Interactive Brokers (Best Kept Secret)

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incidentflux
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Location: Karachi, Pakistan

Re: Interactive Brokers (Best Kept Secret)

Post by incidentflux » Mon Feb 26, 2018 10:17 pm

destin wrote:
Mon Feb 26, 2018 5:16 pm
How did IB fair the beginning of this month when many brokerage sites stopped working?
I think it was mostly TD, IB/ZacksTrade was solid, at least the times I was checking it.

destin
Posts: 41
Joined: Wed Dec 27, 2017 3:20 pm

Re: Interactive Brokers (Best Kept Secret)

Post by destin » Tue Feb 27, 2018 2:29 pm

What are some other IB white label brokers?

whoever
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Re: Interactive Brokers (Best Kept Secret)

Post by whoever » Tue Feb 27, 2018 2:42 pm

Why would any US based buy and hold investor investing in mutual funds/etfs choose IB? I understand if one is trading futures,options,shorting and foriegn markets and utilize their low interest margin rates for leverage makes sense to go with IB.

saver007
Posts: 166
Joined: Fri Nov 07, 2014 9:18 pm

Re: Interactive Brokers (Best Kept Secret)

Post by saver007 » Tue Feb 27, 2018 10:51 pm

whoever wrote:
Tue Feb 27, 2018 2:42 pm
Why would any US based buy and hold investor investing in mutual funds/etfs choose IB? I understand if one is trading futures,options,shorting and foriegn markets and utilize their low interest margin rates for leverage makes sense to go with IB.
Why not? I am being repetitive but here are few reasons..

ETF/stock Commission is very low. 35 cents to execute 100 shares +- external costs. IB pass on exchange rebates..so net charge for 100 shares can be even lower than 35 cents.

IB execution quality ( which probably matters more than commission but hard to measure) is said to be better than any other retail brokers. IB is connected to more liquidity pools and use smart order routing system meaning better chance of orders getting executed at favorable price. IB publishes a statistics saying their all in cost for executing is 3 or 4 basis points of trade value when comparing it against trade based on days volume weighted average price. Point is every single basis point matters...


You can lend out your long stock and earn $$ .

IB pays interest on brokerage cash balance without having to purchase money market funds or sweep to money market account although you can get better interest via MMF/MMA route with other brokers.

IB is highly capitalized broker.. hold 10 times the required regulatory capital..founder run company with 40+ years of history.

lazyday
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Joined: Wed Mar 14, 2007 10:27 pm

Re: Interactive Brokers (Best Kept Secret)

Post by lazyday » Wed Feb 28, 2018 4:04 am

saver007 wrote:
Tue Feb 27, 2018 10:51 pm
You can lend out your long stock and earn $$
A buy and hold US investor who rarely trades, mainly owns individual stocks and some ETFs, is in the 0% tax bracket, and has a large taxable margin account might really benefit from this.

Heh, now that I wrote that, I'm thinking there are few such people. Maybe some are close enough to give IB at least a glance.
without having to purchase money market funds or sweep to money market account
Just to be clear, the sweep is automatic. For example, at Vanguard you can sell an index fund and then do nothing, after settlement the cash will go into the money market fund where it will likely earn significantly more than at IB.

Tanelorn
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Re: Interactive Brokers (Best Kept Secret)

Post by Tanelorn » Wed Feb 28, 2018 5:11 am

lazyday wrote:
Wed Feb 28, 2018 4:04 am
Just to be clear, the sweep is automatic. For example, at Vanguard you can sell an index fund and then do nothing, after settlement the cash will go into the money market fund where it will likely earn significantly more than at IB.
Here are the current rates:

1.53% Vanguard prime MM (includes CDs, foreigns, corp paper, etc)
https://personal.vanguard.com/us/funds/ ... irect=true

1.36% Vanguard Federal MM (US government only)
https://personal.vanguard.com/us/funds/ ... irect=true

0.92% IB interest credited for USD balances over $10k
https://www.interactivebrokers.com/en/index.php?f=1595

So yes, Vanguard does pay about a 0.5% higher rate on cash balances. Then again, at IB it's easy to get full FDIC insurance for almost $3M worth, and the Vanguard money market funds, very low risk as they are, are not insured against loss.

IB cash sweep program
https://www.interactivebrokers.com/en/index.php?f=27462

lazyday
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Re: Interactive Brokers (Best Kept Secret)

Post by lazyday » Wed Feb 28, 2018 5:44 am

At Vanguard you can no longer use the Prime fund for sweep. The Federal fund you listed is the correct one.

An FDIC account is safer, but maybe not by much. If you think markets price risks efficiently, then consider that even Prime yields only about .2% more than the Treasury money market after accounting for expenses, and Federal is probably safer than Prime. Also institutions probably pay more to manage commercial paper than T Bills, so maybe I shouldn't have backed out all of the expenses.

From your link for Federal:
Although these securities are high-quality, most of the securities held by the fund are neither guaranteed by the U.S. Treasury nor supported by the full faith and credit of the U.S. government. To be considered high quality, a security must be determined by Vanguard to present minimal credit risk based in part on a consideration of maturity, portfolio diversification, portfolio liquidity, and credit quality. The fund maintains a dollar-weighted average maturity of 60 days or less and a dollar-weighted average life of 120 days or less.

