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Interactive Brokers $10 Monthly Inactivity Fees Eliminated!

Yesterday, some Interactive Brokers clients noticed some changes on their official website:

from Interactive Brokers website

It looks too good to be true. But it really is.

Beginning 1st July 2021, Interactive Brokers have eliminated the monthly Inactivity Fees for all retail and adviser-client accounts below – regardless of the prior US$100,000 AUM.

This is big news for a lot of retail traders and investors who wanted to be on Interactive Brokers but were apprehensive due to this monthly inactivity fee.

What this Monthly Inactivity Fee is About

Prior to this change, if you go to the same page, you would observe this:

If the net liquidation value of your account is less than USD$100,000, IBKR will charge an inactivity fee of USD$10 a month (I am not sure why it called an activity fee haha)

If you made trades in the month, the commissions are net off from this $10, so IBKR do not double charge you.

If you are under 25 years old, they have a competitive inactivity fee of US$3.

But with this change, all these inactivity fees go away.

Who Benefits from this Monthly Inactivity Fee Elimination?

I think almost everybody benefits.

The traders benefit less. If you trade on the US stock exchanges under IBKR or IBSG’s Tiered commission structure, each stock trade would roughly cost you US$0.35.

It would take you 29 trades a month to equal that monthly inactivity fee.

It is that cheap.

But I think the biggest group of people that will benefit are the young, long-term, buy-and-hold, passive investors.

These young adults just started work and want to DIY and invest in just a few low-cost, broad-based, Irish-domiciled, tax-efficient exchange-traded funds (ETF), most likely listed on the London Stock Exchange.

Some popular ETFs are ETFs that track the MSCI World, MSCI All Country World, FTSE All-World, various factor and multifactor ETF, MSCI Emerging Market, MSCI World SmallCAP, Bloomberg Barclays Global Aggregate Bond, High Yield Bond Index, Semi-conductor Index, China Internet Stock Index.

As young investors, they are not sure if they would eventually accumulate to US$100,000. They are also unsure how suitable is Interactive Brokers before using it.

With this inactivity fee elimination, the biggest stumbling blocks have been eliminated and long term investors have a great platform for them to custodised their stocks long term.

The Advantages of Interactive Brokers Platform

I will try to list down why I think Interactive Brokers is a great platform to subscribe to:

  1. Easy to set up. With MyInfo, the fastest I heard is someone funding their account to be ready for trading in 2 hours. Everything is done online. You can follow my guide below.
  2. The commission is very competitive. Under Tiered pricing, my UCITS ETF cost worked out to be 0.056% a trade. My US stock trade cost like US$0.35.
  3. Near spot current conversion at a flat fee of US$2. Out of all the brokers out there, Interactive Brokers run their own treasury trading desk and the advantage is that you get a currency conversion very close to the spot. It is very easy to convert from SGD to USD, HKD, CNY, EUR, GBP. If you wanna speculate on currency prices, you could just convert to and fro.
  4. Many exchanges to trade on in one platform. Check out the full listing.
  5. You can trade options and other derivatives on it.
  6. It has a mobile application that allows you to trade and check your portfolio on the fly.
  7. No dividend handling charges and custodian charges.
  8. The notification informs you when there is a corporate action, or dividend is a deposit.
  9. Create a joint account (if you create a joint account, it will be on IBKR instead of IBSG)
  10. Margin rate currently at 1.65% p.a.
  11. Easily fund your account by local transfer from your DBS account to IBSG’s DBS account or through FAST transfer.
  12. Very comprehensive monthly report with Portfolio Analyst (about 30 pages). There are also ad-hoc reports.
  13. You can set up the account to automatically send daily reports and monthly reports to your email.
  14. For those who know how to program, you can make use of their API to program your execution.
  15. Many registered investment advisers, boutique funds, mini-hedge funds use Interactive Brokers to help their clients managed their money or trade for them. They probably stick with Interactive Brokers for a lot of good reasons.
  16. Interactive Brokers have been around for 40 plus years. They are listed and you can frequently take a look at their financial standing.

