Interactive Broker’s Fees
Many of my clients use Interactive Brokers. It can work well as a broker for expats that want a low-cost account to setup their own investment plan.
But IB is designed for traders so it can be a bit tricky until you figure it out. While it’s not free, IB is inexpensive. In fact, the low trading buy and hold investor – likely you if you are reading this – benefits from low commission costs since more active traders generate the income IB needs.
The important charges from IB are the monthly fee and trading commissions. The monthly fee, also called the inactivity fee, is $10 USD equivalent. However, I think the term inactivity fee is misleading. You pay it each month whether you trade or not. IB’s policy is that you pay the greater of the monthly fee or your monthly commissions.
For example, if you have no trades or commissions in a month, you pay the $10. If you have $5 worth of commissions, you pay the $10. If you have $12 worth of commissions in a month, you pay $12. Make sense? Either your $10 or monthly commissions, whichever is greater.
However, don’t make a trade each month just to cover the fee. Trade because you have money to invest.
IB waives the fee when your total account balance is greater than $100,000 USD.
Transaction commissions vary from exchange to exchange. Most of my US clients pay from $1 to $2 per trade. Cost per trade in GBP on the UK exchange is .1% of the value of the trade with a minimum of £6 per trade up to a maximum of £29.
Buying in USD on the UK exhange, which may of my international clients do, is also .1% of the value of the trade with a minimum of $5 per trade and no maximum. Most of my clients’ trades are $5. The Euro exchanges that most of my clients use are the Netherlands, Italy, and Germany. The cost on their exchanges is also .1% of the value of the trade and a minimum of €4 up to a maximum of €29.
Currency commissions are excellent on IB. Typical cost is 2 basis points per conversion of the transaction value. For example, on a conversion to $200,000 USD, the cost would be $4.
This brief video explains the IB fee structure.
