Investment Moats

Once you have setup your Interactive Brokers account through an entirely online sequence, you need to fund your account to start trading.

You can fund your Interactive Brokers account from banks and financial institutions from all over the globe. The transfer is free and you are entitled to one free withdrawal per calendar month.

I will show you how to

1. Deposit money to fund your Interactive Brokers account in SGD
2. Withdraw money from your Interactive Brokers account to your Bank account
3. Deposit money to fund your Interactive Brokers account in USD via online remittance
4. Some other possible cool ways to fund, withdraw money that I came across
5. Some other fun things you could do with the account

How to Setup Transfer Instructions in Interactive Brokers

Login to your Interactive Brokers account on your desktop (I have always transferred on my desktop.

You can also initial this fund transfer through the mobile app. Go to Account Management then Fund Transfers. However, you can only deposit funds and not withdraw funds on the mobile app.

Let us continue on the desktop app.

Go to the top left corner to bring out the menu. Under Transfer & Pay, select Transfer Funds.

Select Make a Deposit, because that is what you wish to do.

In this screen you will see two sections. The top section is shown to be populated if you have created and save transfer instructions.

If this is your first transaction (which I assume you are), go to the section Choose a New Deposit Method.

This allows you to setup a standing instruction to transfer the funds from your account to Interactive Brokers’ account.

We will want to do a Bank Wire transaction which is to wire funds from your bank account to Interactive Brokers account.

Notice that you can select different currency to fund. This means if you move to another country, say Australia, and you have a local Australia bank, you can Bank Wire AUD into the Interactive Brokers account.

Today we will go through how to bank wire your base currency (in my case SGD) and USD through a local bank.

How to Fund SGD from Your DBS Bank to Your Interactive Brokers Account via FAST Transfer

The most simplest funding method is to do a bank transfer via FAST to IBKR or IBSG.

With FAST transfer, the transaction can take place in the same day. You can transfer and a few hours later, your money will be in your Interactive Brokers account and you can use it.

FAST Transfer to Interactive Brokers (for retail folks and to other places) is FREE currently, regardless of how many times you do it.

Here is a tip.
I am not sure about you, but I am rather fearful of transferring a large sum of money around, making a mistake, and losing the money.
Since transfer is free, perhaps test it out with $10 or a smaller sum of money. Ensure the money gets to Interactive Brokers safely at least the first time, before you transfer a larger sum.

The high level idea of the transfer:

1. Set up a standing instruction in Interactive Brokers, letting them know a sum of money in a certain currency is coming from a certain bank
2. Go to your bank and create a FAST transfer instruction to Interactive Brokers
3. At your bank, submit the FAST transfer
4. Check Interactive Brokers a few hours later to see if it is funded

Ok let us go through this.

Select Singapore Dollar. Click on how to Wire Funds.

You may need to take note of your DBS SWIFT Code and relevant information. (Do not trust the information in this screen capture. Banks change their codes from time to time.)

You can find them in this link here: https://www.dbs.com.sg/personal/support/bank-general-swift-code-details.html

If you wish to save this information in the future, toggle Yes for the first option. Give your sending institution a name. I called this DBS Bank.

Type in the account number of your DBS Bank in Account Number. The nickname will be the name that appear in your IBKR’s Saved Deposit Information section.

Specify the amount you wish to fund.

You have the option to make this a recurring transaction.

Once that is done click on Create Deposit.

Interactive Brokers is now waiting for your money to come.

Interactive Brokers will provide you with the information to specify at DBS bank. The address to wire to is the Singapore Tampines address.

Interactive Brokers will also give you a Bank Account Number that you will specify in your DBS FAST Instruction.

At the bottom is a payment reference that you will have to put in your DBS FAST Instruction. This basically puts your {Interactive Brokers Account No} {Your name}.

This is so that when Interactive Brokers receive the money, they know who this $80 belongs to. If you do not specify this, it will lead to some unnecessary complications.

Now go to your DBS online banking account.

Go to Transfer > To Other Bank Account (FAST).

This is where you key in the instructions provided by Interactive Brokers.

Put in a name that you can identify this transaction next time in DBS.

Select the Recipient Bank to be Citibank NA.