Under the new money market reforms, government money market funds are required to invest at least 99.5% of their total assets in cash, government securities, and/or repurchase agreements that are collateralized solely by government securities or cash (collectively, government securities).

saver007
Posts: 166
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Re: Interactive Brokers (Best Kept Secret)

Post by saver007 » Wed Feb 28, 2018 7:07 am

lazyday wrote:
Wed Feb 28, 2018 4:04 am
saver007 wrote:
Tue Feb 27, 2018 10:51 pm
You can lend out your long stock and earn $$
A buy and hold US investor who rarely trades, mainly owns individual stocks and some ETFs, is in the 0% tax bracket, and has a large taxable margin account might really benefit from this.

Heh, now that I wrote that, I'm thinking there are few such people. Maybe some are close enough to give IB at least a glance.
This program is available for even cash accounts and IRA accounts. There is a small chance of getting payment in lieu of dividends than actual dividends. IB says they mitigate this risk by recalling loan before dividend payment but cannot guarantee it.

https://www.interactivebrokers.com/en/i ... 5691&nhf=T

lazyday
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Re: Interactive Brokers (Best Kept Secret)

Post by lazyday » Wed Feb 28, 2018 8:10 am

saver007 wrote:
Wed Feb 28, 2018 7:07 am
This program is available for even cash accounts and IRA accounts.
Thanks, I didn't know that. The FAQ you linked clearly states you can use IRAs!

I didn't spot anything about cash accounts though.

Something else new to me: not all IRAs are cash accounts. https://www.interactivebrokers.com/en/s ... _types.htm
IRA Margin Accounts
US resident customers may open cash or margin Individual Retirement Accounts (IRAs).

Rom1b
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Contact:

Re: Interactive Brokers (Best Kept Secret)

Post by Rom1b » Wed Feb 28, 2018 8:14 am

I use IB since a few weeks now and can only say: very low costs, and very professional software, and good support (online at least)

Of course they're not non profit but their market perspectives are very big, worldwide (Im in the EU), and they can do economies of scale with their curstomer number and low infrastructure costs.
Just a modern company in an old world, and for now beneficial to the end customers / investors for a change, and in my opinion.
Dr Bernstein - If You Can / free PDF, google it | 3Fund Portfolio www.bogleheads.org/forum/viewtopic.php?f=10&t=88005 | CollectiveThought www.bogleheads.org/forum/viewtopic.php?f=10&t=7353

saver007
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Re: Interactive Brokers (Best Kept Secret)

Post by saver007 » Wed Feb 28, 2018 8:29 am

lazyday wrote:
Wed Feb 28, 2018 8:10 am

Thanks, I didn't know that. The FAQ you linked clearly states you can use IRAs!
I didn't spot anything about cash accounts though.
Cash accounts above 50k equity is eligible per https://ibkr.info/node/1839

whoever
Posts: 51
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Re: Interactive Brokers (Best Kept Secret)

Post by whoever » Wed Feb 28, 2018 9:33 am

If one has Voyager select at Vanguard which gives $2 per stock/etf transaction would one still go with IB just for better execution of trades?

destin
Posts: 41
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Re: Interactive Brokers (Best Kept Secret)

Post by destin » Wed Feb 28, 2018 1:27 pm

whoever wrote:
Tue Feb 27, 2018 2:42 pm
Why would any US based buy and hold investor investing in mutual funds/etfs choose IB? I understand if one is trading futures,options,shorting and foriegn markets and utilize their low interest margin rates for leverage makes sense to go with IB.
Others here have made the case they aren't citizens or residents of the US and IB is actually one of their cheaper options for their country.

To add to that, many US brokerages only allow accounts for US residents. If your honest with your US broker and move out of the country, they will lock or severely limit access to your account. IB, from what I hear, is available in many countries.

So if your planning on retiring or working outside the US, be careful on which broker your using and what your investing in. This applies even if your a US citizen outside the country.

saver007
Posts: 166
Joined: Fri Nov 07, 2014 9:18 pm

Re: Interactive Brokers (Best Kept Secret)

Post by saver007 » Thu Mar 01, 2018 5:44 pm

whoever wrote:
Wed Feb 28, 2018 9:33 am
If one has Voyager select at Vanguard which gives $2 per stock/etf transaction would one still go with IB just for better execution of trades?
Difficult to answer this question because commission is readily measurable and execution quality is not.
If one just buys just mutual funds..it is an easy answer, stick with vanguards..

incidentflux
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Location: Karachi, Pakistan

Re: Interactive Brokers (Best Kept Secret)

Post by incidentflux » Fri Mar 02, 2018 11:04 am

What's the cheapest way to transfer funds every month?
I have these options:

1. HSBC: Pay sender and receiver wire transfer fees = $32.67
2. HSBC: Pay only sender fees, receiver pays their fees = $16.335
3. Citibank: Free transfer since custodial account is in Citibank NY = Zero fees
4. Money exchange: $13.61 per transfer.

I think the only way to send free international transfers to IB is to have an account in Citibank?
What methods are fastest and cheapest to send from outside USA?

