Why You Should Probably Switch to Interactive Brokers (IBKR) Right Now

Interactive Brokers

Now, if you’ve seen my broker comparison here, you would know that I use Interactive Brokers as my main broker and have been doing so for about the past 1 year now, having switched from a mix of Standard Chartered and FSMone.

But as most people are also likely aware, Interactive Brokers is known for one thing:

Their infamous inactivity charge.

This charge is levied on every account with less than USD100k in it and can be either USD3 or USD10 per month depending on your age. That’s a hefty price to pay to just hold some shares in your account no?

AND YES, I agree!

So, what changed?

Aha, but just a few days back, on the first of July, something very magical happened…

Interactive Brokers Removal of Fees

Interactive Brokers officially removed their inactivity charge, woohoo! Which, in my eyes at least, officially make them the undisputed best broker available to Singaporeans (for now).

But let’s really look at all that Interactive Brokers has to offer and why I love it so much, despite not being sponsored by them hahahaha. (IBKR, any moment now)

Ridiculously Low Commissions

Cost is most definitely the top concern when it comes to choosing a broker. Everyone is just looking for that magical percentage figure, plus the minimum commission per trade when they look into a new broker in the market. 

Interactive Brokers boasts one of the lowest commissions on the market, with minimum commissions on their Tiered Pricing structure going as low as USD0.35 per trade. Yup, that’s 35 cents!

Interactive Brokers Tiered Pricing

Do note that by default, the pricing structure is set to Fixed Pricing, so if you intend to make an account, do remember to switch it in your Account Settings. The change should take effect in about 1-2 days.

Market Access

Well, what’s the big deal about USD0.35 commissions, when TD Ameritrade has free commissions?

Interactive Brokers has more than just low commissions. Interactive Brokers also gives you access to more than 20 different countries’ exchanges, including the highly coveted LSE to capitalise on the lower dividend withholding tax.

Interactive Brokers Market Access

Other favourites include the Hong Kong Exchange, Australian Stock Exchange and Tokyo Stock Exchange.

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FX Rates

But everyone knows Standard Chartered or Saxo offers LSE access too!

That’s true, but one key downside to both of those exchanges (beyond their cost), is actually the FX rates that they use. Standard Chartered and Saxo are known for having poor FX rates (although improved in recent years).

Index Investing Singapore
Photo by AlphaTradeZone on Pexels

But Interactive Brokers uses a flat fee currency conversion at SPOT RATES to convert from one currency to another. Crazy, I know.

Order Types

Now that we got through what most people look out for in a broker, let’s look at some, more niche features.

Interactive Brokers also sports a huge range (quite possibly overly huge) of order types. Most brokers only allow Limit and Market orders, with some also allowing Stop-Loss Orders.

Just look at the selection!

I don’t even know what half of these orders do!

I think some interesting ones that regular folks like us may be interested in are:

    • Trailing Market if Touched: Useful for when the market is falling but you want to catch it when it rebounds
    • Trailing Stop Limit: Similar to above, but more of increasing your stop loss as the price rises, allowing you to capture more profits
    • Market on Close: Market sell/buy at the price when the market closes

Margin Rates

One last thing that Interactive Brokers is well known for is Margin Rates. Margin rates refers to the interest charged when you borrow funds from Interactive Brokers. This can be done to buy shares, buy options, sell options etc.

Do note that using margin can lead to large losses and if you’re not familiar with it, just use a cash account. For myself, I only use margin very conservatively and I always maintain a large buffer from my maintenance margin levels.

Interactive Brokers, as far as I know, charges the lowest margin rates I know of at 2.6% per annum (yes, the same as a HDB Loan hehe).

For reference, here are the rates of other popular brokers:

  • Tiger Brokers: 4.1%
  • Moomoo: 6.8%
  • TD Ameritrade: 9.5%

Downsides

Now, that said, Interactive Brokers is not without flaws. To have a balanced viewpoint, let me give you some downsides after using this broker for a whole year, trading through the volatility that was 2020 and 2021.

Interactive Brokers firstly, does not provide live price data (at least not for free). The cost I believe is about USD4.50 per month for live pricing. For me, this isn’t a big issue as I just use TradingView (on desktop) and Webull (on Mobile) to view live pricing for US markets.

Interactive Brokers secondly, also doesn’t place a lot of emphasis on UI. Their mobile app is pretty boring in terms of design and sometimes the performance graph doesn’t load in the app. But I think really, the biggest gripe that most people have is with their desktop app, also known as Trader Workstation (TWS). The app literally looks like it was built in the 90s and never changed after that. Just look at it!

Interactive Broker Trader Workstation
Interactive Brokers’ Trader Workstation Interface

The good news is, if you don’t trade options, you probably won’t ever have to touch it since buying and selling can easily be done through mobile or within the browser. But if you use TWS, please use this video to help you navigate the features properly so you don’t accidentally buy or sell anything without realising it.

Closing Thoughts

Personally, I feel that Interactive Brokers is the best broker out there right now for Singaporeans. And without the inactivity charge, there’s really nothing holding you back from entering the DIY investing space!

What a time to be an investor!

2 thoughts on “Why You Should Probably Switch to Interactive Brokers (IBKR) Right Now”

  1. Hey!! I stumbled across your comments from Seedly and WOW I am so glad to have read your blogs!! As a newcomer to the world of investing, I have been reading up on good stocks/ETFs to start off (gotta start slow y’know HAHAH) and your blogs have brought fresh insight for me!

    Have been looking for a good broker to start with and have been eyeing INBKR, Tiger, MooMoo and FSMOne, after reading this, I have made my decision HAHAHA

    Thank you so much for doing what you do, really appreciate the helpful comments in Seedly and for this lovely blog!!!

    Do you have any recommendations on communities that I can dive right in to educate myself on investing? :)))) Thanks a bunch, really love this!

    1. Hey Daniel, thank you so much for the kind words, your words really mean a lot to me!

      No shame in starting slow, index investing gets the job done after all and honestly, index investors probably did better than many stock pickers this year too HAHAH

      As for educating yourself on investing, I think I can suggest starting with books like One Up on Wall Street by Peter Lynch.

      For communities in particular, I think /r/stocks and /r/investing on Reddit have some good content and discussion about stock picking. Seeking Alpha is alright too although generally since the articles are written by just about anyone, do read with a skeptical mind. Alternatively, there are certain telegram chats (formed up with mostly Singaporeans) such as “Fundamental Scorecard” (run by another blogger, TUBinvesting), “Tesla, SPACs and US Market Chat” and “Growth Profits” (run by another investing guru Rui Ming).

      Hope this helps!

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