Interactive Brokers

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regular savingsInternational regular savings review:
Interactive Brokers is headquartered in Greenwich, Connecticut and has approximately 960 employees in its offices in the USA, Switzerland, Canada, Hong Kong, UK, Australia, Hungary, Russia, Japan, India, China and Estonia. IB is regulated by the SEC, FINRA, NYSE, FCA and other regulatory agencies around the world.

Interactive Brokers regular savings mechanism is known for its international trade capabilities, low commissions and advanced trading platform. EME reviewed Interactive Broker in 2016 and it became our new best provider review at that point.

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Interactive Brokers Summary

Regular Savings Review

This is the most competitive fund purchase vehicle EME has reviewed. Interactive Brokers is an up-to-date 2016 offering with full transparency with regards to charges, funds / equities / ETF from territories such as the UK, the USA and some European Bourses as well as Hong Kong; ultimately, an Interactive Brokers trading account is an inexpensive pure platform solution. The loss of a half a star is purely because it does not offer an insurance tax wrapper, has poor customer service reputation and has steep learning curve.


For


  • Full flexibility with full withdrawal or full access in the early years without penalty
  • No commission, and no hidden charges
  • Superior account security
  • Full transparency of costs leads to lower charges
  • Provides full access to lowest cost funds, passive trackers and equities throughout the worlds markets

Against


  • Not available to everyone in every country
  • Fully tax declarable unless held in a suitable wrapper
  • Account history and statements displayed separately
  • This is a fee driven product which must be paid at outset
  • Not suitable for novices as the trading platform can be complex



Interactive Brokers promotion: What does Interactive Brokers write about their own platform? Interactive Brokers was founded in 1993 by Thomas Peterffy, an early innovator in computer-assisted trading. He introduced electronic devices to options floor trading at the Chicago Board of Trade and went on to develop related trading technologies before entering the electronic brokerage business.

In 1983, the company created the first handheld computers used for trading. As Peterffy explained in a 2016 interview, the battery-powered units had touch screens for the user to input a stock price and it would produce the recommended option price, and it also tracked positions and continually repriced options on stocks.

Eligibility: Anyone over the age of 18 that is resident in an acceptable country. Us clients are welcome with Interactive Brokers, in fact it is the only investment platform among all of the companies reviewed that welcomes US clients.
Life Insurance: Interactive Brokers does not offer life assurance, it is a trading platform purely for investing your money with a wide range of investment options.
Minimums: The minimum regular savings premium is $500 with the aim of building the account to $100,000 as this negates the monthly charge as detailed below. Although Interactive Brokers gives you a grace period of three months before the monthly charge applies.
Charges:

Establishment Charge Structure:
There is no establishment charge, this platform is very different from most of the other companies offering investment opportunities.

Administration charge:
There is a monthly charge $20 if your account balance is below $100,000, once the account has reached this amount then there is no administration charge as the monthly trades ( regular savings ) conducted within the portfolio cover the administration.

Other Charges:
Charges are minimal and they depend to the specific portfolio chosen, for example, trading a US stock is $1 per trade. Interactive Brokers has charging rates on their website here.

An adviser charge to manage the portfolio, this typically can be between 1 to 1.5% per annum depending on the chosen advisers charging structure and service provided. The Interactive Broker trading account can be managed completely by the client that is comfortable selecting and trading stock.

Full details can be found here.

Are charges explicit: By explicit, it means that it is clear to see not only the charges for taking out the plan but also the cost of funds annually, any upfront fund costs. No penalties on access, etc. Yes, in the main the Interactive Broker trading account charges are clearly shown and any professional should be able to interpret them.

Documents

Interactive Brokers Adviser Brochure
Interactive Brokers Guide
Interactive Brokers Terms

Expat Money Expert Verdict on Charges

Surrender of the Interactive Broker trading account: There are no surrender charges and no early redemption charges as there is no commission charged when the account is set up. This is the future of investing, portfolio can be built based on the clients specific appetite to risk included IRS compliant portfolios for US clients.

