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What is a Blind Trust and How Do You Set One Up?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

A blind trust allows you to grant control of your financial assets to another party, called a trustee, who manages them for you. There are a variety of trusts that serve different purposes; blind trusts are for people who need to avoid potential conflicts of interest that could arise between their work and their investments.

What’s the difference between a blind trust and a normal trust?

The main difference between a blind trust and other trusts is that neither the grantor nor the beneficiary know where funds in the trust are invested, or have any real say in how they are being invested.

Every trust establishes a fiduciary relationship between someone who owns financial assets and someone who manages those assets. In most cases, when setting up a trust there are three parties involved:

  • The grantor: The person who owns the assets and creates the trust.
  • The trustee: A party chosen by the grantor to manage the trust.
  • The beneficiary: The party who is entitled to receive financial benefits from the trust.

In many trust arrangements, the trustee and grantor communicate regularly regarding the administration of a trust. The beneficiary is typically aware of what’s in the trust or at least what trust assets they’re entitled to.

In a blind trust, the trustee alone knows where funds in the trust are being invested. A blind trust is a way to limit the beneficiary’s knowledge about what’s held in trust and how those assets are managed, says Patrick Hicks, head of legal at online estate planning company Trust & Will.

How does a blind trust work?

An independent trustee manages blind trust assets on the grantor’s behalf. The named beneficiary or beneficiaries have no knowledge of what’s in the trust or what decisions the trustee makes with those assets. Meanwhile, the trustee isn’t required to report to the grantor regarding trust activity. In addition, the grantor of a blind trust may choose to remain anonymous.

This doesn’t mean the trustee can do whatever they like with trust assets, however. As with all trusts, the trustees are fiduciaries, which means they’re required to act in the best interests of the trust beneficiaries.

Revocable vs. irrevocable blind trust: What’s the difference?

A blind trust can be revocable or irrevocable. The difference between the two hinges on whether you can change the terms of the trust once it’s established.

  • Revocable blind trust: You have the power to change, revoke or terminate the trust at any time. For example, you may want to add assets to the trust while moving others out. Or name a different trustee or add beneficiaries to the trust.
  • Irrevocable blind trust: This version is permanent. Once you’ve established the blind trust, named the trustee and transferred assets to his or her control, you have no further ability to make changes to the trust terms.

Whether it makes sense to establish a revocable or irrevocable blind trust depends on your reasons for creating the trust. If you don’t anticipate making further changes, then an irrevocable trust could meet your needs. On the other hand, a revocable blind trust gives you flexibility if you think the trust terms might need to be amended down the line.

Who needs a blind trust?

Technically, anyone could set up a blind trust. But typically they’re only used in situations where people need to separate themselves from their assets. A common scenario where that might be necessary is to avoid professional conflicts of interest.

Publicly elected officials may choose to set up a blind trust. The Ethics in Government Act of 1978 requires government officials to disclose assets unless they’re held in a qualified blind trust. Transferring assets to a blind trust can help lawmakers and other government officials minimize the potential for conflicts of interest by keeping their political and financial lives separate to a degree.

Hicks offers an example using a publicly-elected judge. If the judge is overseeing a case that could impact the value of the company in which he or she is invested, that could present a conflict of interest if their decision could affect the value of said investment. A blind trust would offer a legal safety net against that conflict.

Corporate executives and individuals who serve on a board of directors may also consider a blind trust to hold assets to avoid a similar scenario. Doing so could help them sidestep any financial dealings that could possibly create a conflict of interest.

Corporate insiders are subject to federal regulations that prevent insider trading and other illegal activity. With a blind trust, the trustee would have authority to buy or sell shares of company stock held in the trust allowing the executive to avoid violating any federal trading guidelines.

I just won the lottery, do I need a blind trust?

A blind trust is something you might be interested in creating if you win the lottery. When you have a blind trust, lottery winnings can be claimed in the trust’s name instead of your own. That means you can stay anonymous, which is something you might prefer if you don’t want a lot of people knowing about your windfall.

