When it comes to investing, there are two popular financial investment vehicles: stocks and mutual funds. While stocks are traditionally traded in the market, mutual funds are individual investment accounts that pool money, allowing you to diversify your investments. Investing in either is a good idea, but for this blog post, I’m specifically talking about opening an Interactive Brokers account in 2021.

In 2021, it will be possible to open a brokerage account in which you can trade a single stock in a fully customizable manner. The broker will have a virtual server that you can access from a web browser, from any phone, from a tablet, from a Nintendo Switch, from a VR headset, from a robot, from a giant screen in the sky, from a toaster, or from a vending machine.

As a financial advisor, I get a lot of questions from clients asking how they can open a new account with Interactive Brokers, a company that focuses primarily on providing a platform for professional traders of all types. A lot of these clients aren’t willing to pay a high commission to get started, and IB’s high fees make it difficult for many to make the investment. But the company has recently announced a new fee structure that makes it much easier to invest in the firm without paying a lot of money up front.

How to Open an Interactive Brokers Account?

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Interactive Brokers is a brokerage firm that specializes in trading is a brokerage firm that specializes in trading is a brokerage firm that specializes in trading, based in the United States, is a fantastic broker. It is well-known for its low costs and diverse selection of investment options. Many personal finance blogs, for example, make use of it.

It is presently the top broker for ETFs from the United States. And for Swiss investors, U.S. ETFs are the most efficient.

In this article, I’ll explain how to create an Interactive Brokers account in detail. It is not difficult, but there are a few things you should be aware of before beginning your application.

Interactive Brokers

Swiss Investors’ Favorite Broker

Interactive Brokers

Interactive Brokers is a fantastic broker with very low commissions! For as little as 0.5 USD, you may trade US securities!

Interactive Brokers

So, what is Interactive Brokers (IB) and how does it work? The brokerage company IB is based in the United States. It was first developed in New York in 1978, more than 40 years ago! IB is the country’s biggest brokerage company and the top foreign exchange (forex) broker. Stocks, bonds, options, futures, futures options, and many more products are available via Interactive Brokers.

It is a well-known broker with a solid track record. It is well-known for being inexpensive in comparison to its rivals. I’ve already weighed in on the merits of IB and DEGIRO. This comparison revealed that it is even cheaper than DEGIRO, the broker I previously used.

One important feature of IB is that, unlike DEGIRO, they do not lend your shares to other individuals by default. You also have the option of leasing shares and receiving a portion of the proceeds. However, you have a choice, which is a wonderful thing!

Read my Interactive Brokers review if you want to learn more about the company.

Why should you create an IB account?

So, why did I create an IB account in the first place? It is the finest broker accessible to Swiss investors right now.

There are many reasons why Interactive Brokers should be preferred over other brokers.

  1. They provide Swiss investors with access to US ETFs, while many brokers do not.
  2. They offer really reasonable pricing.
  3. They provide access to a wide range of investment options.
  4. They provide outstanding foreign exchange rates.

I used to have a DEGIRO broker account, which I used for the narrative. Then, despite the fact that it was unnecessary, they restricted access to US ETFs. They also experienced a lot of miscommunication throughout the procedure. In that regard, I considered them to be very unprofessional. As a result, I chose to move to IB, which still provides this access while also being considerably more professional.

Finally, DEGIRO accepts funds from just one bank account. You may use IB to transfer money from any bank account to your account. Because I sometimes get funds in USD, it is critical for me to be able to transfer funds without incurring any fees.

When it comes to changing between currencies, IB is considerably less expensive than DEGIRO. As a result, IB will save me a lot of money in the long run.

So, let’s have a look at how to make an account on IB.

Open an account with Interactive Brokers.

First, set aside some time for yourself. The procedure of opening an account with Interactive Brokers is not complicated, but it does take some time. You’ll have to answer a few questions and wait for your account to be financed, which may take up to a day.

To begin, go to the account creation page and choose Start Application for Individual, Joint, and Retirement Accounts from the drop-down menu. I required an Individual account, but if you’re doing it for yourself and your partner, you may need a Joint account. The process should be similar in most cases, but I’ve never attempted anything other than the Individual account.