Leesbro63
Posts: 6580
Joined: Mon Nov 08, 2010 4:36 pm

Re: Interactive Brokers (Best Kept Secret)

Post by Leesbro63 » Fri Mar 02, 2018 11:09 am

lazyday wrote:
Wed Feb 28, 2018 4:04 am
saver007 wrote:
Tue Feb 27, 2018 10:51 pm
You can lend out your long stock and earn $$
A buy and hold US investor who rarely trades, mainly owns individual stocks and some ETFs, is in the 0% tax bracket, and has a large taxable margin account might really benefit from this.

Heh, now that I wrote that, I'm thinking there are few such people. Maybe some are close enough to give IB at least a glance.
without having to purchase money market funds or sweep to money market account
Just to be clear, the sweep is automatic. For example, at Vanguard you can sell an index fund and then do nothing, after settlement the cash will go into the money market fund where it will likely earn significantly more than at IB.
Almos by definition, if you have a large taxable account, you probably are not in the 0% bracket. People who can accumulate bigger wealth, after doing the tax sheltered stuff, generally have enough income that they are not in the zero or even 15% brackets.

lazyday
Posts: 3797
Joined: Wed Mar 14, 2007 10:27 pm

Re: Interactive Brokers (Best Kept Secret)

Post by lazyday » Fri Mar 02, 2018 11:31 am

Leesbro63 wrote:
Fri Mar 02, 2018 11:09 am
...large taxable account, you probably are not in the 0% bracket...
True. Maybe if you have most of the account in 0 dividend stocks.

It turns out though that you can agree to have shares loaned out even in an IRA, as saver007 posted above.

NYCwriter
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Re: Interactive Brokers (Best Kept Secret)

Post by NYCwriter » Fri Mar 02, 2018 5:02 pm

Pretty sure Fidelity also has a lending program, though I've never been interested (yet) in using it.

I got 2 years' free commissions and a bonus when I moved individual holdings to Fidelity. I am not a trader, though, and I don't use margin.

saver007
Posts: 166
Joined: Fri Nov 07, 2014 9:18 pm

Re: Interactive Brokers (Best Kept Secret)

Post by saver007 » Sat Mar 03, 2018 4:14 pm

incidentflux wrote:
Fri Mar 02, 2018 11:04 am
What's the cheapest way to transfer funds every month?
I have these options:

1. HSBC: Pay sender and receiver wire transfer fees = $32.67
2. HSBC: Pay only sender fees, receiver pays their fees = $16.335
3. Citibank: Free transfer since custodial account is in Citibank NY = Zero fees
4. Money exchange: $13.61 per transfer.

I think the only way to send free international transfers to IB is to have an account in Citibank?
What methods are fastest and cheapest to send from outside USA?
Try asking your question in following forum
https://forums.hardwarezone.com.sg/mone ... -248.html

incidentflux
Posts: 10
Joined: Fri Feb 23, 2018 7:10 am
Location: Karachi, Pakistan

Re: Interactive Brokers (Best Kept Secret)

Post by incidentflux » Sat Mar 10, 2018 2:47 pm

saver007 wrote:
Sat Mar 03, 2018 4:14 pm
incidentflux wrote:
Fri Mar 02, 2018 11:04 am
What's the cheapest way to transfer funds every month?
I have these options:

1. HSBC: Pay sender and receiver wire transfer fees = $32.67
2. HSBC: Pay only sender fees, receiver pays their fees = $16.335
3. Citibank: Free transfer since custodial account is in Citibank NY = Zero fees
4. Money exchange: $13.61 per transfer.

I think the only way to send free international transfers to IB is to have an account in Citibank?
What methods are fastest and cheapest to send from outside USA?
Try asking your question in following forum
https://forums.hardwarezone.com.sg/mone ... -248.html
Thanks, I just figured it out myself.

Bank Wire Transfer Fees Summary
Citi Bank UAE to Citi Bank US (IB) = Free
Local Exchange to Citi Bank US (IB) = 25 AED / 6.81 USD
Other Bank to Citi Bank US (IB) = 50 AED / 13.61 USD

stressed
Posts: 59
Joined: Mon Feb 26, 2018 6:28 am

Re: Interactive Brokers (Best Kept Secret)

Post by stressed » Tue Apr 10, 2018 4:54 am

incidentflux wrote:
Sat Mar 10, 2018 2:47 pm
saver007 wrote:
Sat Mar 03, 2018 4:14 pm
incidentflux wrote:
Fri Mar 02, 2018 11:04 am
What's the cheapest way to transfer funds every month?
I have these options:

1. HSBC: Pay sender and receiver wire transfer fees = $32.67
2. HSBC: Pay only sender fees, receiver pays their fees = $16.335
3. Citibank: Free transfer since custodial account is in Citibank NY = Zero fees
4. Money exchange: $13.61 per transfer.

I think the only way to send free international transfers to IB is to have an account in Citibank?
What methods are fastest and cheapest to send from outside USA?
Try asking your question in following forum
https://forums.hardwarezone.com.sg/mone ... -248.html
Thanks, I just figured it out myself.

Bank Wire Transfer Fees Summary
Citi Bank UAE to Citi Bank US (IB) = Free
Local Exchange to Citi Bank US (IB) = 25 AED / 6.81 USD
Other Bank to Citi Bank US (IB) = 50 AED / 13.61 USD
If you have a US bank account you can do free ACH transfers to IB, you don't have to use wire, unless you need the funds the same day.

