Interactive Brokers has lengthy been a well-liked dealer for superior merchants, however in 2019 the corporate launched a second tier of service — IBKR Lite — for extra informal traders.
With IBKR Lite, you get limitless free trades of shares and exchange-traded funds which might be listed on U.S. exchanges. Should you’re desirous about buying and selling different investments, together with choices, futures, mutual funds, fastened earnings and extra, you are able to do that on 135 exchanges in 33 international locations with a Lite account, however the buying and selling prices would be the identical as what IBKR Professional traders pay.
Because the title implies, IBKR Professional is geared towards superior merchants. If that is you, you will in all probability just like the dealer’s per-share pricing of $0.005 per share (the minimal is $1), superior buying and selling platform, unmatched vary of tradable securities — together with international shares — and ridiculously low margin charges.
Each tiers of service have a $Zero account minimal and provide fractional shares of inventory. IBKR Lite has no account upkeep or inactivity charges. IBKR Professional expenses an inactivity payment, although it is attainable to skirt that if you happen to commerce comparatively continuously.
Interactive Brokers is greatest for:
Informal and superior merchants.
Interactive Brokers at a look
• IBKR Lite: Limitless free trades on U.S.-listed shares and ETFs.
• IBKR Professional: $0.005 per share; minimal $1 and most 1% of commerce worth; quantity low cost out there.
IBKR Lite and IBKR Professional: No base fee; 65 cents per contract with $1 minimal. Quantity low cost out there.
Account charges (annual, switch, closing, inactivity)
• IBKR Professional: Accounts with lower than $100,000 pay $10/month minus any commerce commissions; accounts with lower than $2,000 pay $20/month minus commissions.
Variety of commission-free ETFs
• IBKR Lite: Limitless commission-free trades on all out there ETFs.
• IBKR Professional: 96 commission-free ETFs.
Variety of no-transaction-fee mutual funds
Over 8,300 no-transaction-fee mutual funds.
IBKR Lite and IBKR Professional prospects get entry to Consumer Portal buying and selling platform and highly effective Dealer Workstation platform.
Superior options mimic the desktop app.
In depth analysis choices, each free and subscription-based.
Buyer help choices (consists of web site transparency)
24-hour telephone, e mail and chat help, out there six days per week.
The place Interactive Brokers shines
Low commissions: Should you’re an informal investor, it’s laborious to beat the free trades you will take pleasure in with IBKR Lite. However even superior merchants who go for IBKR Professional will just like the low inventory and ETF fee construction at Interactive Brokers, which favors frequent, high-volume merchants at simply $0.005 per share. There’s a $1 minimal commerce fee and a most of 1% of the full commerce worth, and trade and regulatory charges are included. The dealer additionally affords tiered pricing to decrease charges much more: Traders who commerce greater than 300,000 shares a month pays $0.002 or much less per share, relying on commerce quantity, though trade and regulatory charges are further on this plan. Charges can go even decrease for really high-volume merchants.
Choices buying and selling, too, is obtainable at aggressive pricing, for each Professional and Lite prospects, with a 65 cent cost per contract and no base, plus reductions for bigger volumes. The minimal choices commerce fee is $1 per order.
Margin charges: Margin merchants may also profit from the low charges at Interactive Brokers. For IBKR Professional prospects, the utmost margin price is the benchmark price plus 1.5% — and NerdWallet customers get an additional 0.25 proportion level low cost. For IBKR Lite, it is the benchmark price plus 2.5%. These charges apply on balances as much as $100,000; the charges drop at larger balances. The dealer expenses a blended price based mostly on the scale of the margin mortgage, and has a calculator on its web site to assist traders rapidly do the mathematics based mostly on their steadiness.
Interactive Brokers additionally affords an built-in money administration characteristic, which permits traders to borrow towards their accounts with a debit Mastercard, additionally at low rates of interest.
Fractional shares: The flexibility to buy a portion of an organization’s inventory, quite than a full-priced share, makes it simpler to put money into corporations which have lofty share costs. That, in flip, makes it simpler to take care of a diversified portfolio, particularly for traders with smaller accounts. For instance, quite than paying greater than $575 for one share of Tesla inventory, you’ll be able to divvy up that cash amongst completely different corporations.
Buying and selling platform: The informal merchants who discover IBKR Lite interesting will discover the Consumer Portal platform enough for his or her buying and selling wants. However each IBKR Lite and IBKR Professional merchants looking for one thing extra highly effective can now take pleasure in entry to Interactive Brokers’ Desktop Dealer Workstation, which is taken into account probably the greatest buying and selling platforms out there for superior merchants.
