Interactive Brokers (Best Kept Secret)

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Rainier
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Joined: Thu Jun 14, 2012 5:59 am

Re: Interactive Brokers (Best Kept Secret)

Post by Rainier »

Hope some IB users can help. I just transferred some securities to IB from Fidelity.

When does cost basis get transferred for covered lots? The shares came over but the basis is still missing. What about uncovered lots? Will that get transferred? If not, can I manually enter?

Also, what is the best way to link my account to Fidelity for cash transfers? On the IB side or the Fidelity side and by what method?
muffins14
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Location: New York

Re: Interactive Brokers (Best Kept Secret)

Post by muffins14 »

For me the cost basis took a couple of days.

Actually that reminds me of another thing I liked more at Fidelity — it was easier to see that specific lots were at a loss and I should TLH. At IBKR, you have to go to the tax optimizer, note the current price, then subtract your basis. No automatic color coding or gain/loss calculation etc per lot.

For transfers, I just set up my Fidelity account via ACH inside IB. No complaints about that, but as I wrote earlier, it seems I can’t withdraw it for 60 days, which seems excessive to me
Last edited by muffins14 on Thu Aug 04, 2022 6:34 pm, edited 1 time in total.
35% VTI, 25% AVUV, 15% IXUS, 15% AVDV, 10% VWO
Startled Cat
Posts: 576
Joined: Thu Apr 03, 2008 8:54 pm

Re: Interactive Brokers (Best Kept Secret)

Post by Startled Cat »

muffins14 wrote: Thu Aug 04, 2022 7:33 am Actually that reminds me of another thing I liked more at Fidelity — it was easier to see that specific lots were at a loss and I should TLH. At IBKR, you have to go to the tax optimizer, note cue current price, then subtract your basis. No automatic color coding or gain/loss calculation etc per lot.
I find this extremely annoying. I can't imagine what IBKR's designers are thinking.
comeinvest
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Joined: Mon Mar 12, 2012 6:57 pm

Re: Interactive Brokers (Best Kept Secret)

Post by comeinvest »

Startled Cat wrote: Thu Aug 04, 2022 5:33 pm
muffins14 wrote: Thu Aug 04, 2022 7:33 am Actually that reminds me of another thing I liked more at Fidelity — it was easier to see that specific lots were at a loss and I should TLH. At IBKR, you have to go to the tax optimizer, note cue current price, then subtract your basis. No automatic color coding or gain/loss calculation etc per lot.
I find this extremely annoying. I can't imagine what IBKR's designers are thinking.
I agree there are a number of things to be improved at IB, this is just one of them. The tax optimizer is an awkwardly implemented afterthought, probably programmed by someone in a rush with little to no oversight, that doesn't really integrate with the platform neither functionally nor visually. Overall however IB has unique markets and features that none of the other U.S. brokers offer, and I find TWS is a unique tool for those who like the concept of a spreadsheet-like portfolio management and trading platform.
Kenneth Almquist
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Re: Interactive Brokers (Best Kept Secret)

Post by Kenneth Almquist »

muffins14 wrote: Tue Aug 02, 2022 6:55 am And maybe another thing is that fidelity doesn’t put a 60-day hold on incoming money from direct deposits. I could see this being annoying and forcing me to go on margin for things like rent payments, because I usually only hold about 5-10k cash. At fidelity I can spend the cash as soon as it arrives from my paycheck.
If you have, say, $100,000 of VTI at Interactive Brokers, you can deposit $10,000 and withdraw it the same day. This will show up in your account as a -$10,000 cash balance and $10,000 funds on hold. The margin limits apply to the cash balance, which is why you need marginable securities (like VTI in this example) in your account for this to work. You aren't charged any margin interest because margin interest is based on the total cash in the account, including funds on hold.