While there are advantages, there are some challenges as well. This would include that you have to purchase the live prices, you can argue other platforms provide more sophistication when it comes to options but I feel these are manageable challenges.

If you are interested, give Interactive Brokers a try today.

My Comprehensive Interactive Brokers How-to Guides

Here are some of my past articles on wealth building with Interactive Brokers. I hope it makes your life easier and brighter.

  1. An Easy Step-By-Step Guide to Setup Interactive Brokers (IBKR)
  2. How to Fund & Withdraw Funds from Your Interactive Brokers Account
  3. How to Convert Currencies in Interactive Brokers
  4. How to Buy and Sell Stocks and Securities on Interactive Brokers
  5. How Competitive are Interactive Brokers Commissions Pricing?
  6. Interactive Brokers have Eliminated the US$10 monthly inactivity fee. More details here.
  7. How to Transfer your shares from Standard Chartered Online Trading to Interactive Brokers
  8. How to trade after-hours and premarket
  9. How to create customized reports and automatically send to your email
  10. Send Money from TransferWise to Interactive Brokers

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June

Wednesday 22nd of September 2021

Hi Kyith,

I was following your advice by buying VWRA using SCB online trading because I didn't want to pay the monthly fee that IBKR was charging. Now that they removed this fee, and with the commission much more attractive than SCB, i wanted to switch to using IBKR to build up my portfolio. I was wondering if there are any concerns or cons against against IBKR compared to SCB. Like for how it affects buying stocks where through SCB the stocks are held in our CDP and not custodian. Would you be able to advise if there is similar concerns for ETFs?

Thanks vm in advance.

Kyith

Thursday 23rd of September 2021

HI June, in that regards there is no differentiation. Under SCB, it is not held in your CDP as well. Comparing both of them, fees aside, I think you can reach SCB staff easier. With priority banking, you do not have minimum commission as well. It is not the best but as you move up, you enjoy other banking perks and synergies at SCB that you cannot have with Interactive Brokers

Petrel

Saturday 4th of September 2021

Hi, I just finished reading your article, very informative. I do have a question if you don't mind me asking.

Do they allow currency conversion only in their account. I'm thinking of putting some US dollars in there and take advantage of conversion rate fluctuation by converting back and forth between USD and CAD.

Thanks.

Kyith

Monday 6th of September 2021

HI, they do not have that. But because there is no fee for using, you can make use of that service!

Daniel Lee

Friday 3rd of September 2021

Fyi warning to all, I transferred my IBKR acct to IBSG, then realised they charge margin interest rate of 2.6% instead of 1.6% for IBKR acct holders. Now want to switch back to IBKR but they do not allow the change. Keith, any idea if there is a way to switch back? Thanks.

Kyith

Friday 3rd of September 2021

Hi Daniel, we noticed that but could not confirm. Have been asking around but my friends say the rates are meshed up so its hard to pin point if its 2.6%. I think there are not a lot of way. I think one way people say is... when you try to open an account... you can use MyInfo to fill in the details or submit things manually. If you submit things manually, they seem to allow you to create a IBKR account instead.

George

Monday 19th of July 2021

How does interactive broker compare with moomoo and tiger? I just signed up to moomoo because of the promotions and have been using it for a few months. Should I change brokerage now?

Kyith

Tuesday 20th of July 2021

Hi George, I think Interactive Broker is a more stable broker as they been around for a long time. Allows you to trade more markets as well. Tiger is also leveraging on their platform. I think in this post I have laid out in point form the advantages of Interactive Brokers.

K

Wednesday 14th of July 2021

hi Kyith, just wondering how do you feel about IBKR's customer service?

Are they easy to contact? How fast is their response?

Kyith

Tuesday 20th of July 2021

Hi K, They have an international call center and perhaps that is the downside about it. You would have to file a ticket to get good response from them.

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