You must provide your email address, a user name, and a password for the account on the first page. Make sure your password and user name are both strong. I suggest using a password that is at least 20 characters long. To keep your online accounts safe, you’ll need a lengthy password. Also, make sure you remember it properly!

You’ll also need to enter your home country. You must also enter your country of legal residency if it is different. The first page may then be confirmed.

They will send you an email to validate your email address at this point. Simply check your email and select whether or not to proceed with the application.

Information about the individual

You must choose your account type on the second page. For my requirements, I chose Individual. You may go through the different types of accounts to make sure you get the right one for you. However, the vast majority of individuals will choose an Individual account.

Then you’ll have to specify the general kind of personal data. There’s nothing unique about this; it’s just the information you’re accustomed to providing on each website. You’ll also need to set your addresses. Keep in mind that because this will ultimately affect your taxes, it is critical that you input them properly. You must also provide a valid phone number. This phone number will be needed to verify your identity, so make sure you type it in properly.

IB offers a variety of account kinds. You must choose the account type you want. A Cash account is the most common kind of account. The kind of account you’ll most likely need is a cash account. It implies that you must have the funds available before to each transaction. Margin accounts are also available. Margin refers to the ability to invest with money you don’t have. If you don’t know what you’re doing, I strongly advise you to open a Cash account.

When you establish an IB account, you’ll also need to choose your account’s base currency. I reside in Switzerland and make the majority of my payments in Swiss Francs (CHF). As a result, I chose CHF as my base currency. Money may be converted from your base currency to any other currency at any time. The base currency is solely relevant for the interface’s presentation. You may still transfer USD and purchase shares in EUR, for example, if you select CHF.

You will be informed about the negative interest rate on CHF holdings if you transfer CHF. Negative interest is currently only paid on amounts above 100,000 CHF. The exact negative interest rate and limit may be found here.

You’ll now have to create three security questions. These questions will come in handy if you ever need to restore your account. This is a regular process once again. Make sure you ask questions with clear answers (but that aren’t simple to figure out)!

Investing Concerns

After that, you’ll have to answer a slew of financial inquiries.

You’ll need to figure out how much money you have and how much net worth you have. You should also state what your investing goals are. For example, you may choose to invest in capital appreciation or fixed income. All of this data is provided for regulatory purposes. I would urge you to simply and honestly respond to them.

You must also decide which instruments to invest in. If you wish to invest in stocks and bonds, for example, you must choose these choices. I just chose stocks. Stocks, bonds, options, and futures are just a few of the numerous choices available. You must also decide the nation (stock exchange) you wish to invest in.

You must also enter a code to validate your phone number.

Confirmations

You will be required to consent to all of IB’s trading regulations at this time. Ideally, you should read them. You, on the other hand, are unlikely to!

You may also join the Stock Yield Enhancement Program if you wish. IB will be able to lend your shares to others via this service. You will get half of the loan’s interest as a result of this. Of course, there’s a possibility that you won’t be able to sell your shares when you want or need to. That did not sit well with me. But it’s something I’ll think about in the future.

Interactive Brokers will need proof of identity at this stage. For IB to authenticate your identification, you may submit a driver’s license, an ID card, a passport, or an immigrant ID card. You’ll also have to fill out details regarding your tax status on the same page. You’ll also need to provide information about your company and work title. In most cases, you’ll also need to provide evidence of address. However, I was unable to do this at the time I made my account for some reason.

Make a deposit into your account

Once IB receives funds, your account will be completely activated.

For IB to verify your account, you must deposit the initial quantity of money. To begin, you must specify the amount of money you will deposit. Then IB will provide you with all of the required payment details.

Make sure you copy the IBAN correctly. Before completing a financial transaction, you should always double-check all banking information. The transfer will be free since they have a Swiss bank account!

Remember to add the phrase “Further Benefit to XXX”! Otherwise, the funds will not be sent immediately to your account, and you will need to contact them to resolve the problem. This is something you’ll have to do for any future deposits to your Interactive Brokers account.

