be a useful tool that isn’t uniformly available at low-cost brokerages.

Customer Support Options

You can get in touch with Capital One Investing’s customer support team by phone from 8am to 9pm Eastern, Monday through Friday. Live chat hours are similar. Support emails are generally answered within one business day.

Note that some Capital One Investing teams have shorter hours. For instance, Capital One Advisors is available 8:30am to 5:30pm, Monday through Friday.

Tax Center

Capital One Investing’s Tax Center lets you monitor the tax implication of your account activity.

The gain-loss reports show exactly how much you’ve earned or lost on each transaction during a given tax year, as well as the cost basis for each position that you’ve held. The 1099 tax forms page includes 1099-B (proceeds from profitable sales), 1099-INT (proceeds from interest), and 1099-DIV (proceeds from dividends) forms for each tax year.

Although you can opt to receive these documents by mail, it’s useful to have them online as well.

Advantages

1. Reasonable Pricing
Even among low-cost online brokerages, Capital One Investing has a reputation for relatively low commissions and fees. Commissions are $6.95 to trade stocks, options, mutual funds, ETFs, and bond funds, although options have an additional cost of $0.75 per contract. These commissions are lower than most direct competitors, which can charge as much as $10 per online trade. Capital One Investing’s ShareBuilder Investment Plan feature is even cheaper – just $3.95 per automatic trade. In other words, setting up your weekly trades ahead of time (and giving up some control over their timing, since all automatic trades execute on Tuesday) reduces your commissions by about 40%.

2. Solid Bonuses for New Accounts
Other brokerages offer new-account bonuses, but few are as generous to smaller investors as Capital One Investing. An opening deposit of just $5,000 qualifies you for a $50 bonus. If you’re farther along on the road to financial independence, bring $200,000 to the table and reap a $600 bonus – among the top new account hauls available anywhere in the low-cost online brokerage space.

3. Retirement Options for Small Business Owners
Many low-cost brokerages only offer individual IRAs. Capital One Investing’s is one of the only brokerages at its price point – sub-$7 base commission – that offers 401k options for small businesses. Even some pricier brokerages that market themselves as full-service alternatives to discount brokers – a category that includes TD Ameritrade and Fidelity – lack specific 401(k) plans for small business owners. Capital One Investing’s decision to offer this product makes it very attractive for business owners who don’t want to pay a professional investor to manage their employees’ retirement funds.

4. Drama-Free Recurring Automatic Investments
Some other brokerage firms offer automatic investment programs, but Capital One Investing’s $3.95 commission is more affordable than what traders can find elsewhere. Even better, Capital One Investing’s automatic dividend reinvestment program (DRIP) is free for most securities. Surprisingly, many online brokerages have yet to follow suit.

5. Affordable Phone Trades
Capital One Investing’s phone trading service is far more affordable than most competing brokerages’. At less than $20 per trade, it’s not cheap – but most competitors charge at least $30 for the same service.

6. No Account Minimums for Non-Managed Accounts
Many low-cost online trading platforms, including Capital One Investing, waive minimum deposits for new accounts. But some, especially those catering to professional day traders, do require substantial opening deposits – sometimes in excess of $10,000.

The only exception to this rule is Capital One Advisors Managed Portfolios, which requires at least $25,000 to open an account. That’s actually a reasonable starting deposit for portfolios managed by human advisors though.

7. Express Funding Lets You Invest Your Money Before It’s Available
Capital One Investing’s Express Funding feature eliminates the need to transfer funds to your brokerage account before filling a buy order. By linking your Capital One Investing account directly with an outside bank account – or a Capital One 360 bank account, which eliminates the additional $6.95 fee for Express Funding – this tool basically turns your bank account into an extra source of cash for your investing activities.

This feature is virtually unique in the low-cost online brokerage space. Most brokerages do offer real-time inbound transfers that allow you to trade with transferred funds almost immediately after initiating the deposit, but this still requires an extra step on your part.