The platform is quick and consists of normal options comparable to real-time monitoring, alerts, watchlists and a customizable account dashboard. An choices technique lab helps you to create and submit each easy and sophisticated multileg choices orders and evaluate as much as 5 choices methods at one time.
Different instruments embrace a volatility lab, superior charting, warmth maps of sector and inventory image efficiency, paper buying and selling and a mutual fund replicator, which helps customers determine ETFs that replicate the efficiency of a specific mutual fund however provide decrease charges. InteractiveBroker’s For You notifications provide custom-made alerts about occasions that would have an effect on a dealer’s investments.
Value noting: One other dealer we assessment, Zacks Commerce, affords its prospects entry to white-labeled variations of Dealer Workstation. Zacks Commerce expenses larger commerce commissions, however affords shoppers free calls with help reps, who’re licensed brokers. It is an choice value contemplating for merchants who need the ability of Interactive Brokers’ buying and selling platforms alongside a bit extra private help.
Socially accountable investing: For traders seeking to commerce with a conscience, Interactive Brokers just lately unveiled its Impression Dashboard, free to all customers on Dealer Workstation, the Consumer Portal or cell apps. The dashboard permits traders to pick out their private funding standards from 13 rules (together with clear air and water, LGBTQ inclusion and gender equality). Traders also can exclude investments based mostly on 10 classes, comparable to animal testing, company political spending and lobbying, and dangerous waste manufacturing.
Cell app: The IBKR cell app, out there to each Lite and Professional prospects, is Dealer Workstation on the go, with superior buying and selling shortcuts, over 400 information columns, choice train and unfold templates, information, analysis, charting and scanners. Customers can create order presets, which prefill order tickets for quick entry. Presets arrange on Dealer Workstation are additionally out there from the cell app.
Analysis: Interactive Brokers offers entry to an enormous collection of analysis suppliers and information companies, many totally free, together with Fundamentals Explorer, which affords fundamentals information from Thomson Reuters on over 30,000 corporations, plus greater than 5,500 analyst scores, and studies and newswires from 82 corporations. Different analysis suppliers out there to all shoppers embrace Zacks Funding Analysis, Morningstar Fairness Possession, Market Realist, 24/7 Wall Avenue and Looking for Alpha. Over 100 extra suppliers are additionally out there by subscription.
Funding choice: Interactive Brokers affords one thing for everybody right here: Superior merchants will love the large collection of merchandise, from normal choices of shares, choices and ETFs to treasured metals, foreign exchange, warrants and futures. The retirement-investor set might be proud of the dealer’s spectacular record of no-transaction-fee mutual funds — over 8,300 in all — and respectable collection of 96 commission-free ETFs (and Lite prospects get to commerce all U.S.-listed ETFs commission-free).
Interactive Brokers additionally has a robo-advisor providing, Interactive Advisors, which expenses administration charges starting from 0.08% to 1.5%. The service affords about 80 portfolio choices, and 36 of these portfolios require simply $100 to get began. (The administration charges and account minimums differ by portfolio.)
Open to worldwide traders: Whereas many brokerages are solely open to U.S. traders, Interactive Brokers is accessible to traders in 218 international locations and territories. As famous above, Interactive brokers opens the door to investing on 135 exchanges in 33 international locations, and lets shoppers fund and commerce accounts in 23 currencies.
The place Interactive Brokers falls quick
Interactive Brokers’ shortcomings are primarily as a result of firm’s deal with superior merchants:
Inactivity charges: Interactive Brokers caters to energetic merchants, and that focus reveals up in its inactivity charges for IBKR Professional prospects. Accounts with balances of $100,000 or much less should meet a minimal of $10 a month in commerce commissions, or Interactive Brokers will cost the distinction as a month-to-month payment. Accounts with an fairness steadiness of $2,000 or much less should meet minimal commerce commissions of $20. IBKR Lite does not cost inactivity charges.
There’s a break right here for shoppers 25 or youthful, who’ve a minimal month-to-month commerce fee of simply $3.
Web site ease-of-use: Interactive Brokers offers a substantial amount of info on its web site, however discovering and deciphering the data you need is not all the time simple. For IBKR Professional prospects, the assorted fee and payment constructions could make it laborious to rapidly determine what your prices might be. Parts of the web site are devoted to institutional, dealer and proprietary buying and selling accounts, and that may be complicated.
Is Interactive Brokers best for you?
Interactive Brokers has all the time been a fantastic alternative for energetic merchants, particularly those that can transfer into the dealer’s cheaper volume-pricing setup. Now, with the supply of free trades with IBKR Lite, even informal merchants may discover Interactive Brokers a robust contender. However newbie traders may favor a dealer that provides a bit extra hand-holding and academic assets.
Arielle O’Shea contributed to this assessment.