- BASICS - About Interactive Brokers
Interactive Brokers:
cost and fees, benefits and types of brokerage accounts,
What is Interactive Brokers at all and why?
Interactive Brokers is a US broker. Gives access to investments worldwide
Interactive Brokers: cost and fees
Immersion in the topic is not easy, the IB website has a lot of information and it is not always understood clearly.
What do you pay for IB?
- For various subscriptions to data (for example, analytics or online prices - by default they are delayed by 15 minutes)
- For transactions (commissions are low, vary depending on assets). Similarly, like our brokers - a lot of different commissions, depending on the instrument.
- For inaction! Or rather, just for the content of the account. Let's consider in more detail ...
Commission for account maintenance:
You have assets worth more than $ 100,000 - you do not pay
You have assets worth more than $ 10,000 - a fixed fee of $ 10 per month. At the same time, it decreases by the amount that you pay in the form of commissions from transactions. That is, they traded a commission of $ 5, the fix will be 10-5 = $ 5. Bargained for a commission of $ 20 - no longer pay a fix.
You have assets of less than $ 2,000 - a fixed fee of $ 20 per month and it also decreases by the commission you have traded.
If you are under 25, the fixed fee will be $ 3
Total:
- For a long-term investor with a portfolio of up to $ 2,000, go for IB madness (maintenance will cost> 10% annually).
- A long-term investor (bought and forgot) with a portfolio of about $ 10,000 needs to think (just the contents of the account will take $ 120 per year, which is 1.2% commission). Add to this the fee for the transfer of money (depending on the bank) and perhaps the St. Petersburg exchange will appeal to you more. On the other hand, for access to shares that you otherwise would not buy is not so critical.
- The active speculator will probably need paid subscriptions (for the same prices: Requests for US stocks cost USD 0.01 for each, and for other instruments - USD 0.03.)
Links to detailed prices:
Commissions from transactions (https://www.interactivebrokers.co.uk/en/index.php?f=5 ..)
leverage commission (https://www.interactivebrokers.co.uk/en/index.php?f=5 ..)
Analytics (https://www.interactivebrokers.co.uk/en/index.php?f=3 ..)
Market data (https://www.interactivebrokers.co.uk/en/index.php?f=1 ..)
Account Contents (https://www.interactivebrokers.co.uk/ru/index.php?f=5 ..)
IBKR processes one withdrawal request once a calendar month for free. After the first withdrawal of funds (of any type), IBKR will charge a fee (https://www.interactivebrokers.co.uk/en/index.php?f=1 ..)
interactive brokers: benefits and types of brokerage accounts
- Asset protection in bankruptcy of a broker up to $ 500,000
- Low entry threshold (any amount)
- Support in Russian
- Access to all leading world exchanges (not only the USA)
Now I’ll tell you about the types of accounts:
In short, a regular individual account is suitable for private investors from Russia. And that’s it.
The trick is that America has developed such a thing as joint brokerage accounts.
Joint brokerage account:
You, together with your spouse / partner / friend, open a joint brokerage account and everyone has access to all the assets of the account, everyone can make transactions with all the funds in the account and so on.
Similarly, all funds are automatically inherited by your partner in the event of your death.
However, for Russian citizens, the benefits of such accounts will not work:
- For non-residents of the United States, a joint account does not mean automatic inheritance of funds in the account. In the event of the death of one of the owners, the partner will need to go through all the standard inheritance procedures.
- You will not have the opportunity to withdraw money from a joint brokerage account to any other bank account, except for that which is tied to a brokerage account. This restriction is introduced for countries where AML
- (Anti-Money Laundering) is at high risk. Russia is just at such a risk. Thus, given that in Russia there is no such thing as a joint bank account, you may have problems withdrawing money.
As a result, Interactive Brokers do not recommend opening a joint brokerage account from jurisdictions where there are no joint bank accounts.
Normal individual account:
Just what you will open in 99% of cases.
There are 2 classification of individual accounts:
Monetary:
- You use only your money currently available on the account
- You do not have a minimum amount to open an account
This is a safer option for beginning investors, but here, due to the T + trading mode, you will not be able to use the money from the shares sold on the same day, but should wait a few days when they actually arrive in your account.
Marginal:
- You have access to broker margin lending (no need to wait for the receipt of money under the T + mode)
- The minimum amount to open an account is $ 2,00
- There are strict margin reserve requirements
Investors must have funds in the account, the amount of which is at least 25% of the market value of their securities. This is called the maintenance margin.
For market participants that are classified as System Day Traders, the minimum margin requirements are $ 25,000 or 25% of the total market value of the securities (depending on which amount is greater).
If the balance of the margin account falls below the minimum requirements, the broker has the right to liquidate the position or require the investor to increase the amount of collateral, i.e. making additional cash.
_____
You choose the type of your account (cash or margin) when opening an account and then at any time you can change it!
What is Interactive Brokers at all and why?
Interactive Brokers is a large American brokerage company founded in 1978. At the moment, the company's equity is above $ 7 billion. The company is a global player in the financial market, has offices in more than 10 countries and provides access to trading in 125 markets in more than 30 countries.
The company is a member of FINRA (http://www.finra.org/) and SIPC (http://www.sipc.org/) and is supervised by the US Securities and Exchange Commission (SEC (http: // www. sec.gov/))
Actually:
SEC - the main regulator of the American securities market
FINRA is a kind of analogue of our NAUFOR (although of course, vice versa). the largest independent regulator of US financial markets, the main goal is to protect the interests of investors.
SIPC - A non-profit company, which all American brokers are required to enter. Protects investors and insures them against bankruptcy or liquidation of a broker.
The broker joining the members of these organizations guarantees investors the safety and repayment of their funds (there are limits) in the event of a broker's bankruptcy.
In particular, SIPC insures you up to $ 500,000, including $ 250,000 in money. What is especially good, SIPC will also return your assets to you if, if a broker goes bankrupt, he will not have any records about them (of course, you may need to submit some extracts).
Video from the official SIPC website (useful!):
https://res.cloudinary.com/sipc/video/upload/f_mp4/v1 .. (https://res.cloudinary.com/sipc/video/upload/f_mp4/v1 ..)
Video from the official FINRA website (voditsa):
https://player.vimeo.com/video/324245232?api=1
Why is Interactive Brokers so attractive in the Russian Federation?
- Low entry threshold (previously there was a limit of $ 10,000 to open an account, now it is not)
- Access to world markets (not only US stocks and exchanges, but also more than 30 countries)
- Support in Russian and Russian site interface.
- Well, we already said about security
The combination of these factors (especially the first 3 points) makes IB
so attractive and unique for investors from the Russian Federation who want to diversify and protect their assets.
And Interactive Brokers is cool not only for the Russian Federation, but in general. For example, they won the nomination for the best
- American broker in 2019.
That's all.
Always yours, Victor Bavin)
-------------------------------------------------------------------------------------------
Contact me
Facebook : victor.bavin
Telegram : +7 (995) 911-94-01
WhatsApp : +7 (995) 911-94-01
Viber : +7 (995) 911-94-01
Mail : bavin.vict@yandex.ru