Aoiowl
Posts: 8
Joined: Sat Oct 20, 2018 6:41 am

Re: Interactive Brokers (Best Kept Secret)

Post by Aoiowl » Tue Oct 30, 2018 5:48 pm

The Planner wrote:
Wed May 13, 2015 2:02 pm
galeno wrote:The main reason we are with IB is because it gives USA-NRAs w/o a tax treaty cheap and safe access to Ireland domiciled Vanguard and Ishares ETFs. Using them reduces our portfolio costs by 50% (0.36%).

The main disadvantage is it's a USA domiciled broker. If and when a non-USA broker available to us stops acting like the old full service brokers regarding portfolio costs, we will switch.
This. For index investors outside the US (i.e. most of the world), brokers like Saxo Capital Markets charge commissions that are 400% more expensive than IB; lack the currency flexibility; and lack the wide range of Ireland-domiciled ETFs (like VUSD) available on IB. IB is miles cheaper than any of the alternatives that European expats like me could also use. My account is over 100k USD, so I don't pay the inactivity fee.
I'm currently in the process of opening a trading account and as a UK expat based in the tax-free Middle East, my options are limited. I have looked at various brokers and Internaxx, based in Luxembourg, seem to be a suitable option. They appear to be reliable and are well spoken of by plenty of people. However, I've also seen IB constantly mentioned as a no-brainer for keeping costs low, but I'm hesitant because of what I've read about complications with US estate taxes (if I die with assets at IB, the US govt takes a big cut?), and also I've heard that if I moved back to the UK, they would force me to switch my holdings to a UK account, potentially bringing tax issues with it.

I plan to buy and hold, so maintenance fees are quite important to me. I will only invest in ETFs and at the rate of a single $10k equivalent purchase every quarter, so trading volume will be low. At Internaxx, an ETF trade of $10k would be about $27. So assuming four trades per year, plus their inacivity fees, I'd expect to pay about $220 per year. For $40k invested that represents about 0.55%. I suspect people on here will find that expensive. The fees would never end with Internaxx, so the idea of having no maintenance fees once I reach $100k with IB is appealing.

Could anybody shed any light on how much would I expect to pay at IB for the same amount of trading?

Would IB be a better option because of lower fees?

typical.investor
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Joined: Mon Jun 11, 2018 3:17 am

Re: Interactive Brokers (Best Kept Secret)

Post by typical.investor » Tue Oct 30, 2018 7:11 pm

Aoiowl wrote:
Tue Oct 30, 2018 5:48 pm
The Planner wrote:
Wed May 13, 2015 2:02 pm
galeno wrote:The main reason we are with IB is because it gives USA-NRAs w/o a tax treaty cheap and safe access to Ireland domiciled Vanguard and Ishares ETFs. Using them reduces our portfolio costs by 50% (0.36%).

The main disadvantage is it's a USA domiciled broker. If and when a non-USA broker available to us stops acting like the old full service brokers regarding portfolio costs, we will switch.
This. For index investors outside the US (i.e. most of the world), brokers like Saxo Capital Markets charge commissions that are 400% more expensive than IB; lack the currency flexibility; and lack the wide range of Ireland-domiciled ETFs (like VUSD) available on IB. IB is miles cheaper than any of the alternatives that European expats like me could also use. My account is over 100k USD, so I don't pay the inactivity fee.
I'm currently in the process of opening a trading account and as a UK expat based in the tax-free Middle East, my options are limited. I have looked at various brokers and Internaxx, based in Luxembourg, seem to be a suitable option. They appear to be reliable and are well spoken of by plenty of people. However, I've also seen IB constantly mentioned as a no-brainer for keeping costs low, but I'm hesitant because of what I've read about complications with US estate taxes (if I die with assets at IB, the US govt takes a big cut?), and also I've heard that if I moved back to the UK, they would force me to switch my holdings to a UK account, potentially bringing tax issues with it.
For Ireland-domiciled ETFs, I am not sure what the risk of estate taxes is. I don't think there is any really. Cash amounts (over $60k) would be subject I believe. And US domiciled funds, stocks and bonds would be too. So you should hold non-US domiciled funds.

If you move to the UK and switch accounts to IB UK, don't they just transfer in-kind? I suspect they do.

I plan to buy and hold, so maintenance fees are quite important to me. I will only invest in ETFs and at the rate of a single $10k equivalent purchase every quarter, so trading volume will be low. At Internaxx, an ETF trade of $10k would be about $27. So assuming four trades per year, plus their inacivity fees, I'd expect to pay about $220 per year. For $40k invested that represents about 0.55%. I suspect people on here will find that expensive. The fees would never end with Internaxx, so the idea of having no maintenance fees once I reach $100k with IB is appealing.

Could anybody shed any light on how much would I expect to pay at IB for the same amount of trading?

Would IB be a better option because of lower fees?
I suspect you'd be under the $10/month minimum commission level and so would be looking at $120 (at 6 Pound/trade don't do all the trades in the same month or you'll go over the minimum and have to pay more that month but still pay the minimum in other months). The other thing to consider is IB has about the best rates on currency conversion so if you are paid in a different currency that your fund is using, it's probably cheaper at IB to convert it.

https://www.interactivebrokers.com/en/i ... &p=stocks1

Aoiowl
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Re: Interactive Brokers (Best Kept Secret)

Post by Aoiowl » Fri Nov 02, 2018 7:29 am

typical.investor wrote:
Tue Oct 30, 2018 7:11 pm
If you move to the UK and switch accounts to IB UK, don't they just transfer in-kind? I suspect they do.

