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I tried them. If they have the fund on their platform, then its definitely the cheaper way to access them compared to Schwab. But they dont have as many funds as Schwab does. I dont use other brokers so I cant compare beyond that. Of course one can invest directly with the funds but its a lot more account set up etc which I want to avoid.
I too have been thinking about opening an IBKR account and had wanted to ask for forum members experience with IBKR. I can move my stock account there if mutual fund access is an issue. But would like to know about IBKR customer service and how much their brokerage sweep account pays in interest. TD and Schwab sweep accounts pay nearly zero (similar to most bank checking and savings), and require one to buy and sell money market funds if a higher interest rate is desired. For stock investing / trading, such money market fund activity is a bit annoying, though for mutual fund investing it may be OK.
Clients may earn interest on positive settled cash balances.
Accounts with a Net Asset Value (NAV) of USD 100,000 (or equivalent) or more are paid interest at the full rate for which they are eligible. Accounts with NAV of less than USD 100,000 (or equivalent) receive interest at rates proportional to the size of the account. There will be no interest paid on the first USD 10,000 of cash.
Since the first $10K earns no interest, you can only earn a blended rate up to but not including the "full rate". And that's assuming that your total account value is at least $100K, else your earnings are prorated (multiplied by account value/$100K)
In case that isn't clear, the page has a handy dandy calculator.
The full rate is "benchmark - 50 basis points" for a "Pro" account and "benchmark - 150 basis points" for a "Lite" account.
Note that this is on settled cash. You might be losing out on a day's interest relative to a broker like Fidelity where its MMFs pay divs starting the first business day after purchase, though that may have been purchased with proceeds of a sale that doesn't settle for two days (T+2).
Shares purchased by ... orders [other than by wire] generally begin to earn dividends on the first business day following the day of purchase.
This is not a sweep account. Cash is not swept from the brokerage into a government MMF (as at Fidelity) or into FDIC-insured banks (as at Schwab). Rather, the cash just "is" - a general liability of the brokerage. This is called a free credit balance. At IBKR it gets $250K of SIPC coverage plus $900K of excess SIPC coverage via Lloyd's of London. Though if you go "Pro", you can get FDIC coverage. https://www.interactivebrokers.com/en/general/security-investor-protection.php
Thanks, @msf. IBKR seems complicated relative to Fidelity where I have Govt MMF as my sweep account which usually has nearly zero balance because I buy into higher yielding MM fund. Fidelity takes care of selling those MM funds to settle my other trades. However, IBKR would be a reasonable alternative to Schwab to my TD account(s).
Does IBKR have zero fees for sending and receiving wire transfers? Fidelity does.
Any feed back on IBKR customer service would be good - I just need it to be as good or better than Schwab.
Customer service exists at IBKR as long as you are not too keen to use it On a 1-10, if you think walking into a Schwab shop to get your needs attended has a success rate of 7 or 8, I think IBKR might feel disappointing. The reason is they have a very efficient process all around. They expect that people come to IBKR know what's what. THeir websites are far more thorough with all the bells and whistles. They have chat and phone customer service and they are very helpful but its not a shop like schwab.
From my quick use, IBKR research tool is a bit flimsy (non-existent?) for mutual funds. ( I wonder how good their research tools for other products are.). The $15 transaction fees mentioned earlier is for each leg.
I have not been to a Schwab branch in more than a decade. I like to not have to interact with customer service at any brokerage but if something goes wrong, the customer service needs to be available and be competent and not just BS away. Many posters in this forum know more about the large brokerages' products and services (and SEC rules) than many, many customer service reps at those brokerages.
From my quick review, it appears the Pro account has a minimum fees of $10 per month (reduced by commissions paid during the month). I will accept that fees if I never have to contact their customer service.
I tried to use their mutual fund search tool and asked the tool to give me all the US equity funds. I received a "There are 0 results." I am sure they offer more than 0 US equity mutual funds but could they make their website a little bit more friendly? I can live without using IBKR for mutual funds but not with an uncooperative website.
Under ACH transfers, it says, "Limited to $100,000 per seven days." Hotel California?
I am sure IBKR has more wide ranging capabilities than other large traditional brokerages but I first need a brokerage to do basic things well before getting excited about trading stocks on foreign exchanges.
IBKR is very profitable (unlike HOOD) and so they must be doing something right.
Regular account trades are routed under "payments for order flows" and that is how they distinguish the Pro account commissions.
I tried to use their mutual fund search tool and asked the tool to give me all the US equity funds. I received a "There are 0 results." I am sure they offer more than 0 US equity mutual funds but could they make their website a little bit more friendly?
The problem is with the data, not the tool. Do a search for stock funds, not equity funds. VMVFX is reported as a stock fund. The stock fund search still won't get all stock (equity) funds because the database reports many funds, such as VHCAX, as being of type "N/A".
