Interactive Brokers review

How we rated Interactive Brokers's investment features

Interactive Brokers, or “IBKR”, is a comprehensive trading platform that lets you trade on stocks in more than 200 countries. It claims to offer the lowest trading fees – albeit in a bit of a complicated way, which we’ll get to later. Find out if this sophisticated investment platform is suitable for you and what we thought.

Interactive Brokers fees

Interactive Brokers is a bit of an odd one for fees because the complexity of the arrangement overshadows the fact that overall, it’s pretty cheap.

There first hurdle is that there are 2 types of pricing:

• Fixed pricing. This is what most investors will use and it’s the simplest.
• Tiered pricing. This is for investors making large trades (over 300,000 shares a month).

For the purpose of this review, we’re going to be looking mainly at the fixed pricing because that’s what the majority of UK retail investors would be using.

To complicate things further, the fixed pricing also offers 2 options for some investments: “SmartRouting” or “Direct Routing”. Direct routing means selecting what exchange you want an order to be routed through and SmartRouting searches for the best available prices across exchanges and “dark pools”.

There’s no platform fee for Interactive Brokers, thumbs up from us. However, there is a withdrawal fee of £7, thumbs down from us. Although, you do get one free withdrawal per calendar month.

The investing commissions are quite competitive. The price you’ll pay will depend on the currency you’re using and the location of the stock (the exchange where it’s based).

For UK shares, it costs 0.05% (£3 minimum) for SmartRouting and 0.1% (£4 minimum for Direct Routing). With US shares, it’s $0.005 per share ($1 minimum and maximum 1% of the trade size).

International shares can vary based on the currency and stock exchange. It’s well worth spending some time familiarising yourself with Interactive Brokers full commission structure before you start investing.

Most exchange-traded funds (ETFs) cost the same to buy or sell as a stock from the same country. There are also some commission- free ETFs. For mutual funds, the majority are free, but some come with a €4.95 commission.

The other notable cost is the FX fee, which is 0.002%. This is leaps and bounds cheaper than most other platforms, but there’s a catch. There’s a $2 minimum fee. So, it doesn’t work out very cheap for smaller trades, but provides good value for big transactions.

Interactive Brokers investment choice and stocks

Interactive Brokers is an unstoppable force when it comes to the investments and assets available, definitely its trump card. Overall, there’s more than 100,000 investments across a range of asset types, so there’s little chance you won’t find what you want here.

This sheer amount of choice might be slightly overwhelming for beginners, and to be honest, most UK investors won’t necessarily need such a breadth of options but it doesn’t hurt to have them.

Another slight downside is that having so many options is partly what makes Interactive Broker’s fee structure so complex. Because, there are various fees for each type of investment from each global market but then there are also exceptions.

For example, you pay a commission to invest in most ETFs but some are free. And for mutual funds, it’s the other way around. Or for UK shares, you pay on a percentage basis but for US stocks you pay on a dollar per share basis.

With so many investments available, it’s understandable that this is the case, but it does make it quite a challenge for investors to easily get an idea of the costs for investing in the way they want.

The type of assets available with Interactive Brokers includes:

• Stocks and shares
• ETFs and mutual funds
• Bonds
• Futures and options
• Currencies and commodities
• Contracts for difference (CFDs)

Is Interactive Brokers safe?

Interactive Brokers (IBKR) is regulated by the Financial Conduct Authority (FCA). One major downside with Interactive Brokers is that it doesn’t come with Financial Services Compensation Scheme (FSCS) protection.

Interactive Brokers does offer alternative compensation for some investments because it’s FINRA regulated and a registered member of the Securities Investor Protection Corporation (SIPC). This means your US securities are protected up to the value of $500,000 should Interactive Brokers go bust (with a $250,000 cash compensation limit).
Another way Interactive Brokers provides transparency to investors is because it’s part of a publicly traded company, Interactive Brokers Group (IBKR) listed on the Nasdaq stock exchange.

Interactive Brokers account types and products

Interactive Brokers has a decent range of account on offer, including:

• General investment account (GIA)
• Stocks and shares ISA
• Self-invested personal pension (SIPP)
• Business accounts
• Junior ISA (JISA)

Interactive Brokers GIA

The general investment account (GIA) is Interactive Brokers’s most basic account. If you select this, you can open an individual or joint account.

There are no restrictions or limits on how much you can invest but there aren’t any tax advantages to trading with a GIA, like there are with a stocks and shares ISA, which we cover in a second.

If you make more than £6,000 in each tax year then you have to pay capital gains tax (CGT) on the portion over this amount. And if you breach your £1,000 dividend allowance (reducing to £500 in 2024/25), you’ll also have to pay tax.

Interactive Brokers stocks and shares ISA

The Interactive Brokers stocks and shares ISA lets you use your annual ISA allowance to invest and you can use up to your full allowance each tax year. The allowance is £20,000 in 2023/2024, which means you can invest up to £20,000 without paying UK tax on your profits.

Other than the tax benefits, the regular GIA and stocks and shares ISA are pretty much the same, including the features and the fees.

Interactive Brokers self invested personal pension (SIPP)

This account lets you save up for your retirement with tax benefits. SIPPs are a type of personal pension that give you more control over what you invest in. You can’t withdraw your pension until you turn 55 (rising to 57 in 2028).

However, with the Interactive Brokers SIPP, you can’t control everything yourself. A SIPP Administrator has to open a master account which basically means you need a middleman company to use this account.

Interactive Brokers junior ISA

The Interactive Brokers junior ISA (JISA) allows you to invest on behalf of someone under 18. You can invest up to £9,000 each tax year, which doesn’t count towards your annual allowance. The child can only access the account once they turn 18.

Other than the structural restrictions and allowance limit, the IBKR JISA operates in much the same way as the adult version of the stocks and shares ISA.

Interactive Brokers ease of use

Interactive Brokers scored fairly well in our ease of use assessment with a few ways to contact the customer service team and generally positive reviews for its app.

Most reviewers seem to enjoy the Interactive Brokers app on Apple and Android devices. On the App Store it has a 4.3 out of 5 and on Google Play, it has an impressive 4.8 out of 5 (as of February 2024).

One thing to note is that the Interactive Brokers app is popular with more experienced investors but the overall interface and experience is fairly challenging if you’re a beginner – so it’s definitely worthwhile trying the demo account out first.

Interactive Brokers customer reviews

On Trustpilot, reviewers gave Interactive Brokers a 3.7 out of 5 “average” rating from over 2,500 reviews.

Interactive Brokers tools, resources and features

Interactive Brokers has lots of tools and resources packed into its comprehensive platform. The only area where it’s lacking is the social investing aspect, with no community forum or way for investors to connect and share ideas.

With Interactive Brokers, there’s plenty of features like:

• Advanced charting and analysis tools
• Multi-currency accounts
• IBKR GlobalAnalyst, which scans global markets for undervalued stocks
• Multiple trading platforms (Trader Workstation, desktop, mobile app, GlobalTrader) to suit your style of investing
• Plenty of trading order types
• Market commentary, research and news

There’s also plenty of educational and learning resources such as:

• The IBKR Campus
• Traders’ Academy and Traders’ Insight
• Podcasts, blogs and webinars
• Investing calendars

With Interactive Brokers, the information and tools on offer are pretty diverse, to help you make the most of the platform and research all the investment opportunities available.