Barron ranked Interactive Brokers the Best Online Broker in 2020 - a designation sure to pique our interest in this entry in the crowded world of digital trading platforms.
Offering access to global markets, a wealth of tools, multiple investment choices, and low commission fees, Interactive Brokers - the company likes to refer to itself with its stock symbol, IBKR - seems to be an excellent fit for advanced traders.
But with so many big online brokers tempting investors with sophisticated features and trading tools, jaw-dropping educational resources, commission-free trading, and more, does IBKR live up to the hype?
Our Interactive Brokers review reveals what IBKR has (and doesn’t have) to offer.
Broker-Assisted Trades Fee: $30
- International trading
- Advanced trading tools
- Low commissions starting at $0
- More than 37,000 mutual funds
- $0 account minimum
- Website is difficult to navigate
- Steep inactivity fees
- Limited cryptocurrency trading
- Lackluster customer service
Interactive Brokers Overview
Founded in 1977, Interactive Brokers is an old-school company that offers brokerage services and is headquartered in Greenwich, Connecticut. Enthusiasts who set out on an individual journey to review Interactive Brokers will find that it’s best known for its broad market access.
The Interactive Brokers trading platform has access to more than 135 markets in 33 countries. Traders are welcome to invest in options, futures, mutual funds, bonds, Forex, currencies, stocks, and exchange-traded funds.
Investing in companies whose shares users could probably not afford on their own is enabled with fractional shares. With such an abundance of options, Interactive Brokers is perfectly capable of competing with modern fintech giants and other brokers.
The Interactive Brokers’ motto is: Minimize costs and maximize returns. While the company does make a point with its commission-free trades and $0 account minimums, this won’t make it stand out among other online brokers. Why not? Simply because most large brokers have the same offer.
Interactive Brokers reviews show that the firm went from being one of the lowest-cost brokers to relatively high trading fees for Pro users. And IBKR is heavily geared toward professional traders.
As for safety, certain rough edges might ward off new users. Interactive Brokers was fined in 2020 for money-laundering breaches when it failed to file required suspicious activity reports. However, the BBB rating of A- and licenses from top-tier regulators are convincing evidence that your money is safe with IBKR.
How Interactive Brokers Compares to Other Platforms
Interactive Brokers Features
In a zero-commission environment like Interactive Brokers, investors might understandably ask themselves what the catch is. Well, the company is heavily-oriented toward experienced, advanced traders who trade securities frequently.
Sophisticated investors, both individual and institutional, will benefit from a wealth of tools designed for advanced trading. On top of that, they can exploit numerous market analyses and educational platforms.
Those who prefer to trade in global markets will be quite satisfied with the company’s access to more than 135 exchanges in 33 countries.
However, before you log in to the Interactive Brokers platform, review not only its prices but its services. We wouldn’t recommend the venue to amateur investors. Although Interactive Brokers tries to tailor its features toward casual traders, these options’ complexity still wards new investors off.
There are four platforms:
- Client Portal: User-friendly web application, easy-to-use, displays all the necessary information and tools
- Trader Workstation (TWS): Designed for active traders and investors; quite challenging to navigate
- IBKR Mobile: Available both for iOS and Android, more user-friendly than its desktop counterpart
- IBKR APIs: Documentation and communication protocols that allow software developers to bridge Interactive Brokers’ servers and custom software applications
Among the four, the Client Portal is probably the best choice for amateurs and new investors.
IBKR Lite is a trading plan specially designed for up-and-coming investors, as it tries to make things less intimidating for them.
However, even though Interactive Brokers aims to open up to the mass market by providing educational material and introducing user-friendly features, it still favors active users.
In a nutshell - opt for Interactive Brokers once you’re ready to take your investing to the next level.
Interactive Brokers Application Process
Opening an account is possible in almost every country, and it won’t cost you a cent. Interactive Brokers’ account minimum is $0, and there’s no deposit minimum if you don’t intend to trade on margins or make short sales. If you do, you’ll need to deposit at least $2,000.
The process of opening an account with Interactive Brokers is quite complicated and time-consuming. Once you create your account following a five-step registration procedure, verification will take two days.
During setup, you’ll be directed to submit personal information and answer questions about your previous trading experience. After that, you’ll be asked to verify your identity and residency by uploading documents. You needn’t feel uneasy - it’s a standard procedure.
After Interactive Brokers reviews your data, you’ll get access to a wide array of account options, both individual and institutional.
Once you’re all set with your IBKR login, you can choose between cash, margin, and portfolio accounts and pick a plan that best suits your needs. We’ve listed them for your convenience.
