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Interactive Brokers may pique your interest if you’re an active investor looking to place regular trades on US-listed exchanges as well as international markets. But it’s not the best option for passive investors who are looking for a hands-off approach to wealth-building.
Interactive Brokers provides trading, investing, retirement, and cash management products for individual and institutional clients. The brokerage offers two trading plans for investors: IBKR Lite and IBKR Pro.
Both plans offer commission-free trades, $0 account minimums, and access to more than 135 stock exchanges in 33 countries. IBKR Lite customers get unlimited access to commission-free trades on stocks and ETFs; IBKR Pro users can only access roughly 98 commission-free ETFs. In addition, IBKR Pro account holders pay between $0.0005 and $0.0035 in commissions per share.
Interactive Brokers offers several other notable services, including automated investment management, fractional shares, mobile apps, and research and educational content. In fact, the company has courses on investing, markets, and programming through its Trader Workstation (TWS) application.
The broker also provides copious investment choices, including stocks, bonds, ETFs, options, mutual funds, metals, futures, hedge funds, and Forex. Interactive Brokers currently provides more than 4,300 no-transaction-fee mutual funds.
Though Interactive Brokers has an automated investment platform, its services are heavily tailored toward active traders who buy and sell securities regularly. Financial experts generally advise against active trading for those who want to steadily grow their money over time.
Bottom Line: Interactive Brokers is best for advanced, active investors who trade securities frequently and value access to market analysis and trading platforms. The brokerage could also be a great fit for those looking to make trades in global markets.
|Editor’s rating||4.8 out of 5|
|Trading fees||$0 for IBKR Lite; $0.0005 – $0.0035 per share (IBKR Pro)|
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Interactive Brokers pros and cons
- Low commissions and fees
- International trading opportunities
- Competitive trading platforms and tools
- Several account types available
- Less active traders pay more for IBKR Pro
- Website can be tricky to navigate
$0 for IBKR Lite; IBKR Pro: $10/month for accounts with $100,00 or less, $20/month for accounts with $2,000 or less
0% (up to 0.35% for automated investment advice)
0% ($20 annual account service fee for brokerage accounts and IRAs)
|Open an account||Open an account||Open an account|
Standard brokerage accounts
Interactive Brokers gives you the choice of two brokerage plans: IBKR Lite or IBKR Pro. IBKR Lite offers commission-free trading for US-listed stocks and ETFs, and you can set up and maintain your account without any minimum opening deposits or inactivity fees. IBKR Lite also accepts individual, joint, IRA, and trust accounts.
IBKR Pro, on the other hand, is a better choice for the more active and sophisticated investors. This plan offers extra access to investment research, and it lets you use software like Interactive Brokers’ SmartRouting system. The broker’s SmartRouting system offers $0.47 per 100 shares price improvement versus the industry, according to its website. Interactive Broker’s SmartRouting system also aims to make sure your orders are executed at the best price and market possible.
Both IBKR Lite and IBKR Pro provide access to Interactive Brokers’ Client Portal, IBKR Mobile, and Trader Workstation (TWS).
Interactive Brokers offers a robo-advisor — Interactive Advisors — that specializes in automated investment management. The platform offers more than 70 portfolios built with a mixture of stocks and ETFs.
Management fees for these portfolios range from 0.08% to 1.5%. Minimum investment sizes range from $100 to $50,000.
Interactive Brokers also lets you purchase portions of a company instead of paying for full shares. Fractional trading is available on both IBKR Lite and IBKR Pro, and you can use the service to pick any available US stocks.
This brokerage doesn’t currently offer fractional shares for foreign exchanges, but you can trade US stocks in fractions as long as they’re listed on the following stock exchanges: NYSE, NASDAQ, AMEX, ARCA, or BATs. You can also trade certain OTC Pink US penny stocks.
Interactive Brokers offers traditional IRAs, Roth IRAs, traditional rollover IRAs, traditional inherited IRAs, Roth inherited IRAs, and SEP IRAs.
IRAs are generally available in cash or margin form, and IRA margin accounts allow you to trade currency products.
Interactive Brokers is a digital trading platform offering an extensive range of national and international investing opportunities. The broker provides trading access to more than 135 markets in 33 countries around the world, allowing you to invest in stocks, options, mutual funds, ETFs, futures, bonds, and currencies.
Interactive Brokers serves both individual and institutional investors. Its individual offerings cater to single and joint filers, friends and family advisors, and minors through its custodial accounts.
The brokerage’s institutional clients include registered investment advisors (RIAs), proprietary traders, hedge funds, compliance officers, family offices, money managers, small businesses, hedge fund allocators, educators, fund administrators, and introducing brokers.
Interactive Brokers traces its origins back to 1977, when its owner, Thomas Peterffy, began trading equity options as a member of the American Stock Exchange (AMEX). In 1978, Peterffy formed T.P. & Co., the first company to use computer-generated financial balance sheets.
Headquartered in Greenwich, Connecticut, Interactive Brokers offers low-cost investing, multiple trading platforms and investment choices, market research, mobile apps, and competitive customer service. Barron’s recently ranked the broker as the No.1 Best Online Broker in 2020.
Interactive Brokers currently manages more than $8.5 billion in equity capital, and it conducts more than 1,832,000 trades per day, according to its website.
Rickie Houston is a wealth-building reporter at Personal Finance Insider who covers investing, brokerage, and wealth-building products. Before joining Business Insider, he worked as a personal finance writer for SmartAsset. He is also a Certified Educator in Personal Finance (CEPF).