This might only be possible to do if you live in a state that doesn’t require lottery winners to disclose their identity. As of 2020, these states have laws or lottery board policies that allow winners to stay anonymous:

  • Arizona (for prizes of $100,000 or more)
  • Delaware
  • Georgia (for prizes of $250,000 or more)
  • Kansas
  • Maryland
  • North Dakota
  • Ohio
  • South Carolina
  • Texas (for prizes of $1 million or more)
  • Virginia (for prizes of $10 million or more)

Aside from anonymity, a blind trust could also be helpful if you’re concerned about preserving your lottery winnings. By transferring the money into a trust, you can dictate when you and your beneficiaries should receive payouts.

How to set up a blind trust

The first step in setting up a blind trust is meeting with a qualified attorney, who can help you determine whether a blind trust is something you need and which laws in your state have to be observed for establishing one.

From there, you can go through the mechanics of creating and funding the trust, which includes:

  • Determining which assets will be placed in the trust.
  • Collecting relevant documents related to those assets, such as deeds to real estate or stock certificates.
  • Choosing an individual or financial institution, such as a wealth management firm, to act as trustee.
  • Deciding whether to create a revocable or irrevocable trust.
  • Drafting the trust document and funding the trust by transferring assets to it.

Depending on where you live, the trust document may need to be notarized and recorded with your register of deeds or another state agency for it to be completely legal.

Do you need a blind trust?

A blind trust can help shield you from conflicts of interest related to your finances. That may be important if you have a high-profile job in the public sector or a private sector role that’s heavily regulated. A blind trust can also be helpful in managing lottery winnings if you’d rather you keep your newfound wealth under wraps or put safeguards in place to protect those assets.

The main challenges of blind trusts are the cost as well as the lack of transparency and control. First, setting up the trust usually means paying the blind trust attorney’s fees, which could be substantial since this type of trust tends to be more complex than other trust options. Beyond that, there are ongoing costs associated with maintaining a trust, including the administrative fee paid to the trustee for their services. Hicks says the initial setup costs can run in the tens of thousands, while annual management fees can run as high as 3% of trust assets.

On the transparency and control side, your beneficiaries won’t know what the trustee is doing but then again, neither will you. That could make a blind trust less than ideal if you’re more of a hands-on type when it comes to managing your assets.

Bottom line, blind trusts can serve a specific purpose in estate planning. Talking to an estate planning attorney can help you decide whether establishing one is the right move.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Stockpile Review: A No-Hassle Way to Give the Gift of Stock

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Stockpile is an online investing platform that lets new investors build a portfolio using fractional shares. With fractional shares, you purchase only a small part of a single share of a publicly traded company. This approach provides big cost advantages, letting people invest with any amount of money. Especially when purchasing shares in some of the most popular companies traded today — like Google parent Alphabet Inc, which as of writing was trading above $1,400 a share.

Stockpile’s other marquee feature is the ability to give shares as a gift. You can purchase an e-gift card or physical gift card that’s redeemable for stock shares. It’s a great way to introduce kids to the building blocks of investing or simply gift stock to anyone.

Stockpile
VISIT StockpileSecuredon Stockpile’s secure site
The Bottom Line: Stockpile is a good choice for novice or younger investors who want to build a stock portfolio using small amounts, or parents who want to gift stocks to young children or teens.

  • Invest any amount you want in the stock market, and pay a commission of only $0.99 per transaction, with no minimums or monthly fees.
  • Open a taxable investment account for yourself or a custodial account on behalf of your children.
  • You’ll need to look elsewhere for investing options beyond stocks and exchange-traded funds (ETFs).

Who should consider Stockpile

Stockpile is best suited for beginning investors who are just dipping their toes into the market. The biggest selling point is that you don’t need a lot of money to invest, since you’re not buying full shares of stock.

You might want to invest in a big-name stock like Amazon Inc., which sells for over $1,800 a share as of writing. But you may only have $100 a month to invest.

At that rate, you’d need to wait well over a year to save up enough to buy a single share of Amazon, assuming the price stays the same. With fractional shares, you can invest $100 each month and work your way up to owning a full share of Amazon, one step at a time.

In that respect, it’s similar to some of the micro-investing apps that have grown popular, such as Acorns or Stash. These spare-change apps let you invest with small amounts as well. The difference is that they tend to focus on exchange-traded funds (ETFs) and prebuilt portfolios as their main investment too, rather than encouraging investors to buy fractional stock shares.

Stockpile allows you to invest in more than 1,000 U.S. companies, ETFs and foreign companies, including every component of the S&P 500. Many of the stocks are names that should be familiar to most people, including Amazon, Disney and Google. Investors pay $0.99 per trade to buy and sell shares.

