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CapitalOne Investing Review: How It Works

When it comes to online trading, there is no shortage of platforms from which to choose.  Although CapitalOne Investing may be moving to the E*Trade platform in late 2018, their products and offerings will stay the same for customers who are currently enrolled.

Despite not having the brand recognition of some of the other major players in the market, they currently offer some competitive and enticing features that make them stand out from their competition.

Investors who like a simple, streamlined process appreciate that there are no account minimums, and you also won’t get dinged with additional fees for behaviors like inactivity.  The trade commissions are right in line with the competition at a $6.59 flat rate, and there are options to do it yourself or get advisor guidance along the way.

Although they don’t have their own trading platform, there are other perks, like a free dividend reinvestment program, which might make up for that gap.

In this guide, we’ll take an in-depth look at their current program, discuss how it works, ways it stands out from the competition, and who may benefit the most from this service.

Comparison Table

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Portfolio Building Tool
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Building a diversified portfolio can be not only difficult but also expensive.

Research And Data
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If you are someone who prefers to do their own research on stocks, mutual funds, and ETFs for yourself, this brokerage offers an impressive array of tools and data to help you find the information you desire.

What Is CapitalOne Investing And How Does It Work?

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Sometimes also called the ShareBuilder Plan, the investing options through Capital One allow you to invest in a portfolio made up of stocks, ETFs, and mutual funds.  The transactions are dollar-based rather than share-based, and the program will enable you to purchase partial shares to hit your spend limit.

This operates differently than some ETF trading software, and is a nice feature if you have a specific investment budget, but want to invest in particular areas.

The way it works is similar to most other options in the marketplace, and it’s simple to do.

First, you select the securities that you want to purchase and set your dollar limit for each option.  You can choose top performers from one of the many in-screen lists on the site, or use the robust research section to view an in-depth snapshot and then toggle to the stock, mutual fund, or ETF on the list.

Then you select your investment frequency and define your parameters.  You can set up a one-time transaction or recurring selections depending on your needs and goals.  As long as the CapitalOne Investing account is funded, the payments will process automatically based on your criteria.

Finally, you’ll configure your payment options and tell the system to either pull the funds directly from your bank account, or from the linked investment account.

You can change your settings and configuration at any time, but once you’re set up everything will happen automatically per your instructions.  The system will execute trades, create the buy orders, and transfer money without any need for daily management.

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What Makes CapitalOne Investing Unique

Although this platform has many of the same features and functionality as their competition, there are a few areas where they really shine.  Here are the most compelling.

Deposit, Commissions, And Fees

One of the most notable ways that Capital One differentiates themselves from their competition is by having no minimum deposit on their brokerage accounts.  This is especially appealing for beginners as it provides an opportunity to make trades and learn the system at a risk level that is both comfortable and acceptable for everyone.

Also, the flat-rate $6.95 commission is very competitive with other full-service brokers who offer a similar product like TD Ameritrade or Charles Schwab.  The company is also the only one to give a discount if you choose their automatic investment program. These cost only $3.95 per transaction.

Regarding fees, Capital One charges fewer than most of the competition.  They don’t assess an inactivity fee, and there is an option to use one of 450 no-transaction-fee broker-assisted trades.

Automation

As we mentioned above, you can save money if you decide to use the ShareBuilder Plan and set up an automated schedule of investments through Capital One.  In addition to the cost-savings, the automatic investing plan is a user-friendly option for beginner investors.

You can set up transactions that occur weekly, biweekly, or monthly and choose from a list of over 7,000 ETFs and stocks.  With this option, you can make changes at any time and purchase or accumulate partial shares.

Even more appealing, you can turn the automation off whenever you want.  This makes it easy for beginners to graduate into a more active management structure, or to keep growing your account if you need to take an internet break for any reason, like traveling out of the country or while recovering from surgery.

Portfolio Building Tool

Building a diversified portfolio can be not only difficult but also expensive.  If you’re not familiar with how to use an asset allocation model to select ETFs that have a performance record that matches your risk tolerance and investing style, it might seem overwhelming.

The portfolio builder from Capital One helps to simplify the process.  They ask questions to determine your investing style, the amount of money you want to set aside regularly, and the fund family that makes sense for your needs.

The system then builds a custom portfolio that includes between six to eight ETFs that match your criteria.  You’ll pay an $18.95 flat-fee for every order processed, which works out to a discounted rate from what you would pay for each transaction.

Just like you see in the ShareBuilder plan, you can accumulate partial shares as your transactions will all be dollar-based rather than share-based so that you adhere to your desired spend amount.

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Research And Data

If you are someone who prefers to do their own research on stocks, mutual funds, and ETFs for yourself, this brokerage offers an impressive array of tools and data to help you find the information you desire.

