Interactive Brokers Review – The good, the bad and the ugly
An investing platform that combines low fees with a range of asset classes and tools
You are facing a dilemma – wait several months for your TD Ameritrade account to be set up or invest using low commission brokers? That is until you walk into SingaporeFI Reddit, where most investors there advocate for Interactive Brokers (IBKR)… and for a good reason.
Interactive Brokers was first founded in 1978 and only reached Singapore in 2020, it sent shockwaves throughout the local financial market as banks are no longer the only way to invest for us. Banks like DBS held monopoly in investments, charging a whopping high amount of commission per trade. Now, we have more investing options to choose from and will no longer have to pay an exorbitant fee just to buy a Tesla stock.
Why Interactive Brokers?
Interactive Brokers allows you to invest in stocks, options, futures, currencies, bonds and fund at a low cost compared to other brokerages, with zero minimum balance. They even allow fractional shares.
|Low fees||UI not as intuitive as Tiger brokers|
|A large variety of products||Lack of SIPC protection|
|Competitive FX rates||Higher commission fees for SG stocks|
|Access to over 135 markets in 23 currencies including LSE|
|Safe and reliable|
|No minimum balance or activity fees|
Reasons to use IBKR
- Low fees– IBKR has one of the cheapest commission fees in Singapore, second to TD Ameritrade when it comes to US stocks. It is just 0.35 USD per share, with a minimum of 1 USD! However, London stock exchange (LSE) fees are a bit higher, at 0.05%, with a minimum of US 1.70.
- Competitive FX rates – IBKR offers competitive foreign exchange rates with an exchange fee of 0.0045%, min 0.10 GBP. Look through seedly reviews, and you will find that FX rates are one of the best options available to us in Singapore.
- No minimum balance or activity fees– Now that the monthly inactivity fee of USD 10 is gone, it is expected that many investors will switch to IBKR instead of the bank or other brokerages. No need to worry about the monthly fees anymore!
- Access to over 135 markets in 23 currencies including LSE– IBKR offers a lot of market choices to its clients, including the ever-popular London stock exchange (LSE). Most of us would rather invest in UCITS ETF than it’s US counter parts. It is just 15% in LSE compared to the 30% dividend withholding tax levied by the US government. More money gains is always good!
- Safe and reliable– IBKR is regulated by financial authorities around the world, such as the UK’s Financial Conduct Authority (FCA) and the US Securities and Exchange Commission (SEC). It has a long track record that is unlikely to go bankrupt.
Reasons to avoid IBKR
- UI is not intuitive – Let’s be honest, IBKR’s UI is not very user friendly. It is hard to find what you are looking for if you are new to the platform. Took me a while to find out how to transfer stocks out of IBKR. There are certainly other brokerages with better UI out there.
- Lack of SIPC protection– Only the US IBKR has SIPC protection. The SG version does not have it, so it may be a turn off for those who seek these kind of protection. Personally, I do not mind as IBKR is well-established broker.
- Higher commission fees for SG stocks– It is rather pricey for SG stocks at a 0.08%, with a minimum commission of 2.50 SGD. There are other brokerages such as Tiger Broker that offers cheaper commissions on SG stocks.
IBKR offers two types of pricing.
- Fixed pricing: The user is charged a fixed rate per share that includes all exchange and regulatory fees.
- Tiered pricing: The commission fee depends upon trading volume, the more trades you do, the lower it gets, plus exchange, regulatory and clearing fees.
If your investments are small, it is better to pick Tiered instead of fixed to save even more. You can find out more here.
IBKR’s fee are considered cheaper than other brokerages. We must thank Financial Horse for doing up a table here showing all the lowest stock brokerages available!
Am I using the right IBKR?
There are two IBKR platforms, LLC (for the US folks) and Singapore based IBKR. How to know if I am using the Singapore version? It’s simple!
For those using the web portal, click on reports, then statements, follow by activity (click on the arrow) to generate a report. You should be able to see the local Singapore address at the top.
- Tiger broker/ Moo Moo– Tiger brokers and Moo Moo are rather new brokers that offers low commission fees. The advantages they have over IBKR include free stock shares with new registration, and even limited commission free vouchers for Tiger to help offset the fees. However, it has a limited track record compared to IBKR, so it may be best to tread with caution.
- TD Ameritrade– $0 commission fees- nuff said. This only applies to US exchange listed stocks, options and ETFS. So, if you looking to buy VWRA, you are better off with IBKR. There is also the long account opening times and it is quite a hassle to provide the multiple documents for the registration.
If you are looking for a low fees broker with access to the world market, Interactive brokers is your answer. I personally use it for buying ARK etfs in the past but changed to Tiger brokers due to inactivity fees. Now, I am looking to get back into it now that the fees are gone. I had some sign up and approval issues as well, so just ping a comment down below if you are need help!
Yay or Nay?
Is it a solid YAY! I give IBKR a 4 out of stars!
If you have yet to sign up with IBKR, here’s your chance! Use my Interactive Brokers link and receive $1 worth of free stocks for every $100 you put in! It isn’t much, but its something.
Note: No sponsorship or affiliates involved, the above is my personal and honest opinion meant to help readers to make a decision.