Stockpile trading platform and tools

Stockpile’s trading platform is user-friendly in terms of how simple it is to use. You create your account, link your bank account and from there, you can begin buying stocks and ETFs.

You can manage your account online or through the Stockpile app, which is downloadable for Android and iPhone. The interface is streamlined and simple. You can use the app or go online to:

  • Buy stocks or ETFs
  • Track the performance of stocks and ETFs you’ve already purchased
  • Estimate an investment’s growth potential over time

It’s all very basic, which might appeal to an investor who feels overwhelmed with all the bells and whistles other trading platforms offer. On the other hand, a more advanced investor may be underwhelmed by the lack of features, such as real-time trading data, forecasting tools or an extensive library of stock and investment research.

In terms of customer service, Stockpile relies on online chat and email to communicate with investors. Phone support isn’t available but that’s one of the ways Stockpile tries to keep costs as low as possible for investors.

Stockpile investment options

With Stockpile, your investment options include:

  • Stocks
  • ETFs
  • ADRs, which are foreign stocks that trade on a U.S. exchange

That’s a good starting lineup for new investors, but that’s where the variety ends. A respectable number of publicly traded companies are available, but it’s a subset of the overall market. You won’t find other asset types here, like bonds, index funds, hedge funds, forex or other options.

In terms of fees, here’s what you’ll pay to trade:

  • $0.99 per trade to purchase stocks
  • $0.99 per trade to sell stocks

If you’re purchasing gift cards for stocks to give to someone else, here’s what you’ll pay:

  • $2.99 for the first stock, $0.99 for each additional stock
  • 3% debit/credit card processing fee
  • $4.95 to $7.95 fee for physical gift cards

It costs nothing to redeem a gift card purchased from Stockpile. There are also some miscellaneous fees to be aware of, including a $30 returned check fee, a $5 paper check fee and a $75 fee to transfer your account assets to another brokerage.

Investing for kids with Stockpile

While Stockpile can be used to invest for yourself, the platform was initially developed as a way to gift stocks to kids. If you’re a parent with young kids or teens, that’s something you might be interested in.

There are two steps you can take to help kids invest through the platform. The first is to purchase Stockpile gift cards, which can then be redeemed for stocks.

You don’t need an account to do this. All you do is:

  • Select the stock gift card you want to purchase
  • Choose a dollar amount (the maximum is $2,000 for printed or e-gift cards; maximum $100 for physical gift cards)
  • Decide whether you want to print out a paper receipt showing your certificate amount, email your gift card or choose a physical gift card
  • Pay for your stock gift card with a debit or credit card

Remember, you’ll pay a $2.99 fee, plus 3%. So for a $100 gift card purchase, the fee comes to $5.99. And if you’re requesting a physical gift card, you’ll pay an additional fee ranging from $4.95 to $7.95, depending on the card.

The second part of investing for kids with Stockpile is setting up a custodial account that stock gift cards can be redeemed into. A custodial account is technically owned by the adult on the account until the minor comes of age.

One interesting feature is that kids and teens can set up their own trades through the custodial account. They just have to be approved by the adult listed on the account for those trades to be executed. They can also create a wish list of stocks they’d like to own to share with family and friends for future gifts. It’s a hands-on way to get kids interested in and learning about how the stock market works.

Strengths of Stockpile

  • Low barrier to entry: Investing in a mutual fund at a traditional brokerage might require a minimum initial investment of anywhere from $500 to $10,000. Stockpile has no minimum requirements, making it an accessible way to start investing.
  • Ease of use: The online interface and mobile app are easy to navigate and not overwhelming for someone who’s new to investing online.
  • Fractional investing: While there are a number of micro-investing apps out there that allow for investing small amounts, not all of them offer fractional shares. Stockpile makes it possible for an investor with even a budget to own their favorite big-name stocks.
  • No monthly fees or annual fees: At other online brokerages or robo-advisors, you might pay a monthly or annual management fee. Stockpile has no monthly or annual fees.