I suspect you'd be under the $10/month minimum commission level and so would be looking at $120 (at 6 Pound/trade don't do all the trades in the same month or you'll go over the minimum and have to pay more that month but still pay the minimum in other months).
Thanks for the reply. I'm slightly concerned that if I temporarily returned to the UK in between jobs, for say six months or so, my assets would transfer to the UK version of IB and therefore complicate matters. I cannot open a UK Vanguard account because I'm an expat, and I'm pretty sure I've read somewhere that generally speaking, once you become non-resident, you may no longer add funds. With Internaxx I believe I would probably have less complications, again I may be wrong.

Also, am I right in thinking that any Ireland domiciled ETFs would be purchased on the London Stock Exchange and therefore cost the £6 fee you mention, regardless of where the actual equities are?

typical.investor
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Re: Interactive Brokers (Best Kept Secret)

Post by typical.investor » Fri Nov 02, 2018 7:43 am

Aoiowl wrote:
Fri Nov 02, 2018 7:29 am
typical.investor wrote:
Tue Oct 30, 2018 7:11 pm
If you move to the UK and switch accounts to IB UK, don't they just transfer in-kind? I suspect they do.

I suspect you'd be under the $10/month minimum commission level and so would be looking at $120 (at 6 Pound/trade don't do all the trades in the same month or you'll go over the minimum and have to pay more that month but still pay the minimum in other months).
Thanks for the reply. I'm slightly concerned that if I temporarily returned to the UK in between jobs, for say six months or so, my assets would transfer to the UK version of IB and therefore complicate matters. I cannot open a UK Vanguard account because I'm an expat, and I'm pretty sure I've read somewhere that generally speaking, once you become non-resident, you may no longer add funds. With Internaxx I believe I would probably have less complications, again I may be wrong.
I don't know the detail of IB, but I don't think it's a concern. Take this case where IB LLC (US) stopped serving Australian residents. They had to transfer to IB Australia. Of course, this isn't your case exactly, but I think it helps show that you won't be facing sales of your funds and you will be able to continue investing.
As a client of IB Australia, you will continue to be able to trade all of the exchange traded products you currently have access to (including local and global stocks, bonds, options, futures, etc.)

Moving your account to IB Australia is easy. The process is simple because we will use the information and documents we already have on file for you. The transfer process is initiated once you sign the online authorisation form. This form will be presented to you immediately upon log in to Account Management. Once the form has been signed your account will be scheduled for transfer, with the transfer typically taking effect over a weekend (with consideration given to weekends which coincide with option expiration processing).

https://ibkr.info/node/2928
Aoiowl wrote:
Fri Nov 02, 2018 7:29 am
Also, am I right in thinking that any Ireland domiciled ETFs would be purchased on the London Stock Exchange and therefore cost the £6 fee you mention, regardless of where the actual equities are?
I believe so, but I am not trading there. I think that's what is said in a footnote. You might want to start a new thread " Ireland domiciled ETF costs at IB" or something like that to catch the eye of the people who are using them on IB.

ICH
Posts: 240
Joined: Wed Jun 13, 2018 3:08 am

Re: Interactive Brokers (Best Kept Secret)

Post by ICH » Sat Nov 03, 2018 5:22 am

Aoiowl wrote:
Fri Nov 02, 2018 7:29 am
Also, am I right in thinking that any Ireland domiciled ETFs would be purchased on the London Stock Exchange and therefore cost the £6 fee you mention, regardless of where the actual equities are?
Ireland domiciled ETFs can be purchased through IB in a number of exchanges. But if your trading currency is GBP, then you will have to buy them on the LSE. I would not expext other exchanges to trade on GBP. If your trading currency is USD or EUR, you don't generally need to use the LSE, although it may still be convenient. Where the equities included in the ETF are domiciled is not relevant.

Up to GBP 50,000 trade value, IB charges GBP6 per trade. For accounts below USD 100,000 they charge a monthly inactivity charge of USD10, but they subtract from this, any amount you have paid in commissions on a given month. Hence, if you're smart, the maximum you will pay with IB is USD120 per year.

I have found only one broker cheaper: Degiro. But there are some issues there.

User avatar
bubbasour
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Re: Interactive Brokers (Best Kept Secret)

Post by bubbasour » Sat Nov 03, 2018 6:15 am

The Planner wrote:
Wed May 13, 2015 2:02 pm
galeno wrote:The main reason we are with IB is because it gives USA-NRAs w/o a tax treaty cheap and safe access to Ireland domiciled Vanguard and Ishares ETFs. Using them reduces our portfolio costs by 50% (0.36%).