Complete your account.

There are a couple additional things you can do once you’ve financed your account.

To begin, you may customize the market data. Your market data status should be set to non-professional. Also, make sure you’re not purchasing any market data. You don’t need any of this information unless you intend to day trade. It’s something you don’t want to pay for.

You may also set up your phone as a Two-Factor Authentication device (2FA). One great feature is that you have no option but to utilize two-factor authentication. It’s fantastic. Two-factor authentication (or 2FA) is an important aspect of internet security. You must first download and install IBRK Mobile on your phone. This software is available for both Android and iOS devices.

After you’ve installed the app, you may set it up as a two-factor authentication for your account. You’ll need to enter your user name and password to get started. You must input the code that was sent to you through SMS. Finally, for future two-factor authentication, you may select a PIN. Make a mental note of that PIN since you’ll need it for each of your Interactive Brokers connections.

Read my post on online personal finance and security if you’re not familiar with 2FA and why it’s important.

Please wait for your account to be created.

All you have to do now is wait for IB to establish and fund your account.

It should take no more than a few minutes. My account was established and financed in less than a day for me. It’s pretty quick. I was able to make my first transaction the following day.

Complete your account.

Now that you’ve gained access to your account, there are just two things left to do.

The first thing that has to be done now is to set up the Pricing System. I strongly advise you to utilize the Tiered Pricing scheme. When using the Tiered Pricing method, IB is less expensive than DEGIRO. Changes may be made in your Account Settings. You may also choose Fixed Pricing if you want a more predictable price.

Before I switched to Tiered pricing, these were my settings:

Interactive Brokers Account Settings Account Options at Interactive Brokers

The second point is relevant if you are a Swiss investor who intends to invest in US ETFs. In such situation, you must complete Form W8-BEN. It’s as easy as that. You may do so by going to your Account Settings page. Then, under Profiles, click the I blue icon next to your name. Then choose “Update Tax Forms” from the drop-down menu. They’ll walk you through the procedure and give you the option of filling out the W8-BEN tax form. This will reduce the amount of dividends withheld from your American stocks and ETFs by half. This is critical if you want to benefit from U.S. ETFs’ excellent tax efficiency.

Conclusion

Swiss Investors’ Favorite Broker

Interactive Brokers

Interactive Brokers is a fantastic broker with very low commissions! For as little as 0.5 USD, you may trade US securities!

Interactive Brokers

The process is now finished! You now have an Interactive Brokers account if you followed this instructions.

For the time being, we have access to U.S. Exchange Traded Funds like VT, which make up the majority of my portfolio.

I’ve been taking IB for almost two years now. And I’m delighted with IB. The top broker for Swiss investors is Interactive Brokers.

The next step is to go to Interactive Brokers and purchase an ETF. It’s not difficult and just takes a few minutes.

What are your impressions about Interactive Brokers? Do you already have a user name and password? If not, who do you use as a broker?

Directly to your email, we’ll provide you our finest tactics and suggestions.

Get free personal financial advice that can help you achieve Financial Independence!

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The author of thepoorswiss.com is Mr. The Poor Swiss. He recognized he was slipping into the lifestyle inflation trap in 2017. He made the decision to reduce his expenditures while increasing his income. This blog chronicles his journey and discoveries. In 2019, he plans to save more than half of his salary. He set a goal for himself to achieve financial independence. Here’s where you may send a message to Mr. The Poor Swiss.

Frequently Asked Questions

How do I open an Interactive Brokers account?

To open an Interactive Brokers account, you must first create a brokerage account with your bank. You can then open an IB account by going to the IB website and clicking on Open an Account.

How much money do you need to open an Interactive Brokers account?

To open an Interactive Brokers account, you will need to deposit at least $5,000.

This article broadly covered the following related topics:

  • interactive brokers fees
  • interactive brokers open account minimum
  • interactive brokers indonesia
  • interactive brokers margin account minimum
  • interactive brokers llc address
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