Drawbacks of Stockpile

  • Limited selection: While Stockpile offers more than 1,000 stocks and ETFs, other brokerages have a much wider variety. E-Trade, for example, offers stocks, bonds, mutual funds, futures, options, ETFs and prebuilt portfolios.
  • Trades aren’t free: At first glance, $0.99 per trade doesn’t seem like much. But when you consider that other brokerages now charge $0 commissions on stock trades, frequent trading could add up.
  • No retirement accounts: Currently, you can only open an individual or custodial taxable account with Stockpile. Joint accounts and IRAs aren’t an option.
  • Limited research tools: If you download the Stockpile app, you’ll have access to mini-lessons on investing and performance charts for individual stocks. But in the way of research, that’s about it, which may be disappointing to some investors.

Is Stockpile safe?

This is always a good question to ask when investing online and the answer is yes. Stockpile is registered with the SEC and is a member of FINRA and SIPC. Being a SIPC member means your account is insured for up to $500,000, including up to $100,000 of cash, in the event that the company goes under. You’re not, however, insured against losses due to market fluctuations.

In terms of internet security, Stockpile encrypts and protects investors’ personal information, including your Social Security number.

Is Stockpile right for you?

Stockpile offers a no-frills way to start investing in stock using fractional shares and to gift stocks to friends and family members. No minimums and no monthly fees might appeal to investors who want a budget-friendly way to start building a portfolio. That should be weighed against the $0.99 per trade fee and the overall range of investment options.

Stockpile could be a great place to get your feet wet with purchasing stocks or teaching kids and teens the basics of investing. But if you have an interest in more advanced trading strategies or you want to open an account to invest for retirement, another online brokerage could be better suited to your needs.

Fees mentioned in the article are accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Interactive Brokers Review 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Interactive Brokers has a reputation as a comprehensive trading platform designed for experienced investors and investment professionals. Some of the features that distinguish this broker from its competitors are its extensive range of investment offerings, sophisticated trading platforms and minimal fees for margin trades.

More recently, Interactive Brokers has launched IBKR Lite, a service tailored to the needs of less-experienced or more casual investors. IBKR Lite offers commission-free trading of U.S. stocks and ETFs, plus more approachable versions of their well-regarded tools.

Interactive Brokers
Visit Interactive BrokersSecuredon Interactive Brokers’s secure site
The bottom line: Interactive Brokers offers a wide range of low-cost or no-cost trading options for both hands-on professionals and more casual investors.

  • Trade globally around the clock
  • Multiple pricing tiers to meet the needs of different investors
  • No account minimums required

Who should consider Interactive Brokers

Interactive Brokers’ IBKR Pro account is designed for active traders and investment professionals who need a platform for professional trading. The platform’s fee structure is flexible enough to accommodate different trading volumes, while keeping costs to a minimum.

The addition of IBKR Lite to Interactive Brokers’ product line-up gives beginning investors and more casual users with fee-free options for trading ETFs and U.S. stocks. It also lets them trade more complicated asset classes, like forex and fixed income, with different pricing options available.

Both account types offer margin trading, and both support a wide range of investments, giving you opportunities to build a portfolio beyond stocks or bonds with instruments like options, futures and forex.

Interactive Brokers fees and features

Current promotions

No minimum trading commission for three months ($10 minimum per month after that)

Stock trading fees
  • $1 per trade minimum fixed pricing ($0.005 / share)
  • $0.35 per trade minimum tiered pricing ($0.0035 / share)
  • $0.005 per share fixed pricing ($1 order minimum)
  • $0.0035 per share and lower based on volume ($0.35 order minimum)
Option trading fees
  • $0 / trade + $0.70 / contract, $1 order minimum
  • $0 / trade + $0.15 / contract, $1 order minimum (>100K contracts per month)
Amount minimum to open account
  • $0
Margin rate range2.82% - 3.70%
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures / commodities
  • Forex
Account fees (annual, transfer, inactivity)
  • $10 monthly fee minus monthly trading commissions for most accounts
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $10 per month inactivity fee if trading commissions are less than $10 per month for most accounts
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • SEP IRA
  • Trust
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Trading platform
Mobile appiOS, Android
Customer supportPhone, Chat, Email

Interactive Brokers fees and commissions

Interactive Brokers features a more complicated pricing scheme than many other brokers. You may choose either IBKR Pro for a full-featured investing experience, with fixed or tiered pricing. The IBKR Lite account has a user-friendly platform with both fee-free and commission fee trading options.

IBKR Lite fees

IBKR Lite allows for commission-free trading of U.S. exchange-listed stocks and exchange-traded funds. There is no minimum balance required for an IBKR Lite account and no monthly maintenance fee. In addition, IBKR Lite users can trade option, forex, fixed income and mutual funds, with commissions.