The main disadvantage is it's a USA domiciled broker. If and when a non-USA broker available to us stops acting like the old full service brokers regarding portfolio costs, we will switch.
This. For index investors outside the US (i.e. most of the world), brokers like Saxo Capital Markets charge commissions that are 400% more expensive than IB; lack the currency flexibility; and lack the wide range of Ireland-domiciled ETFs (like VUSD) available on IB. IB is miles cheaper than any of the alternatives that European expats like me could also use. My account is over 100k USD, so I don't pay the inactivity fee.
Just to make sure we get the details right here, Saxo trades on 36 exchanges in the world and you can just as me trade VUSD VWRD etc. at LSE. You may also wanna check out their (competitive?) Pricing schemes that were launched recently. https://www.home.saxo/en-sg/accounts
NRA, Prefer VUSD (VOO) and VWRD (VT), No capital gain tax.

JackoC
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Re: Interactive Brokers (Best Kept Secret)

Post by JackoC » Sat Nov 03, 2018 9:11 am

whoever wrote:
Tue Feb 27, 2018 2:42 pm
Why would any US based buy and hold investor investing in mutual funds/etfs choose IB? I understand if one is trading futures,options,shorting and foriegn markets and utilize their low interest margin rates for leverage makes sense to go with IB.
Looking over the whole multi-year thread this has been mentioned along with other reasons, but the only reason I personally have a taxable account with IB is that I could borrow on margin against my ETF's at very competitive rates. It's standby liquidity for free, as opposed to paying fees for a HELOC, or as opposed to depositing excess cash for liquidity even at the most competitive deposit rates.

Also and related, IB's risk based portfolio margin rules mean you could typically borrow up to something like 75% of the value of the ETF's. So if you consider you'd only borrow say 25%, that would be well insulated against margin calls in all but a total meltdown of the stock market. I'm not recommending (or discouraging) leverage or debt. I'm talking about contingent liquidity. If I had those ETF's at Vanguard (where I have all my mutual funds) they would not give me any contingent liquidity, except by selling them.

I'm not disputing or endorsing whether IB is best for lots of trading of futures, options, etc. Not necessarily IME, depends on specifics, though they are not a lot worse than anyone else AFAIK. But you're saying other than that, and I think the answer is margin loan rates and portfolio margin policy, as a source of emergency liquidity, not necessarily to have net leverage.

ICH
Posts: 240
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Re: Interactive Brokers (Best Kept Secret)

Post by ICH » Sat Nov 03, 2018 12:43 pm

bubbasour wrote:
Sat Nov 03, 2018 6:15 am
The Planner wrote:
Wed May 13, 2015 2:02 pm
galeno wrote:The main reason we are with IB is because it gives USA-NRAs w/o a tax treaty cheap and safe access to Ireland domiciled Vanguard and Ishares ETFs. Using them reduces our portfolio costs by 50% (0.36%).

The main disadvantage is it's a USA domiciled broker. If and when a non-USA broker available to us stops acting like the old full service brokers regarding portfolio costs, we will switch.
This. For index investors outside the US (i.e. most of the world), brokers like Saxo Capital Markets charge commissions that are 400% more expensive than IB; lack the currency flexibility; and lack the wide range of Ireland-domiciled ETFs (like VUSD) available on IB. IB is miles cheaper than any of the alternatives that European expats like me could also use. My account is over 100k USD, so I don't pay the inactivity fee.
Just to make sure we get the details right here, Saxo trades on 36 exchanges in the world and you can just as me trade VUSD VWRD etc. at LSE. You may also wanna check out their (competitive?) Pricing schemes that were launched recently. https://www.home.saxo/en-sg/accounts
Yeah, above are valid.
For accounts below 100k USD, Saxo and IB have similar charges. For above 100k USD, IB does not charge an inactivity fee while Saxo still charges the 0.12% custody fee.
Of course, fees change.

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Re: Interactive Brokers (Best Kept Secret)

Post by hungrywave » Sun Sep 15, 2019 1:10 am

JackoC wrote:
Sat Nov 03, 2018 9:11 am
whoever wrote:
Tue Feb 27, 2018 2:42 pm
Why would any US based buy and hold investor investing in mutual funds/etfs choose IB? I understand if one is trading futures,options,shorting and foriegn markets and utilize their low interest margin rates for leverage makes sense to go with IB.
Looking over the whole multi-year thread this has been mentioned along with other reasons, but the only reason I personally have a taxable account with IB is that I could borrow on margin against my ETF's at very competitive rates. It's standby liquidity for free, as opposed to paying fees for a HELOC, or as opposed to depositing excess cash for liquidity even at the most competitive deposit rates.

Also and related, IB's risk based portfolio margin rules mean you could typically borrow up to something like 75% of the value of the ETF's. So if you consider you'd only borrow say 25%, that would be well insulated against margin calls in all but a total meltdown of the stock market. I'm not recommending (or discouraging) leverage or debt. I'm talking about contingent liquidity. If I had those ETF's at Vanguard (where I have all my mutual funds) they would not give me any contingent liquidity, except by selling them.

I'm not disputing or endorsing whether IB is best for lots of trading of futures, options, etc. Not necessarily IME, depends on specifics, though they are not a lot worse than anyone else AFAIK. But you're saying other than that, and I think the answer is margin loan rates and portfolio margin policy, as a source of emergency liquidity, not necessarily to have net leverage.
I like this perspective, JackoC! As long as one's potential emergency cash needs are small relative to their taxable, IB portfolio/net liquidation value, then relying on IB's margin loans for liquidity seems the easiest and most profitable way to go.