The investment screener, for example, shows you data on potential investment options that you can sort in a variety of ways including by their dividend yield, fund strategy, or 90-day average volume.

You can look at side by side comparisons between similar funds using data from Morningstar ratings and performance.

The “What if I Had Invested” tool may give your buyers remorse, but it’s invaluable for beginners who want to learn from past mistakes.  It allows you to see a snapshot of what you would have earned today if you had invested in a stock on a prior date.

Like other brokerage software, the site offers robust reporting and charting capabilities.  You can set tracking alerts for your selections, view their watch lists to see top performers, and access other visual aids like heat mapping tools that show you what’s hot right now.

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Intuitive 

CapitalOne Investing doesn’t have their own platform, and all of the transactions are done through their website or app.  Although some users feel like this is a drawback of their service, which we will discuss more below, it offers the advantage of an intuitive user experience.

Most people are familiar enough with banking software that the website is easy to navigate and the steps feel natural, even to those who aren’t particularly web savvy.

Actions like accessing research, placing trades, and checking performance are done with a single click and don’t require complex navigation or computer skills.

All In One Place

Other than Bank of America who offers their Merrill Edge investing platform, Capital One is the only other service who brokers transactions like these and also provides banking services like checking and savings accounts, mortgages, and debit or credit cards.

If you’re already a customer, you can access all of these services through one universal login.  This can be a benefit if you like keeping all of your financial services in one place.

Pricing

Here is a breakdown of the fees to invest and execute trades with this system.

  • Account Minimum: None
  • Manual Stock Trading: $6.95 per transaction
  • Automatic Investment Stock Trading: $3.95 per transaction
  • Options Trades: $6.95 plus $0.75 per contract
  • Closing or Transfer Fees: Up to $75

Public Perception Of CapitalOne Investing

Overall, users say good things about the platform.  It’s particularly popular among new investors who want to get familiar with the space without having to commit to a significant minimum starting point.

The company overall has a favorable reputation, but the one foremost drawback critics often identify is the fact that they don’t have a web-based trading platform.  The only way to execute trades is through the Capital One website, or via their mobile app.

That said, users agree that the interface and easy to use site has all of the capabilities needed to manage a diverse portfolio effectively.

How It Compares

There are lots of competitors in the investing space, so it’s important to understand which ones have the features and benefits that are most important to you.  Here’s a quick summary of two significant areas where there are some gaps, and competitors that may be worth considering.

Commission-Free ETFs

Although you can get lower commissions by enrolling in the ShareBuilder Plan, you will still pay fees on every ETF you trade through Capital One.  This is a notable difference from many of their competitors.

Fidelity, Charles Schwab, TD Ameritrade Scottrade, and Vanguard are just a few who offer numerous ETFs without any commissions.  In fact, many of these companies are expanding their offers for 2018, like Vanguard who will roll out a program with the largest amount of commission-free ETFs of any brokers in August.

Some analysts caution that commission-free ETFs may not offer as much value to traders as they appear to, but they are a relatively standard feature that’s omitted from the Capital One plan.

Types Of Traded Accounts

If you are only interested in trading stocks, mutual funds, and ETFs, then Capital One might be the right choice for you.  However, if you are looking for an investment vehicle like Forex, individual bonds, or futures, you’ll need to look elsewhere.

Larger brokerage groups, like TD Ameritrade, cover all the bases and have a wider array of offerings.  For comparison, Capital One has less than 1,200 available funds, and TD Ameritrade boasts over 12,500.

What We Think

It’s easy to see why the investing platform from Capital One is so well-received.  Not only is it easy to use and a beginner-friendly option, but it also offers a plethora of research and customer tools that will grow with your knowledge base and needs over time.

If you are a casual investor who likes to stick with the basics, or you want to set up an automatic investing solution, this product is definitely worth considering.  These are the areas where it shines.

This is also an excellent choice if you want to invest on a dollar basis rather than purchasing shares, and is particularly appealing if you're going to start small and like the idea of an option without a large minimum threshold.

Advanced traders might want to look at alternatives as they don’t have a trading platform or any commission-free offerings available.  While their fund selection is diverse, it’s also limited, and if you want to execute a specific strategy, you may need to look at a larger brokerage group with more offerings to get it done.

Coupons And 
Deals

If you need an added incentive to get started with this company, they have one.  You can earn up to $600 as a new client based on the amount of your initial deposit.  Here is a breakdown of the promotional structure.

  • Deposits of $5,000 or more get a $50 bonus
  • Deposits of $15,000 or more get a $100 bonus
  • Deposits of $50,000 or more get a $200 bonus
  • Deposits of $100,000 or more get a $300 bonus
  • Deposits of $200,000 or more get a $600 bonus

The company also periodically runs promotions for existing account holders that require a transfer of funds into their investment account to qualify.

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