Expat Money Expert Verdict on Accessibility



Expat Money Expert Assessment of Interactive Brokers

Our current Best Buy

Interactive Brokers trading account is completely different to purchasing a regular savings plan which commits to a set term. It is an up-to-date offering which offers full transparency with regards to charges and funds / equities / ETF from territories such as the UK, the USA and parts of Europe; ultimately, an Interactive Brokers trading account is an inexpensive pure platform solution.

Interactive Brokers normally comes with a $10,000 minimum funding and is not suitable for casual investors, but provides support for international trading and will offer a regular monthly investment model utilising limited investments. It also offers active traders a very competitive commissions schedule for low-cost trading. Fees increase with trading but they still remain very competitive. It has superior account security as well and privacy standards are set high.

The main two downsides are that the online trading system is really designed for professional and account history and statements are displayed separately, and Interactive Brokers can be daunting to novices. We do not think it is suitable for novices. Also, it does not have a life tax wrapper available although it is possible to “buy” one separately and then have Interactive Broker as the trading account within it.

WARNING: Costs and information is correct as of July 2016. Please refer to a brochure from the company for current up to date information and any changes on costs or information. You should not buy based purely on information contained within this article and EME do not accept liability for purchases. If you have any doubts then please speak with your financial adviser or a representative of the company for further advice.

If the provider improves or amends its terms then EME would like to hear from them to amend the review page accordingly, and providers are encouraged to comment on errors or omissions to ensure that readers have the latest and correct information.






  • Charges criteria

    Charges are assessed inclusive of fund fees, capital units, bid/offer spread criteria and third party management fees which are often ignored but are, in effect, compulsory additional costs that essentially must be considered by clients.


    Star ratings

    The star ratings apply at inception of the products and in at least the first 2 -8 years. Some products reduce charges or become more accessible with time held, but the length varies for each product; from our reviews it is typically overall between 5-10 years.

    These ratings are awarded based on information obtained from the companies at a certain date. It is worth considering obtaining the latest updated information yourself before making a decision.


    Star ratings

    ChargesOverall charges greater than 8% per annum.
    FundsLimited selected range of collectives or mirror funds with upfront additional charges (Bid/Offer spread) or initial “capital” units.
    AccessibilitySevere access penalties, some accessibility after establishment period with total loss of fund or severe penalties in establishment period of 6-24 months or longer.
    Overall AssessmentA commission-based adviser’s product. Not recommended under any circumstances.

    ChargesOverall charges greater than 5% per annum.
    FundsIn-house range of collectives or mirror funds with upfront additional charges (Bid/Offer spread).
    AccessibilityPenalties resulting in loss of fund value may exist for 5 years – 8 years or longer, or total loss of fund or severe penalties in establishment period of 3-24 months.
    Overall AssessmentA predominantly commission-based adviser’s product with limited use or appeal.

    ChargesOverall charges between 2.5% and 5% per annum.
    FundsIn-house or limited range of collectives or mirror funds with no Bid/Offer spread.
    AccessibilityTo avoid access penalties, only typically accessible after establishment period of 3-24 months or longer, but with no penalties thereafter.
    Overall AssessmentFor those seeking lock-in target dates (perhaps with guarantees) over 5 years.

    ChargesOverall charges less than 2.5% per annum.
    FundsFull range of collectives with no Bid/Offer spread and rebates on charges reducing annual costs.
    AccessibilityImmediate within 60 days without any penalties on any item.
    Overall AssessmentRecommended for some situations and some people due to lower charges and flexibility.

    ChargesOverall charges less than 1.9% per annum.
    FundsIncludes ETPs (passive) and Individualised accessible collectives with no Bid/Offer spread and clean share classes for lowest annual costs.
    AccessibilityImmediate within 30 days without any penalties on any item.
    Overall AssessmentRecommended for most situations and most people, with full transparency and low charges.