In the Recipient’s Account, put in the Bank Account Number that Interactive Brokers provided. Lastly, at My Name, put something that the other side will identify you with.

Select which bank account to transfer from, and the amount to transfer. Specify the purpose of transfer.

The most important part is in the Comments for Recipient, put the {Interactive Brokers Account No} {Your name} that was provided in Payment Reference.

Check then Submit.

You might not be able to transfer a lot. Sometimes you are limited by your bank transfer limit. For each bank, you can change the bank transfer limit to a larger amount. Do it with care because these limits are there to protect you.

If you have save the FAST pay standing order, you can make use of this instruction to transfer money next time, provided the details stayed the same.

In your DBS account, you would see the transaction out immediately.

Now you wait for your money to come in.

My experience is that within 1 to 2 hours, I see the above in my Interactive Brokers portfolio, which indicates the money is in (screen capture shows 2 deposited sum).

Withdrawal Limit

If I go to the Transaction History, I can review each of these transfer transactions. What I observe is that there seem to be a limit to when I can transfer each sum I just deposited out of the account.

Perhaps something to take note.

How to Fund USD from Your DBS Bank to Your Interactive Brokers Account via DBS Overseas Remit

Now, what if you have different currency in your DBS Multi-currency account?

You can transfer them via the DBS Overseas Remit function to Interactive Brokers account.

Transferring via DBS Overseas Remit is free. There are other similar functions by other banks such as Standard Chartered’s SCRemit.

If I were to believe, this remittance function is also how we can make use of third-party platform such as TransferWise to transfer money into Interactive Brokers.

What is the downside of remitting the money in other currencies?

The downside is that the conversion rates between currencies at a bank are not good. Banks earn a healthy spread from you. This is why you have services like TransferWise, Instarem popping up.

I am showing you how to do it. It does not mean I encourage it. You might have money that you need to transfer this way.

Ok same thing but this time, we choose USD.

Do the same thing. Give a nickname that reflects this transaction.

Click Create a Deposit.

Interactive Brokers is now waiting for your money to come.

Interactive Brokers will provide you with the standing instructions as the SGD FAST Transfer.

The main difference here is that the address for Wire Funds To, is a United States bank address. Take note of the Bank Account Number and Payment Reference.

Now let us go to DBS bank.

Go to Transfer > DBS Remit and Overseas Transfer.

Select Transfer to the United States and you will be sending USD of a particular amount to USD of a particular amount.

The click Start a New Transfer.

In the next screen, select which account you will be sending from and the amount to send.

In the next screen, this is where you specify the information from Interactive Brokers’ standing instruction.

The thing to note is that in the address, you specify Interactive Brokers’ address and not Citibank’s address.

Choose also Citibank US.

Put the Bank Account number that Interactive Brokers provided you.

Lastly, attach your {Interactive Brokers Account No} {Your name} in Payment Details for Receipent.

Once you do a last check, you can submit.

Now you wait for the transaction to go through.

I got a message notification in my email in 3 hours.

I carried out the remit transaction in the middle of the night. The next day at 2 pm, I received an email, and an SMS from DBS informing me that the transaction was successful.

We can also observe that the total service charges is zero.

How to Withdraw Money from Interactive Brokers to Your Bank Account

Now that you are familiar with how to fund, you may be wondering about how to withdraw money.

There are 2 withdrawal method: ACH and Wire Transfer.

The most common one is Wire Transfer.

You will set up a wire transfer instruction in Interactive Brokers letting them know which bank or financial institution you wish to transfer money to.

Then you will transfer the money. Then, you will wait and validate the money is received.

Typical, depending on your institution, your transactions would take place in 2 to 4 days (let me know if your experience is different).

Are there any withdrawal costs?

You can make one withdrawal per calendar month for free. If you wish to make more than 1, it will cost you SG$15 per transaction.

If you ask me, SG$15 is 50% cheaper than a bank wire transfer rate in the past. If it is urgent for you to make a transaction, just pay the $15. It is not a deal breaker.

Go to Transfer & Pay > Transfer Funds.

Select Make a Withdrawal.

Select Singapore Dollar.

However, if you are overseas and have an AUD, GBP, or USD bank account to withdraw to, select accordingly.

Then select Bank Wire > Connect Your Bank.