So the fund holds at Interactive Brokers aren't really an issue if the amount of money you are moving around is small compared to the size of the portfolio you have there. It can be an issue when you are first setting up an account or closing one.
Count of Notre Dame
Posts: 410
Joined: Fri Oct 11, 2013 1:08 pm

Re: Interactive Brokers (Best Kept Secret)

Post by Count of Notre Dame »

Rob Bertram wrote: Wed Aug 04, 2021 11:43 am
Nathan Drake wrote: Wed Aug 04, 2021 10:35 am Do you have a strategy for using leverage to invest and how to pay off the loan?

I.e., only 10-20% leverage…only make interest payments as long as they are low…but pay off the loan once your investments return some satisfactory amount?

That’s my biggest hesitation with leverage, how to time moves…
There are a few strategies involving leverage that have been discussed on the forum. Most of them target a specific leverage ratio (e.g., 10%, 20%, or 50% -- based on your risk tolerance). This means that every dollar that you deposit, then you also borrow additional funds on margin in order to keep to that target ratio. When the portfolio appreciates and therefore reduces the ratio of portfolio / debt, then the strategy has you buy more assets to return to your target level. When the market drops which drives up the leverage, the better strategies have you stay the course so that you are not selling assets while they are low.

It goes without saying that many forum members have strong opinions around debt and borrowing in general. It can be abused, so be very aware of the risks that you are assuming.

Here is one example of my discussion on a leveraged portfolio: viewtopic.php?f=10&t=143037

My strategy has a target leverage during the accumulation phase (e.g., 100% leverage) that tapers down to a maintenance level (e.g., 40% leverage) that can support a sustained withdrawal model. During the withdrawal phase, you do not sell assets. Instead, borrow more. Your portfolio should be sufficiently large that withdrawals are extremely small relative to the portfolio value. So to answer your last question, there is no reason to "time your move" as it is a buy and hold strategy. The target holding period is forever.
I have the same plan as well, that is to never sell any securities and just margin a small percentage of the gains in my portfolio as tax-free spending. While in the asset accumulation stage, I run my margin at 2x. Assuming a 50% decrease in my portfolio's value and 20% maintenance margin, I maintain an emergency fund with a HELOC that is 10% of the total value of my portfolio. This is how much cash I'd have to plunk into the account to avoid a margin call. As my brokerage grows beyond my ability to borrow against my home and other lines of credit, my plan is to start buying a bond ETF to lower the future expected volatility of my portfolio and thus the risk of a margin call. I foresee ending up at a more balanced 60/40 equities to fixed income asset allocation at my end state, starting at 100% equities. What is your asset allocation?
Count of Notre Dame
Posts: 410
Joined: Fri Oct 11, 2013 1:08 pm

Re: Interactive Brokers (Best Kept Secret)

Post by Count of Notre Dame »

muffins14 wrote: Tue Aug 02, 2022 7:30 am
comeinvest wrote: Tue Aug 02, 2022 7:18 am
You must have had lots of TLH to incur $650 in commissions. If you used market orders, you might have saved a lot with limit orders, which have only a fraction of the cost.
There is also IB Lite which also has no commissions.
But if you use box spreads diligently, use no futures etc. that can often lead to negative cash balances, and don't use any of the products (e.g. international equities) that IB has but most other brokers don't, and if you are approved for portfolio margin at Fidelity as well as for the level of options trading that you need for box spreads, then Fidelity (or Schwab) are the way to go.

What do you mean with "Fidelity came within 0.37% on margin" - 0.37% higher than IB? How did you achieve that?
I did limit orders, but even at $0.005 per share, 3000 shares is $15. I was doing TLH on like 700k-800k of VXUS/VTI/ITOT/IXUS at a time.

I was at 2.58% margin at IB, and fidelity was willing to do 2.95%. It’s a discount off their benchmark, so will still float like IB floats. When I tried to negotiate it while at fidelity they offered like 6-7%, in Jan 2022, I said no thanks and left for IB, but when I offered to bring assets back to fidelity on the condition they try to match the margin rate, this is what I got.
What is the maintenance margin at Fidelity? Right now VTI only has a ~10% requirement. How often does Fidelity change these thresholds?
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