Investment typePricing structure
U.S. exchange-listed stocks/ETFsCommission-free
Other stocks/ETFsFixed fees
Options and FuturesFixed fees
ForexTiered fees
Fixed IncomeTiered fees
Mutual FundsFixed fees

IBKR Pro fees

With IBKR Pro, there is no commission-free trading. All trades are subject to either fixed or tiered pricing. IBKR Pro accounts have no minimum balance requirement but there is a monthly maintenance fee. That fee is up to $10 per month, less any commission fees paid for the month.

Investment typePricing structure
U.S. exchange-listed stocks/ETFsFixed or tiered fees
Other stocks/ETFsFixed or tiered fees
Options and futuresFixed or tiered fees
ForexTiered fees
Fixed incomeTiered fees
Mutual fundsFixed or tiered fees

Fixed pricing vs. tiered pricing

With Interactive Brokers’ fixed-fee pricing, investors pay just $0.005 per share, with a minimum order of $1. The maximum fee per order tops out at 1% of the trade’s total value. Using a $25 share price, trading 100 shares would result in a fee of $1. Trading 1,000 shares would increase the fee to just $5.

With tiered pricing, the commission fee is determined by monthly trading volume. At the lowest end, the fee amounts to $0.0005 per share and at the highest end, it comes to $0.0035 per share. This chart illustrates how tiered pricing breaks down:

Monthly volumeU.S. stocks, ETFs, ETPs and warrantsMinimum per orderMaximum per order

<= 300,000 shares

$0.0035$0.351.0% of trade value

300,001 - 3,000,000 Shares

$0.002$0.351.0% of trade value

3,000,001 - 20,000,000 shares

$0.0015$0.351.0% of trade value

20,000,001 - 100,000,000 shares

$0.001$0.351.0% of trade value

> 100,000,000 shares

$0.0005$0.351.0% of trade value

A key difference to note between the tiered and fixed pricing is that tiered commissions don’t include regulatory, exchange and clearing fees. The fixed pricing factors those fees in.

Trading platform and tools

Interactive Brokers offers different trading platforms for IBKR Lite and IBKR Pro users. At the IBKR Lite account level, investors manage their accounts through the Client Portal or the IBKR mobile app. This level of access offers these capabilities:

  • Execute trades and monitor account activity from an iOS or Android device
  • Check stock quotes
  • Review portfolio performance via monthly return charts
  • Examine key metrics, such as rate of return, profit and loss and buying power in real time
  • Review portfolio allocation and cash balances
  • Research individual securities and get the latest stock market news

The IBot chat feature is also available through the Client Portal and the IBKR mobile app. This feature allows you to trade stocks, options, futures, forex and bonds, get detailed quotes and account information and get answers to common trading questions quickly and easily. It can also be used with Facebook messenger and Alexa so you can access it virtually anywhere you are.

At the IBKR Pro level, investors have access to the Trader Workstation, which is considered a gold standard platform for professional traders. With this tool, you can trade stocks, options, futures, forex, bonds and funds on over 100 markets. Some of the key features of Trader Workstation include:

  • Real-time stock market monitoring
  • Up-to-date research and news
  • Advanced trading tools, such as algorithms simulators, market scanners and real-time charting and rebalancing

There’s also IBKR WebTrader, which is an HTML-based trading platform. WebTrader offers a more scaled-down range of features for traders who want a streamlined approach or for those who trade from behind a firewall.

The most advanced traders can take advantage of IBKR APIs. This allows you to build your own trading application or software.

Note, you’re not limited to choosing one platform over another. You can use one or all of the various trading tools at your disposal within your IBKR Pro account.

Investment options

Interactive Brokers is well-known for offering an extensive range of tradable assets. The types of securities you can trade through the platform include:

  • Stocks
  • Options
  • Futures and futures options
  • Commodities
  • Forex
  • Precious metals
  • Fixed income
  • Exchange-traded funds
  • Mutual funds
  • Hedge funds
  • Robo-portfolios

Both IBKR Lite and IBKR Pro members can trade on margin, and Interactive Brokers charges some of the lowest rates on margin loans of any brokerage. The platform uses a blended rate, based on margin balance.