- Individual - an account owned by a single person
- Joint - an account shared by two users
- UGMA/UTMA - a custodial account for minors
- IRA - a retirement account
- Trust Account - an account held by a trustee
- Friends and Family - for up to 15 members
- Family Office - for a family office manager
- Small Business - for small corporations
- Advisor - for a client’s manager
- Money Manager - for a client hired by another advisor
Interactive Brokers Fees and Plans
Are you a professional or an amateur investor? The Interactive Brokers trading platform has brokerage plans for both: IBKR Pro and IBKR Lite. Both provide access to the Client Portal, IBKR Mobile, and Trader Workstation platforms. Let’s compare the two plans:
- IBKR Pro offers top-notch features and sophisticated tools for experienced investors who regularly buy and sell securities, with access to IBKR Web Trader and APIs.
The maintenance fee is $10 per month, or $0 if you generate $10 or more in commissions. The plan gives you access to three trading hours before markets open and lets you use software like the Interactive Brokers SmartRouting system.
IBKR Pro users can access 98 commission-free ETFs. They pay $0.0005 to $0.0035 per share in commissions.
- Interactive Brokers Lite is not that different from its big brother. The plan was introduced in 2019 as the company’s way to attract up-and-coming investors. This plan lets amateurs trade stocks and ETFs commission-free.
The company raises the bar high when it comes to educational materials. What you’ll get for free are numerous videos to lead you through the investment process and get you prepared for the fintech world. The newly launched robo-advisor is an asset, too.
There are no inactivity fees, which is important for passive investors. Another benefit in favor of hassle-free trade is low-cost access to the global market. Search no more; you’ll get an all-in-one experience for low prices.
Interactive Brokers commissions can be free, fixed, or tiered. The company offers low trading prices, open stock, and more than 50 commission-free ETFs, but steep inactivity fees apply for Pro users.
Interactive Brokers’ margin trading rates are the real deal, with only 1.5% on top of the benchmark rate (or 2.5% for Lite users). On the flip side, be prepared to invest as much as $30 for broker-assisted trades.
Out of roughly 37,000 mutual funds, more than 8,300 can be traded at no charge. For the others, investors pay $0.6 per contract. If you’re into futures trading, be ready to invest money based on the number of deals you trade, which is 2.5% for the US micro e-mini stock index.
Our Interactive Brokers Forex review shows that the higher your trades’ volume, the lower the commission you pay. Commissions start at $0.00002 with a minimum of $2 per order but can drop by up to 50% if you are a very active investor.
With the options that Interactive Brokers offers, trading around the world and around the clock might not be that pricey after all.
To Trade or Not To Trade?
If you find yourself to be an investor that fits into this target mold, you’ll be more than satisfied with the firm’s services.
With the addition of the Lite payment package, Interactive Brokers stock trading turned out to be appealing to professionals and amateurs alike.
Once you log into Interactive Brokers and review its terms, conditions, prices, and plans, we’re fairly confident you’ll hang your hat with them. The company sets the bar high with abundant research tools and a wide variety of accounts for individual and institutional users.
Interactive Brokers can handle the most volatile markets and not crash on you, which is essential these days. The company has proved to be rock solid, with more than 40 years in the fintech sphere. And yes, it’s worth the hype, with its robust platforms, sophisticated features, global market access, and low commission fees.
When it comes to the rough edges of Interactive Brokers, our customer service review confirms the rumors about unresponsive customer support. Even though it is available via email, 24-hour phone service on business days, and 24-hour live chat on workdays, waiting times are quite long.
You’ll probably stumble upon negative reviews on this part of the company’s business, so we believe this is something Interactive Brokers could and should work to improve in the near future, especially considering its new focus on amateur investors.
Since the Interactive Brokers website is quite challenging to navigate and tricky for new users, our Interactive Brokers mobile app review favors the latter. However, even though the app is handier than the web platform, it’s still not as user-friendly as its competitors.
The biggest drawback we can find in Interactive Brokers’ offerings is probably the costly inactivity fees that penalize passive investors looking for a hands-off and relaxed approach to buying and selling stock.
Is Interactive Brokers trustworthy?
Aside from a notable anti-money laundering rules transgression that the company was fined for in 2020, our Interactive Brokers review ticks all the right boxes for trustworthiness.
It has a long tradition and it’s regulated by several top-tier financial authorities, such as the US Securities and Exchange Commission and the UK Financial Conduct Authority.
Is Interactive Brokers good for beginners?
Even though the company released its IBKR Lite program for up-and-coming investors, its website and mobile apps are full to the brim with features and are tricky to navigate. Beginners might be better off with other online brokers that provide more hand-holding, investment advice, and easy-to-use software.
What is the minimum deposit for Interactive Brokers?
There is no minimum required deposit to open an IBKR cash account. However, as our Interactive Brokers review points out, some accounts do have a minimum deposit. For trading margins, users must deposit $2,000 or more. Portfolio margin accounts require a deposit of at least $100,000.
Is my money safe with Interactive Brokers?
Yes. Interactive Brokers provides negative balance protection and is regulated by top-tier and trustworthy financial institutions. Users’ money is kept in special bank accounts designated exclusively for IBKR clients.