Give the account a nickname.

If you are depositing to a bank like DBS, choose Bank. If it is a third party platform select, financial institution.

More options will be made available to you (starting from #3).

Select Singapore as your Bank Country.

Key in the account number of your Singapore bank account, then confrim the bank account number again.

Next click on the SEARCH button at Receiving Bank.

You can find the bank based on the SWIFT code. That can be provided by your bank.

If you are successful, the Receiving bank infor is filled.

At the next screen, check that the details are correct. Enter your Interactive Brokers username and password and then click continue.

You will be prompted to validate the transaction with your mobile phone.

Your Withdrawal standing instructions is completed.

If you go back to the Make a Withdrawal page, you can see this new saved withdrawal information.

Click SELECT.

Interactive brokers will let you know the cash balance in SGD available for withdrawal.

They will also let you know the cash available that includes a margin loan. It would seem that you can borrow money from Interactive Brokers through margin and get the money out to spend HAHA!

Since you have specified that you would withdraw in SGD, you can only withdraw from your SGD balance. If you have cash in other currencies, you would have to convert them to SGD and then withdraw.

Or you could withdraw them in other currencies.

Key in the amount you wish to withdraw, then click Create Withdrawal.

Read through the regulatory disclosure. Note that no fees are charged.

Completed. Now wait for money.

How to Transfering Money to Other Countries at Good Exchange Rates with Interactive Brokers

The problem that many people faced is that exchange rates charged by financial institutions for money transfers are high.

Imagine that you are going over to Australia.

You need to buy a home there and you need to convert a large sum of money from SGD to AUD.

You will be charge a high rate if you do the transfer through the traditional bank.

Interactive Brokers has the unique advantage that their currency conversion is almost at spot rates.

If you pair this together with the transfer and withdraw lesson here today, you can see that there may be some useful use-cases.

Videos to Help with Learning About Funding Your Interactive Brokers Account

To get started, create an Interactive Brokers account today through this Link here today.

My Comprehensive Interactive Brokers How-to Funpack

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

Other Guides

Aside from DBS, here are some of the transfer instructions for OCBC and Standard Chartered Online Banking.

Deposit SGD from OCBC to Interactive Brokers

Deposit SGD from Standard Chartered to Interactive Brokers

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
5. Free Stock Portfolio Tracking Google Sheets that many love
6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works

My big boss Christopher Tan from Providend often encourages us to put out our thoughts in the public realm.

The main reason is that in order to explain things clearly and in a simple manner, you have to know your stuff, be able to distill information, data and knowledge into wisdom.

This weekend, Sunday Times’ Me and My Money interviews Liu Chunyen, who is the chief investment officer at insurance firm AIA.

This is one of the better Me and My Money interview. Ms. Liu discusses getting wrong about the commodities trend, and the usually Me and My Money topics.

It is quite interesting that for someone who grew up when the Taiwan stock market was booming, and a CIO, her allocation usually stayed around 60% in fixed income and 40% in stocks. She is happy with a 5% to 10% returns a year with a 5% target rate of return.

She may be one of those rare ones who let her life goals and her risk tolerance drive her asset allocation. (My guess)

We do not get that a lot since most who are deep in this industry have a tendency to be equity animals.

What I would like to share with everyone is her explanation of “How are you planning for retirement?”

I am very lucky to have married a banker who enjoys financial planning as a weekend activity! Believe it or not, a lot of conversations during our free time center on retirement planning and how far away we are from our goals.

We started planning by envisioning the kind of lifestyle we wanted to lead after retirement. Then we began analyzing our spending habits to develop an estimation of expenses by major categories.

On top of that, because of our passion for travel, we have a separate category for travel expenses. We even budgeted for the number of short-and long-haul trips we wanted to be able to take every year.

Once we arrived at a yearly budget, we then decide how many years of retirement we want to save for. This helps us decide when we can retire and what are the potential investment returns we need to achieve.

It’s a fun exercise if we do it frequently enough. It provides clarity to our investment goals and how we can achieve these goals.

Firstly, if you want to put correct life planning / financial planning in a very succint manner, it will be as above.