Disadvantages

1. No Access to Individual Bonds
Unlike TD Ameritrade, Fidelity, and some other discount and full-service online brokerages, Capital One Investing doesn’t allow individual bond purchases. The company frames this as a customer-friendly move that reduces risk and eliminates the complexities of individual bond buying – and it’s true that new or low-net-worth investors may have little reason to purchase individual corporate or Treasury bonds. But that doesn’t change the fact that experienced investors who want the freedom to purchase individual corporate or government bonds through their brokerage account won’t find it here.

2. Managed Portfolios Are Pricey
Capital One Advisors’ annual Managed Portfolio management fee is 0.9% of assets under management, plus commissions and fund expenses. That’s pricier than most automated or semi-automated advisory platforms, which typically charge less than 0.5% AUM. There’s also no graduation – the 0.9% AUM rate applies to all invested balances, from $25,000 on up past $1 million.

3. Account Holders Can’t Sell Stocks Short
Capital One Investing doesn’t allow its account holders to sell equities short under any circumstances. Short selling is a relatively risky strategy by which experienced investors can profit from falling stock prices. Unlike long investing, whereby investors buy shares of a stock at a low price in the hopes of selling them later for more money, short selling involves borrowing shares of a stock in order to sell them at a specific price, then using a portion of the proceeds from that sale to repurchase them in the future at a lower price.

The short seller’s profit is equivalent to the spread between the initial sale price and the (hopefully lower) buy price. Since short selling represents a bet that the price of a stock will fall, it can backfire when the target stock’s price rises. As such, it’s decidedly not recommended for novices.

Many full-service brokerages, including TD Ameritrade and Fidelity, allow account holders to execute short sales. Capital One Investing does offer margin accounts for qualified investors (you need to formally apply for the privilege). Margin accounts allow traders to leverage their accounts by borrowing up to double the amount of cash that they currently have available for trading – but only for long trades.

4. No Forex Exposure
Capital One Investing doesn’t give account holders access to an increasingly popular activity for experienced retail investors: currency trading, or forex. Since forex markets are truly global, it’s possible to buy and sell any commonly traded currency – the vast majority of forex volume involves the U.S., Canadian, and Australian dollars, as well as the Euro, Swiss franc, yen, and pound – as long as an open global market is available. (In the United States, this period runs continuously from the middle of Sunday afternoon until the dinner hour on Friday.)

While Capital One Investing may carry mutual funds and other equities with indirect exposure to global currency markets, it’s not the place to go for direct access. If currency trading is an important piece of your investing strategy, you’ll want to look elsewhere – perhaps in an unexpected place, like WorldCurrency CDs from EverBank, a Florida-based online bank.

5. ShareBuilder Plan Trades Only Happen on Tuesdays
Automatic recurring investments made through the ShareBuilder Investment Plan only happen on Tuesday. This seems like an arbitrary limitation with potential negative implications for market timing. Most full-service platforms let you customize the timing of your recurring investments, or at least offer greater flexibility with regards to how and when they’re executed.

Final Word

Capital One Investing is one of many low-cost online brokerages that bring everyday investors much closer to the stocks, options, and funds that they trade. The platform’s low cost – just $6.95 for a regular online trade – is particularly noteworthy, as is an automatic investing program that costs just $3.95 per trade. Unlike some other online brokerages, Capital One Investing offers retirement accounts for both individual investors and small business owners. It’s also notable for its lack of minimum funding requirements and attractive new account bonuses.

On the other hand, Capital One Investing doesn’t offer access to individual bonds, including corporate bonds and treasuries. It also doesn’t allow investors to sell stocks short (although it does allow margin accounts), which is a major drawback for advanced investors who want flexibility to take advantage of a range of market conditions.

Overall, Capital One Investing is a great tool to use if you’re just starting out as an investor and want to hone your skills on your own terms, and it offers even clearer advantages for current Capital One 360 customers. Experienced or high-net-worth investors should definitely look at more comprehensive brokerages before opening an account with Capital One Investing.

Do you use an online brokerage to invest for retirement, to make extra income, or earn a full-time living? What’s your experience with Capital One Investing?