The Financial Crisis of 2008 was the most costly market disaster since the Great Depression, and it had a devastating effect on financial markets and institutions worldwide. The crisis exposed flaws in the regulation of derivatives and the breakdown of the global banking system.
Interactive Brokers Review For 2021 – Interactive Brokers is a type of online brokerage firm that offers trading in stocks, options, and futures. Its motto is “Bringing the power of trading to the masses.” Interactive Brokers Review For 2021 – Interactive Brokers is a premier online brokerage firm. It is one of the few companies that offers an e-trading platform with integrated trading tools. This online brokerage firm offers low-cost trading services.(Disclosure: some of the links below may be affiliate links).
Updated July 2021: No more inactivity costs!
Interactive Brokers (IB) is an excellent stockbroker. I have been using their services for about two years now. It’s time to give my honest opinion on Interactive Brokers.
In this overview you will find everything you need to know about Interactive Brokers, what you can do with IB, how much IB will cost you and much more!
At the end of this review, you will know if IB is a good broker for you or not!
The best broker for Swiss investors
Interactive Brokers is an excellent stockbroker with extremely low commissions! Trade in US securities for as little as USD 0.5!
Interactive Brokers (IB) is a brokerage firm (broker) based in the United States. The IB was founded in 1978.
Today, Interactive Brokers is a major brokerage firm. It is the largest trading platform in the United States. IB is also a profitable company, with annual revenues of over $1 billion. The IB has more than 1,500 employees worldwide.
IB provides access to shares, bonds, options, futures and other financial instruments on the world’s leading stock exchange. You have access to all the investment tools you will ever need.
So let’s see what the IB has to offer as a broker.
Interactive Brokers offers two types of accounts.
The default account type is the cash account. With this account you can only trade with the money you have in your account. This is the type of account I use that suits most people.
The other type of account is a margin account. You can trade on margin with this account. This means you can buy stocks with money you don’t have. In this way, the IB lends you money to trade on the stock exchange. And you pay interest on the money lent to you. As a general rule, you have a certain margin around the edge. For example, if you have 10,000 euros in cash and a margin of 4:1, you have 40,000 euros.
For most people, a cash account is the best choice. If you don’t know what margin is, you shouldn’t think about opening a margin account. If you don’t know what you’re doing, you could lose a lot of money. On the other hand, if you know what you are doing and want to use leverage, you can opt for a margin account.
In the long run, you need to reduce your costs. Investment costs make a big difference.
Interactive Brokers has two commission systems:
- A fixed remuneration system
- A system of staggered payments
The system of fixed fees is simple. You pay a fixed amount for each exchange. For example, you pay 0.10% on transactions on the Swiss exchange (with a minimum amount of CHF 10).
The system of staggered payments is much more complex. You pay all individual costs, such as B. Clearing costs, transaction reporting costs and transaction fees. And the rules are different for each exchange.
Many people are put off by the complexity of the tiered payment system. But for normal investors, a tiered system is often much more beneficial. In all the calculations I’ve done, the installment system has always been cheaper than the fixed system. So if you want the lowest possible rates , you should opt for the multi-layer system.
I won’t go into detail about all of Interactive Brokers’ commissions, as they are very complex. But in general, IB tuition fees are very low. For example, here is a comparison I made for the best real estate agents in Switzerland:
Interactive Brokers is significantly cheaper than other brokers.
Compared to other brokers available in Switzerland, we find Interactive Brokers’ commission excellent. If you trade a few times a month, your commissions will be very low!
Fortunately, IBnet charges for storage and inactivity!
This is a big advantage for IB over most other brokers. Not only do they have great rates, but the lack of custodial fees is incredible!
Opening an account at Interactive Brokers is not difficult, but it does take some time. The process raises many questions and involves many steps.
Firstly, general information about you is requested (name, address, etc.). You also need to choose the type of account you want. This selection is very important. In this step you also select the base currency of your account.
The second step in the process is to provide financial information. The IB will ask you how much money you have and what experience you have with the IB. And you need to choose the instruments you want to invest in. Don’t worry too much, you can register new units later.
In the next step, you must agree to the terms and conditions of Interactive Brokers. I recommend you at least take a look. You will then be asked to prove your identity and provide some additional tax information.
Finally, you can simply top up your account to complete the order. While it’s not the easiest process, I don’t find it too difficult.
If you would like more information on this process, I have provided a guide on how to create an account with Interactive Brokers.