IBKR allows one free withdrawal request per calendar month. After the first withdrawal (of any kind), IBKR will charge the fees listed below for any subsequent withdrawal:
Under ACH transfers, it says, "Limited to $100,000 per seven days." Hotel California?
More precisely, that is under the heading: "Connect Your Bank via ACH". The limit applies to ACH pulls from your bank. ACH pushes by your bank to IBKR are described under "Direct ACH Transfer from your Bank" and are unlimited.
Funds pushed by your bank "are available for withdrawal [from IBKR] three business days after being deposited." Not unusual. OTOH, funds pulled from your bank "are available for withdrawal to the originating bank account after five business days. If you wish to withdraw the funds to an account other than the originating bank account, the hold period is 44 business days." Emphasis in original.
You can check in any time you like (up to $100K/week), but you can rarely leave (for 44 days). Welcome to the Hotel IBKR.
Regular account trades are routed under "payments for order flows" and that is how they distinguish the Pro account commissions.
Fidelity doesn't get payment for order flow on equity trades (it does on commodities). Neither does Merrill. And they don't charge a commission to give you best execution.
Brokers may also go a step further. If they're not getting payment for order flow, they might enable you to route your orders yourself. You get that with IBKR Pro, and at Fidelity using Active Trader Pro.
Under Fund Type they have 9 choices. Depending on how one reads the sequence of these choices (top to bottom or left to right), "Equity" is either second or sixth choice. "Stock" is the ninth choice. It was intuitive for me to pick "Equity" when I saw it first. What would be covered under "Equity"?
To learn about wire transfers, first I went to Cash Management tab. When that tab was not fruitful, I simply searched the IBKR website and the link I included in my previous post was the most relevant of the search results.
I don't pretend to know what IBKR has in mind. However, generally speaking equity means an ownership interest regardless of the form of ownership. It is broader than stock ownership, i.e. owning shares of a stock-issuing corporation.
Perhaps the most obvious example here is owning shares of a mutual fund. Funds are typically structured as trusts, not as corporations (though they can be). Nevertheless, "Mutual funds are equity investments, as individual stocks are. When you buy shares of a fund, you become a part owner of the fund, and you share in its profits." https://www.finra.org/investors/investing/investment-products/mutual-funds
I tried to figure out if I can wire funds from IBKR to other brokerages and banks and how much IBKR would charge.
Searching FAQs for "wire fees" comes up with the following questions:
Why was I charged a fee for a wire deposit? Neither IBKR or its agent bank charges for electronic deposits of any currency other than MXN https://www.ibkr.com/faq?id=27284795
Why was I charged a fee for a cash withdrawal? IBKR allows one free withdrawal request per calendar month. Subsequent withdrawals, regardless of method, are charged a fee. The fee charged depends upon the denomination of the currency withdrawn and the withdrawal method. Please see the Interactive Brokers website for details. https://www.ibkr.com/faq?id=46314916
That embedded link to "the Interactive Brokers website" brings you to the same page I gave above for withdrawal fees.
Comments
Since the first $10K earns no interest, you can only earn a blended rate up to but not including the "full rate". And that's assuming that your total account value is at least $100K, else your earnings are prorated (multiplied by account value/$100K)
In case that isn't clear, the page has a handy dandy calculator.
The full rate is "benchmark - 50 basis points" for a "Pro" account and "benchmark - 150 basis points" for a "Lite" account.
What's the benchmark? Currently 5.330%
https://www.interactivebrokers.com/en/pricing/reference-benchmark-rates-int.php
Note that this is on settled cash. You might be losing out on a day's interest relative to a broker like Fidelity where its MMFs pay divs starting the first business day after purchase, though that may have been purchased with proceeds of a sale that doesn't settle for two days (T+2). FDRXX prospectus
This is not a sweep account. Cash is not swept from the brokerage into a government MMF (as at Fidelity) or into FDIC-insured banks (as at Schwab). Rather, the cash just "is" - a general liability of the brokerage. This is called a free credit balance. At IBKR it gets $250K of SIPC coverage plus $900K of excess SIPC coverage via Lloyd's of London. Though if you go "Pro", you can get FDIC coverage.
https://www.interactivebrokers.com/en/general/security-investor-protection.php
"Pro" means paying commissions on all trades in exchange for lower margin rates, higher interest rates, etc.
https://www.interactivebrokers.com/en/trading/why-ibkr-lite.php
(Click on blue "Compare Plans" button near bottom of page.)
Does IBKR have zero fees for sending and receiving wire transfers? Fidelity does.
Any feed back on IBKR customer service would be good - I just need it to be as good or better than Schwab.
for $5 after the initial purchase.
From my quick review, it appears the Pro account has a minimum fees of $10 per month (reduced by commissions paid during the month). I will accept that fees if I never have to contact their customer service.