1. Start with the life that you wish to live. Now, within the next 10 years and further into the future
2. Then work out your expenses for those different lifestyle
3. Create a yearly budget and figure out your surplus amount
4. Mathematically work out how many years you need minimally to accumulate enough for this lifestyle. Come up with what-if scenario if you could save more or less

The couple totally get the sequence of things correctly. Life then money. Money is ancillary to life.

There are some naunces that we could learn from this:

1. There are discretionary expenses out of all discretionary expenses that you will not compromise on. That is OK. Make sure you have a concentrated number of these. If you refuse to compromise on all your expenses, you will have a problem.
2. Quantify some of your discretionary wants. Many people think vacation is a recurring expense but often it is not. The couple de-constructed roughly the cost of long-haul and shorter-haul travels and perhaps how many they want in one year. For many of you, during the period where your child is small, you might still want to save for vacation still, so that when they are older, your vacation sinking fund is healthy to go for more trips.
3. Have frequent, constructive discussions about life & money between couples. The couple discuss about money even though both of them work in a field where they probably discuss these things all day. Money is not a conversation subject for many but I think most are interested in what kind of life they would like to live in. Money is ancillary to life and thus if both are clearer where they want to go, you get clearer about money as well.
4. Your target rate of return could be lower if you know what you have and what you want. Ms. Liu shared that her target rate of return is 5% a year.
   • It is likely that by working out the numbers, they realize that they could comfortably reach their life goals within the amount of time they are looking at without needing to take additional risks.
   • By not violating her risk tolerance, she is able to stay the course to achieve the return better and not let volatility scare her into making irrational portfolio decisions.
   • You do not need to chase returns. Know the income that you bring in and how much you need. Your rate of return needed might be lower.

It is amazing what can be achieve if you have high salary, good spousal communication and when you go deep into a subject both of you are passionate about.

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
5. Free Stock Portfolio Tracking Google Sheets that many love
6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works

There are enough people asking me how I achieved my low trading commissions. Well, I do not think they are that low. So maybe I can share more.

Early this year, I decided to add Interactive Brokers to the brokers at my disposal.

There are a few reasons I decide to add Interactive Brokers or IBKR for short to my wealth management platforms.

Here is a short list:

1. Through IBKR, I can buy and sell stocks in a lot of markets. Much more than most brokers out there. (Currently, as a Singaporean, you cannot use IBKR to trade the stocks listed on SGX in Singapore but foreigners can. This will change with the launch of IBSG or Interactive Brokers Singapore later this year)
2. IBKR’s commissions for most markets are low. Based on my trading size of $3000 to $10,000 the commissions for the US is US$1 per trade, US$5 if I were to purchase low-cost exchange-traded funds like IWDA or VWRA on the London Stock Exchange and 0.19% for Hong Kong Stocks in general.
3. IBKR has been around for a long time and is seen as the default trading platform for international investors
4. Currency conversion between different currencies is at near spot rates (like 0.00001-0.00002% or 0.10-0.20 basis points ) with a minimum conversion cost of US$2.
5. Can transfer via FAST transfer to fund accounts easily
6. They have an office in Singapore at Asia Square Tower 1
7. Sophisticated enough in terms of their reporting and consolidating. This does not seem like much but if you have used the iFAST platform for advisers, you will know what I mean.

I might elaborate my reasons in a later post.

I am comfortable with IBKR, Standard Chartered Online Trading, and Lim and Tan as my broker platforms.

Some will find that the account application process to be a stumbling block but the Interactive Brokers account opening and approval process is very easy.

The whole application approval was done online, my approval took 3 working days. So there were no trips to Asia Square Tower 1 or snail mail.

In this post, I bring you through the whole process step-by-step.

1. Start Trading with Interactive Brokers by Opening an Account Application

You start the process by clicking on the Open Application button. Then Start Application.

If you require additional professional or more specific account types such as managing Trust Accounts and managing for friends and family, the process would look different.

Then you will need to create an online account. You need an unique email, username and password.

The username will be what you use to access to your Interactive Brokers account the most frequently. So do think about what you set for it.

Once you have finished that part of the process, an account verification email will be sent to your email address.

You will need to go to your email address to click on the link in the email.

You will then be prompt to log in to your Interactive Brokers account to continue with the account opening process.