It is interesting to note that the IB has different user interfaces:
- Standard web application
- Mobile application (IBKR Mobile)
- WebTrader Interface
- Trading Workstation (TWS) desktop application
So there should be an interface for everyone!
You can do most things from all interfaces. For example, you can trade stocks through one of these interfaces. The problem with the IB is that many people talk about the TWS interface. Many newcomers therefore feel obliged to make use of it. But the TWS interface is by far the most complex of these interfaces.
I have never used the TWS application for trading. It’s just too complicated for most investors. If you are a simple investor and you invest in ETFs, all you need is an account management interface. If you prefer to use a phone, you can also use IBKR’s mobile application to trade.
Interactive Brokers – Trade from Account Management
Starting with account management, you can negotiate anything you want. You can also transfer money to and from your account. All of these processes are relatively simple.
You can top up your account for free by bank transfer. You must first declare your bank account with IB and then you can make a deposit. Recordings are done the same way. You can only send money to accounts in your name. I have never had any problems with deposits or withdrawals.
If you need more information, I have a guide on how to fund your IB account and trade ETFs.
You want your broker to be reliable when you invest a large sum of money. So let’s look at the safety and reliability of the IB.
First, we can look at the regulations. Interactive Brokers has seven different legal entities, depending on the country of the client. For example, Interactive Brokers LLC operates in the United States and Interactive Brokers (U.K.) Limited operates for European clients.
Each of these organizations is regulated. For example, a US company is regulated by the Securities and Exchange Commission (SEC) and a UK company by the Financial Conduct Authority (FCA). Thus, in general, IB is very well regulated.
Moreover, protection in the event of bankruptcy is crucial. Again, your protection in IB depends on where you live. ISDR will protect American investors. SIPC protects your assets up to $500,000. ISDS, on the other hand, only protects your money up to $250,000.
For European investors, things are a little more complicated. Your protection depends on what you negotiate. For Forex, CFDs and non-US options and futures, you are protected by the FCA up to £85,000. For stocks, bonds, mutual funds and US options, you are protected by the SIPC up to $500,000 (cash is only protected up to $250,000).
Again, you have good insolvency protection at Interactive Brokers.
If you want to know more, I’m devoting an entire article to brokerage bankruptcies.
Finally, technical security is also very important.
With Interactive Brokers, you have solid technical protection. All communication with the server is encrypted. But all honest brokers use encrypted traffic.
Most importantly, you can use two-factor authentication for your account. You can use the IBKR Mobile App for this purpose. Each time you log in through the web interface, you must confirm your connection and enter another code on your phone. This second factor ensures a high level of security for your account.
So Interactive Brokers has excellentsecurity!
I started investing at Interactive Brokers when DEGIRO suddenly blocked access to US ETFs for Swiss investors. Since then I have been extremely satisfied with the cooperation with Interactive Brokers.
My entire share portfolio is in my IB account. I buy new ETF units every month through the standard web interface. I also tried other interfaces. The IBKR mobile application is very well done. But in general, I’d rather use a desktop computer than a phone.
Interactive Brokers Account Management Interface
I do everything through the account management interface. This interface meets all my requirements. Over time, I learned to ignore most of the features of this tool. I just need some features for trading. And the IB is exactly what I need.
Since I sometimes receive my salary in US dollars, I can transfer them directly to my account at Interactive Brokers. This way I don’t have to pay any exchange fees. And then I can invest the money directly.
Since I have reached the 100,000 threshold in my account, I pay only minimal commissions. I wish I had started with Interactive Brokers right away. Serious people don’t have to worry about the $10 per month storage fee. In the long run, these costs will be negligible.
Overall, I am satisfied with my experience with the IB. I’ve never had a problem with a realtor. All my transfers came very quickly to the IB. When I had to withdraw money for a deposit, I had no problems either. And all my transactions have been flawless. The web interface reports are exactly what I need. I can only recommend the IB!
Before you use a broker to invest in the stock market, you need to know their reputation.
I always use TrustPilot as a source of information. Let’s take a look at the IB reviews on TrustPilot. Users give the IB an average of 3.3 stars. Before I saw it, I was expecting a higher score. So let’s see what people are complaining about.
First, let’s look at what people don’t like about the IB. Most of the negative comments fall into two categories:
- Poor user interfaces. The IS user interfaces take some time to get used to. But after a while it becomes easy to use.