I tried to use their mutual fund search tool and asked the tool to give me all the US equity funds. I received a "There are 0 results." I am sure they offer more than 0 US equity mutual funds but could they make their website a little bit more friendly? I can live without using IBKR for mutual funds but not with an uncooperative website.
I tried to figure out if I can wire funds from IBKR to other brokerages and banks and how much IBKR would charge. Go to the link below which talks about incoming wires and is silent about outgoing wires - https://www.interactivebrokers.com/en/support/fund-my-account.php?cid=f035942a-e8ad-4d5e-b105-249bcbe6ba32
Under ACH transfers, it says, "Limited to $100,000 per seven days." Hotel California?
I am sure IBKR has more wide ranging capabilities than other large traditional brokerages but I first need a brokerage to do basic things well before getting excited about trading stocks on foreign exchanges.
IBKR is very profitable (unlike HOOD) and so they must be doing something right.
Regular account trades are routed under "payments for order flows" and that is how they distinguish the Pro account commissions.
https://www.interactivebrokers.com/en/trading/fundscanner.php#/
The problem is with the data, not the tool. Do a search for stock funds, not equity funds. VMVFX is reported as a stock fund. The stock fund search still won't get all stock (equity) funds because the database reports many funds, such as VHCAX, as being of type "N/A".
Go to the link below which talks about incoming wires and is silent about outgoing wires - https://www.interactivebrokers.com/en/support/fund-my-account.php?cid=f035942a-e8ad-4d5e-b105-249bcbe6ba32
For withdrawal fees, click on "Withdrawals and Physical Deposits" on this page:
https://www.interactivebrokers.com/en/pricing/other-fees.php Under ACH transfers, it says, "Limited to $100,000 per seven days." Hotel California?
More precisely, that is under the heading: "Connect Your Bank via ACH". The limit applies to ACH pulls from your bank. ACH pushes by your bank to IBKR are described under "Direct ACH Transfer from your Bank" and are unlimited.
Funds pushed by your bank "are available for withdrawal [from IBKR] three business days after being deposited." Not unusual. OTOH, funds pulled from your bank "are available for withdrawal to the originating bank account after five business days. If you wish to withdraw the funds to an account other than the originating bank account, the hold period is 44 business days." Emphasis in original.
You can check in any time you like (up to $100K/week), but you can rarely leave (for 44 days). Welcome to the Hotel IBKR.
Fidelity doesn't get payment for order flow on equity trades (it does on commodities).
Neither does Merrill. And they don't charge a commission to give you best execution.
Brokers may also go a step further. If they're not getting payment for order flow, they might enable you to route your orders yourself. You get that with IBKR Pro, and at Fidelity using Active Trader Pro.
Fidelity Help - Active Trader Pro routes available
https://www.fidelity.com/products/atp/help_10.3/ActiveTraderTools_Trade_Help.html#availableroutes
Fidelity Active Trader Pro Directed Trading User Agreement
https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/fidelity/ATPDirectedTradingUserAgreement10-2.pdf
Under Fund Type they have 9 choices. Depending on how one reads the sequence of these choices (top to bottom or left to right), "Equity" is either second or sixth choice. "Stock" is the ninth choice. It was intuitive for me to pick "Equity" when I saw it first. What would be covered under "Equity"?
To learn about wire transfers, first I went to Cash Management tab. When that tab was not fruitful, I simply searched the IBKR website and the link I included in my previous post was the most relevant of the search results.
I don't pretend to know what IBKR has in mind. However, generally speaking equity means an ownership interest regardless of the form of ownership. It is broader than stock ownership, i.e. owning shares of a stock-issuing corporation.
Perhaps the most obvious example here is owning shares of a mutual fund. Funds are typically structured as trusts, not as corporations (though they can be). Nevertheless, "Mutual funds are equity investments, as individual stocks are. When you buy shares of a fund, you become a part owner of the fund, and you share in its profits."
https://www.finra.org/investors/investing/investment-products/mutual-funds
I simply searched the IBKR website
A good way to search IBKR for answers is to use the FAQ search box.
https://www.interactivebrokers.com/lib/cstools/faq/#/
I tried to figure out if I can wire funds from IBKR to other brokerages and banks and how much IBKR would charge.
Searching FAQs for "wire fees" comes up with the following questions:
Why was I charged a fee for a wire deposit?
Neither IBKR or its agent bank charges for electronic deposits of any currency other than MXN
https://www.ibkr.com/faq?id=27284795
Why was I charged a fee for a cash withdrawal?
IBKR allows one free withdrawal request per calendar month. Subsequent withdrawals, regardless of method, are charged a fee. The fee charged depends upon the denomination of the currency withdrawn and the withdrawal method. Please see the Interactive Brokers website for details.
https://www.ibkr.com/faq?id=46314916
That embedded link to "the Interactive Brokers website" brings you to the same page I gave above for withdrawal fees.