I have a question for the great minds on this thread: For a buy-and-hold ETF investor (my most volatile ETF is and emerging markets index) at IB, how high might IB's margin requirement get during a severe downturn? Last year, IB increased the margin requirement for Tesla to 30% but would they ever do the same for a broad-based ETF or portfolio of such ETFs? How much lower would the margin requirement be with portfolio margin for a portfolio with only broad-based ETFs and how would that change in a severe downturn?

Basically, I want to be able to maintain margin with cash flow through a 50% decline over 6 months. But, in order to know how much leverage I can have and avoid all forced selling in that scenario, I would need to assume what the margin requirement would increase to. Currently I am assuming it would rise to 40% equity but is that too high?

Thanks!
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Re: Interactive Brokers (Best Kept Secret)

Post by indexfundfan » Thu Sep 26, 2019 3:22 pm

Interactive Brokers Group, Inc. (IEX: IBKR) today announced IBKR Lite, a new offering that will provide commission-free, unlimited trades on US exchange-listed stocks and Exchange Traded Funds.

https://www.businesswire.com/news/home/ ... -IBKR-Lite

https://ibkr.com/Lite
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Re: Interactive Brokers (Best Kept Secret)

Post by DonIce » Thu Sep 26, 2019 4:50 pm

indexfundfan wrote:
Thu Sep 26, 2019 3:22 pm
Interactive Brokers Group, Inc. (IEX: IBKR) today announced IBKR Lite, a new offering that will provide commission-free, unlimited trades on US exchange-listed stocks and Exchange Traded Funds.

https://www.businesswire.com/news/home/ ... -IBKR-Lite

https://ibkr.com/Lite
Awesome! I'll be switching over to them I think!

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Re: Interactive Brokers (Best Kept Secret)

Post by abuss368 » Thu Sep 26, 2019 4:52 pm

I did not know much about them until the thread so thank you for sharing. I have seen advertisements.
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Re: Interactive Brokers (Best Kept Secret)

Post by oneleaf » Fri Sep 27, 2019 8:53 pm

IBKR Lite looks fantastic. I'd probably use them over a lot of the other comparable (free trades) platforms, since I'd have more faith that Interactive Brokers can keep this model sustainable. They have been around a long time.

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Re: Interactive Brokers (Best Kept Secret)

Post by indexfundfan » Fri Sep 27, 2019 9:17 pm

According to their website, IBKR does not charge ACAT transfer out fees.

It is one of the few not to levy such a fee, the other two notable ones being Vanguard and Fidelity.
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Re: Interactive Brokers (Best Kept Secret)

Post by AlohaJoe » Fri Sep 27, 2019 10:26 pm

indexfundfan wrote:
Fri Sep 27, 2019 9:17 pm
According to their website, IBKR does not charge ACAT transfer out fees.

It is one of the few not to levy such a fee, the other two notable ones being Vanguard and Fidelity.
Wells Fargo has never charged me an ACAT transfer out fee, either.

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Re: Interactive Brokers (Best Kept Secret)

Post by indexfundfan » Sat Sep 28, 2019 6:26 am

AlohaJoe wrote:
Fri Sep 27, 2019 10:26 pm
indexfundfan wrote:
Fri Sep 27, 2019 9:17 pm
According to their website, IBKR does not charge ACAT transfer out fees.

It is one of the few not to levy such a fee, the other two notable ones being Vanguard and Fidelity.
Wells Fargo has never charged me an ACAT transfer out fee, either.
I was trying to compare the ACAT fees for full transfers. IBKR, Vanguard and Fidelity do not charge these fees.

I did a full transfer out from Wells Fargo years ago and I was charged the fee. I think it was $75 at that time.

According to their website, Wells Fargo now charges $95. Not sure why you are not charged.

https://www.wellsfargo.com/investing/we ... e/pricing/
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Re: Interactive Brokers (Best Kept Secret)

Post by AlohaJoe » Sat Sep 28, 2019 7:31 am

indexfundfan wrote:
Sat Sep 28, 2019 6:26 am
AlohaJoe wrote:
Fri Sep 27, 2019 10:26 pm
indexfundfan wrote:
Fri Sep 27, 2019 9:17 pm
According to their website, IBKR does not charge ACAT transfer out fees.

It is one of the few not to levy such a fee, the other two notable ones being Vanguard and Fidelity.
Wells Fargo has never charged me an ACAT transfer out fee, either.
I was trying to compare the ACAT fees for full transfers. IBKR, Vanguard and Fidelity do not charge these fees.

I did a full transfer out from Wells Fargo years ago and I was charged the fee. I think it was $75 at that time.

According to their website, Wells Fargo now charges $95. Not sure why you are not charged.

https://www.wellsfargo.com/investing/we ... e/pricing/
I've only done a partial ACATS, maybe that's why?

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Re: Interactive Brokers (Best Kept Secret)

Post by oneleaf » Sat Sep 28, 2019 12:05 pm

A couple big differences between the normal IBKR platform and the Lite:
- Cash Balance Interest on the normal account is up to benchmark minus 0.5% (if you have total account NAV of $100K).
- Cash Balance Interest on the lite account is up to benchmark minus 1.5% (with same account balance requirement).
- Interactive Brokers will route the orders of IBKR Lite clients to market makers in exchange for receiving payment, whereas the standard account uses IB's SmartRouting system for professional executions.