As of writing in October 31, 2019, a $10,000 margin loan for an IBKR Lite account was subject to a blended APR of 4.07%. A $100,000 balance in an IBKR Pro account, on the other hand, was subject to a blended APR of 3.07%. Interactive Brokers offers a simple calculator to help traders estimate their blended rate for margin trading.

Research and education tools

Interactive Brokers offers an impressive number of educational resources for traders. Traders’ Academy, for instance, features complimentary courses on a variety of topics, including asset classes, foreign currencies and how to use the Trader Workstation to maximum advantage.

The IBKR education hub also includes both live and pre-recorded webinars, visual tutorials, calculators, widgets and a trader’s glossary. IBKR Trader’s Insight offers up-to-date discussion of the latest market trends and news while the IBKR Quant Blog features posts on advanced investing topics. Inside TWS Mosaic, Pro users can also get updates and analysis from platforms such as Reuters, Dow Jones, Morningstar and Zacks.

Strengths of Interactive Brokers

  • Trading platforms: The broker offers its standard trading platform as well as a professional-grade platform for active traders. For beginners and those submitting the occasional trade, the WebTrader standard platform works well enough. A basic page lists your holdings, account value, and a trade ticket, where you can enter orders one by one. It’s a no-frills package that does exactly what it promises with a minimal amount of fanfare. Advanced and active traders will appreciate the broker’s Trader Workstation, a fully featured platform that offers a range of tools. If you’re looking to give the platform a spin with a virtual trading account, Interactive Brokers offers a free trial.
  • Low trading costs: Interactive Brokers is obsessively focused on costs, and that’s most obvious in its stock commission. Customers won’t benefit just on stocks, though. Options have no base commission rate and are charged $0.15 to $0.65 per contract, based on trading volume, with a $1 minimum total. Mutual fund investors can access more than 4,200 funds without a transaction fee, and nearly 70% of those are no-load funds. This focus on low cost is a great boon to investors.
  • Access to global markets: Customers can invest in what feels like almost any global market, including those across Europe and the major markets of Asia-Pacific. Interactive Brokers also allows trading in foreign exchange, metals and fixed-income products for even more comprehensive diversification.
  • Margin rates: Interactive Brokers offers not only low trading costs but also low margin costs, about as close to the bottom as they can get and well below what other full-service brokers offer. At the lowest end, margin rates start at 2.20% (as of October 31, 2019), putting Interactive Brokers well below many of its competitors, which have minimum rates approaching the double-digit range.

Drawbacks of Interactive Brokers

  • Monthly account fees: If you’re an investor with a low account balance, the IBKR Pro account is probably not for you, especially if you’re not making many trades per month. That’s because it charges a $10 fee for IBKR Pro accounts of less than $100,000, unless you generate $10 in commissions each month. The fee is slightly higher – $20 – for accounts of less than $2,000. The good news is, IBKR Lite investors are not subject to any monthly fee if you trade less frequently.
  • Potentially overwhelming for newer investors: Interactive Brokers is like the Ferrari of brokers, in that it offers a premium range of investment options and tools. That being said, this platform may be a bit intimidating or overwhelming to use for the investing novice. While there’s a wealth of education and learning resources available on the platform, figuring out how to use them requires an investment of time. If you’re a newer investor who’s just looking to make some quick trades, another platform might be a better fit for your needs.

Is Interactive Brokers safe?

Interactive Brokers is trusted by many professional investors, and it’s their go-to broker. The company is focused on protecting your account and uses two-factor authentication when signing you in to prevent unauthorized access. Plus, accounts are protected by the Securities Investor Protection Corporation (SIPC), which guarantees accounts up to $500,000, including a cash-only limit of $250,000, in the event the broker cannot return the assets. Interactive Brokers goes a step further, though, for additional coverage of up to $30 million with Lloyd’s of London, with a cash sublimit of $900,000. These guarantees don’t protect you against losing money in the market, of course.

Final thoughts

Interactive Brokers brings a lot to the table, especially in terms of low costs. That extends to not only trading stocks but also options and the very attractive margin rates. For pros and active traders who know what they’re doing, Interactive Brokers is a great choice, especially now that account minimums have been eliminated. The option to trade U.S. exchange-listed stocks and ETFs in the IBKR Lite account allows it to maintain pace with its commission-free brokerage competitors.

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on Interactive Brokers’s secure website

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.