- Bad customer service. Many people seem to have difficulty getting help from the helpdesk. I can’t comment on this as I have never used their support service. But I know people in Switzerland who have done this and never had a problem.
Overall, I don’t mind these negative comments. Many of them don’t seem to be serious. And many of them look like people who are angry about the platform’s mistakes. But of course it would be better if there were fewer negative reviews.
The good news is that the majority of reviews (39%) are five stars. So let’s see what the positive reviews say:
- Excellent customer service. It is interesting to note that there are both negative and positive reviews about IB’s customer service.
- Excellent payment system
- Excellent order processing
- Good platforms
We can therefore conclude that the comments on the IB are generally mixed. I think it’s because it takes time to get used to. Once you get used to it and focus only on what you need, it will be very easy to use IB.
Let’s summarize the main advantages of Interactive Brokers:
- A wide range of investments
- Very low costs
- No custody or intervention fees
- Very professional service
- US ETFs on offer for Swiss investors
- Good general reputation
- Number of years of experience
- Excellent safety
Let’s list the main shortcomings of Interactive Brokers:
- This can be daunting at first
- Too many user interfaces
- Customer service has a bad reputation
DEGIRO is another interesting alternative for European investors. It is therefore interesting to compare the two brokers.
The first major difference between the two brokers is that only Interactive Brokers offers Swiss investors access to US ETFs. This means that if you invest in DEGIRO, you have to invest in European funds of lower quality. This will have a significant impact on your portfolio returns. This difference alone makes IB a much better choice for Swiss investors than DEGIRO.
But we can also look at the commissions of the two brokers. There are several differences between DEGIRO and IB:
- IB is much more favourable for the US stock market
- DEGIRO slightly more favourable to European equity market
- IB is much cheaper for foreign currencies (FOREX)
There are also some differences when it comes to performance. IB is also a FOREX broker, so you can hold many currencies on your account. And the exchange is cheap. DEGIRO, on the other hand, offers automatic currency exchange on purchases and sales, but it is significantly more expensive than IB (unless you are doing small conversions).
In terms of the user interface, DEGIRO is a little easier to use than IB. The IB, on the other hand, offers many more possibilities. But ordinary investors probably won’t need many of these features.
In addition, there is another difference in equity financing. DEGIRO will make your shares available to other investors by default. If you don’t want that, you have to opt for a deposit account, but then you pay a commission on the dividend. On the other hand, the IB will not lend out your shares by default. But with the IB you can do this and the IB will give you a part of the profit. I think the IB approach is much better because your shares are not loaned out by default.
After all, IB was founded back in 1978, while DEGIRO has only been offering brokerage accounts for retail investors since 2013. The IB therefore has a broader experience.
So overall, Interactive Brokers is a much better broker than DEGIRO. If you are Swiss, you have access to US ETFs. And you get excellent service at very reasonable prices.
If you want to know more, I suggest two comparative articles:
The best broker for Swiss investors
Interactive Brokers is an excellent stockbroker with extremely low commissions! Trade in US securities for as little as USD 0.5!
Overall, Interactive Brokers is an excellent stockbroker. Their rates are incredible and their service is first class. If you want a professional broker at a very fair price, Interactive Brokers should be your choice.
Since they always offer US ETFs to Swiss investors, Interactive Brokers is currently the best broker for Swissinvestors. If you want to optimize your portfolio, no other broker comes even close.
I have been using Interactive Brokers for over two years now. I am happy with the IB and will be using it for a long time to come. IB is the broker I currently recommend to Swiss investors. It is also an excellent choice for European investors.
If you are interested in IB, I have a guide on how to open an IB account.
What about you? What do you think of Interactive Brokers?
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Mr. Poor Switzerland is the author of thepoorswiss.com. In 2017, he realized he had fallen into the trap of lifestyle inflation. He decided to reduce his expenses and increase his income. This blog tells the story and the conclusions. In 2019, he will save more than 50% of his income. He has set himself the goal of becoming financially independent. Here you can send a message to Mr. Send Bad Swiss.
Frequently Asked Questions
Is Interactive Brokers trustworthy?
The answer is yes. Interactive Brokers has a long history of providing reliable trading services to its customers.
Is Interactive Brokers good for futures trading?
Yes, Interactive Brokers is a good place to trade futures.
Is Ibkr good for beginners?
Ibkr is a great place for beginners to start their journey into the world of cryptocurrency. It has a low entry point and is easy to use.
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