2. Filling in Your Particulars

I selected Individual account type under Customer Type.

The personal information and addresses are pretty straight forward.

You will need to specify a phone number. This is to be used for your two-factor authentication in the future. Then you will also need to specify the identification that you wish to use to identify yourself as well as your tax residency.

Then your employment details.

Specify your source of funds for compliance reasons.

3. Choosing Your Interactive Brokers Account Type and Your Base Currency

Interactive Brokers will then ask you what kind of account type you wish and what is your base currency.

There are 3 kind of account type:

• Cash
  • Requires account holder to have enough cash to cover the cost of transaction plus commissions. You cannot borrow to support trading in a cash account.
• Margin
  • US regulatory-based margin account. Allows borrowing to support equities trading, stock shorting, full options trading, full futures/futures options trading, currency conversions, and securities/commodities trading in multiple currencies.
• Portfolio Margin
  • Allows borrowing to support equities trading, stock shorting, full options trading, full futures/futures options trading, currency conversions, and securities/commodities trading on multiple currencies.

If you are a passive, low-cost exchange-traded fund investor, a cash account might just be enough. However, I chose the Margin account which allows me to borrow money if needed.

The base currency is the currency you use to maintain the book of accounts. This affects the translation of currency for your statements and uses to determining your margin requirements.

I choose to set my base currency to be SGD.

I can hold stocks in a lot of different currencies be it Euro, USD, AUD. When I review the statements, the portfolio and accounts are translated into my base currency SGD.

You can change your base currency after this process easier in your account settings so don’t sweat over this.

InteractiveBrokers will then need you to confirm your postal address is correct.

Then you have to answer some compliance questions.

Specify your net worth and objectives you intend to achieve by trading.

4. Choosing What Financial Instruments to Trade and Where You Can Trade on Interactive Brokers

This section is important in that Interactive Brokers find out your experience with different instruments. If you do not have the requisite experience, you cannot manage certain instruments.

If you are a passive ETF investor and would like to purchase ETF in the United States or United Kingdom (London Stock Exchange), be sure to choose United States and United Kingdom.

I did not specify United Kingdom previously and it is only later did I realize I could not purchase ETF on the London Stock Exchange.

If you wish to trade options, also specify accordingly.

Again, if you get it wrong, you can change this in the account settings. However, changing this will take 1 day of approval before you can trade in the new markets or instruments specified.

5. Submitting Your W8-BEN Withholding Tax Status

Usually, if you open a trading account that allows you to trade in the United States, you will need to submit a W-8BEN form for reporting of your tax withholding status.

This is pretty seamless with IBKR.

There are some compliance agreements and disclosures. Please take your time to read through them and choose to AGREE or DISAGREE where appropriate (if you DISAGREE then it is likely you would not sign up for the account).

IBKR then ask if you would like to participate in their program to earn extra income by lending out your shares.

I did not choose to do so.

You can change this later in the account settings.

IBKR then ask how do you know about them follow by a review of your application.

If you click next, IBKR will continue with the actual processing of your application.

6. Submitting Your Identity and Address Verification Online to Interactive Brokers.

IBKR will then inform you that the process submission is done.

Like many application that involves money, the financial institution will need to verify your identity.

IBKR will need you to submit digital copy of some documents to prove your identity. You can also choose to email, fax and snail mail to them.

On the screen capture you can see that i have submited my identity card and another document for proof of address and they have been received.

Here are the documents that you can submit.

7. Wait for Interactive Brokers Update

All that you have to do next is to wait.

Wait for IBKR to inform you about the status of application.

10 minutes after the application process, I was informed that the identity application has been received and have been processed.

8. Interactive Brokers Account Approval in Email

If everything goes well then you should receive an email informing you that your account have been approved.

My approval came within 3 workings days or 5 calendar days in total.

IBKR will then inform you to fund your account so that you can get started trading.

The funding part is another topic altogether and I will share more in some upcoming post.

The whole process is very seamless and fuss-free.

To get started, create an Interactive Brokers account today through this Link here today.

The above is not affiliate link. This is not a sponsored post.

My Comprehensive Interactive Brokers How-to Funpack

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

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
5. Free Stock Portfolio Tracking Google Sheets that many love
6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works