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Re: Interactive Brokers (Best Kept Secret)

Post by SovereignInvestor » Sat Sep 28, 2019 12:09 pm

Yes the interest rates for margin and lending are lower than normal IBKR. IMO not an issue
.with commission free trades if I want the same interest rate I'd just buy short term ETF like BIL for $0 commission. It's higher yield than IB normal rate of 50bps below FFR.

If one needs margin that's a separate issue.

I have normal IBKR and it's great. Also great the new IBKR lite will have no mother minimum of $10/month for account below 100K.

Great broker. Their analytic tools on website and so powerful. I like their security features like limiting which IP addresses can access acount etc.

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Re: Interactive Brokers (Best Kept Secret)

Post by whodidntante » Sat Sep 28, 2019 12:25 pm

SovereignInvestor wrote:
Sat Sep 28, 2019 12:09 pm
Yes the interest rates for margin and lending are lower than normal IBKR. IMO not an issue
.with commission free trades if I want the same interest rate I'd just buy short term ETF like BIL for $0 commission. It's higher yield than IB normal rate of 50bps below FFR.

If one needs margin that's a separate issue.

I have normal IBKR and it's great. Also great the new IBKR lite will have no mother minimum of $10/month for account below 100K.

Great broker. Their analytic tools on website and so powerful. I like their security features like limiting which IP addresses can access acount etc.
I keep my cash at $0, so I don't really care what the core account pays. Core account rates are relevant for futures trading. I suspect that anyone trading futures will not be doing so on the light platform.

Firstrade is pretty competitive if you implement your solution for cash rates. And they allow free options trading. Although their margin rates are awful, though they have a page where they brag that their rates are better than the even more awful competition.

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Re: Interactive Brokers (Best Kept Secret)

Post by rascott » Sat Sep 28, 2019 1:25 pm

This Lite version may be ideal for my futures account, with trades only happening on the quarterly rolls

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Re: Interactive Brokers (Best Kept Secret)

Post by whoever » Sat Sep 28, 2019 1:33 pm

rascott wrote:
Sat Sep 28, 2019 1:25 pm
This Lite version may be ideal for my futures account, with trades only happening on the quarterly rolls
Free trades are only for US stocks and ETFS

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Re: Interactive Brokers (Best Kept Secret)

Post by rascott » Sat Sep 28, 2019 1:44 pm

whoever wrote:
Sat Sep 28, 2019 1:33 pm
rascott wrote:
Sat Sep 28, 2019 1:25 pm
This Lite version may be ideal for my futures account, with trades only happening on the quarterly rolls
Free trades are only for US stocks and ETFS
Understand. But the leveraged risk parity portfolio I have setup is almost entirely equity ETFs... and bond futures. This is the only futures broker where I can have free trades for the equity side when I need to rebalance the portfolio.

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Re: Interactive Brokers (Best Kept Secret)

Post by MinhN » Sat Sep 28, 2019 2:25 pm

IBKR Lite's announcement is huge news. I will move my funds from Fidelity now. Having the ability to trade equities for free and options and futures cheaply is unprecedented. This news is really going to hurt other brokerages now.

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Re: Interactive Brokers (Best Kept Secret)

Post by rascott » Sat Sep 28, 2019 2:43 pm

MinhN wrote:
Sat Sep 28, 2019 2:25 pm
IBKR Lite's announcement is huge news. I will move my funds from Fidelity now. Having the ability to trade equities for free and options and futures cheaply is unprecedented. This news is really going to hurt other brokerages now.
TDA shares were slammed when this news came out.

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Re: Interactive Brokers (Best Kept Secret)

Post by saver007 » Sat Sep 28, 2019 6:39 pm

IBKR lite plus their stock yield enhancement program (security lending program) is essentially like paying negative brokerage commission.

You can get paid for holding stocks/ETFs with SYEP program and pay no commission for trading.

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Re: Interactive Brokers (Best Kept Secret)

Post by RandomWord » Sat Sep 28, 2019 7:22 pm

saver007 wrote:
Tue Feb 27, 2018 10:51 pm


IB execution quality ( which probably matters more than commission but hard to measure) is said to be better than any other retail brokers. IB is connected to more liquidity pools and use smart order routing system meaning better chance of orders getting executed at favorable price. IB publishes a statistics saying their all in cost for executing is 3 or 4 basis points of trade value when comparing it against trade based on days volume weighted average price. Point is every single basis point matters...

So with this new IB Lite, you get free commissions but you won't get the superior execution quality. It would be nice if there was more data on how much that actually matters. It might actually be better to pay the small commission if it can get you a price that's 3 or 4 basis points better on each trade.

saver007
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Re: Interactive Brokers (Best Kept Secret)

Post by saver007 » Sat Sep 28, 2019 8:23 pm

Yep execution quality will definitely suffer but no one knows by how much.
It's good that IB gave a choice to clients; either get free trade for inferior executions or pay commission for superior executions. Sounds fair.
I will stick with commission model (pro) but some one with less than 100k equity, it has some merit as it will avoid their $10 monthly inactivity fee.

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Re: Interactive Brokers (Best Kept Secret)

Post by AndroAsc » Sat Sep 28, 2019 10:29 pm

I'm trying to understand this margin loan thing from a few posts back. Is it possible to use it as an emergency fund? Is the loan callable?

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