How to Buy an ETF on Interactive Brokers the Easy Way
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I have been using Interactive Brokers (IB) for several years. It took me a while to get used to this broker. However, I can now do all the operations I need easily. I will show you how to buy an ETF from start to finish on IB, the easy way!
Many readers were having a hard time starting with Interactive Brokers. It may be a little complicated initially, but it becomes straightforward once you do it. If you follow this guide, you will know how to buy ETFs from IB without issue!
This guide will show you how to buy an ETF directly from the account management interface. And we also see how to deposit money into your account from this interface and even how to convert currencies if necessary. So, we will cover all the steps to make your first investment with Interactive Brokers!
By the end of the guide, you will know exactly how to buy ETFs on IB!
Interactive Brokers Interfaces
The broker you need to buy stocks and ETFs reliably and at extremely affordable prices. Trade U.S. stocks for as little as 0.5 USD!
- Extremely affordable
- Wide range of investing instruments
Interactive Brokers has several different user interfaces:
- Account Management
- Web Trader
- IBKR Mobile
- Trading Workstation (TWS)
This guide will show you how to buy an ETF from the Account Management interface. This interface is the simplest of all the interfaces. And this interface has all the features you need to buy your first ETF from Interactive Brokers. I have a guide on the different IB interfaces if you want to learn more. But do not worry, you only need one!
This guide will review how to buy the VOO (Vanguard S&P 500) ETF from the Account Management interface. Even though my example will focus on the VOO ETF, the process is the same for any ETF. For instance, I follow the same monthly steps to buy VT (my favorite ETF) and CHSPI (my Swiss ETF).
I will guide you through all the steps. The process starts with transferring the money to IB, converting it to USD, and finally buying the ETF. Of course, if your base currency is USD, you do not need step 2. And if your account is already funded, you do not need the first step either.
I assume that you already have an Interactive Brokers account. If you do not have one, you can read my guide on opening an Interactive Brokers account. And then, you can come back once you have created your account!
Usually, there should not be differences between the entities, but I recommend using the IB UK entity for Swiss investors.
The Best Interactive Brokers interface
The Account Management interface is the default interface of Interactive Brokers. This interface allows you to do everything you need:
- You can visualize your portfolio and see your investing performance.
- You can do basic trading. However, some of the advanced options for trading are not available from this interface (but we do not need them anyway).
- You can request a transfer of funds.
- You can generate reports of your activity or results.
This interface is excellent for most tasks. This interface is the only one I use for investing with Interactive Brokers. You should not fall into the trap of using a more complicated interface to do simple tasks.
To open this interface, you can go to the Interactive Brokers website. From there, you can click on the red Login button.
Go to the Client Portal Login or the Account Management link to access Account Management. They both do the same thing. You will need to enter your account name and password. And you will also need to use your phone for two-factor authentication.
Transferring money to Interactive Brokers
If you do not have enough money to make the trade you want, you must first fund your account. For example, you want to transfer 5000 CHF to your IB account.
There are two steps in this process:
- First, create a new deposit method.
- Then, declare an incoming transfer from a deposit method.
The first step is only necessary if you have never made a transfer from this source. If you already did it, you can skip it. We should see how to do both of the steps.
1. Create a new deposit method
On Interactive Brokers, you must first declare the transfer’s source.
It is only necessary to do this once for each source. You can have many sources in many different currencies. However, the source of the deposit must be an account in your name. But it does not have to be in the same currency as your account currency. This is highly convenient to fund your account from different sources.
To access this view, go to Menu > Transfer & Pay > Transfer Funds. If you want to declare a new source, click on How to wire Funds. Then, you must fill in some information about this deposit method.
Make sure to double-check all the information. IB will use this information to associate the incoming funds to your account. If something does not match, the fund transfer may be delayed.
2. Declare a new wire transfer
Once you have created your deposit method, you must declare a new transfer from this method. You will have to do that every time you do a transfer.
Return to the Transfer Funds view and select one of the deposit methods. You should have one for each bank account from which you plan to send money to IB.
Once you have set the correct amount you intend to transfer (5’000 CHF in my example), you can continue, and Interactive Brokers will give you all the information for the bank transfer.
This view should give you all the necessary information to perform the wire transfer from your bank. Be careful about setting the correct message to the recipient. This message should contain your account number and your name.
This information is what Interactive Brokers will use to identify the transfer. If you do not use the correct information, the transfer may take a while to be processed and returned to your bank account.
You can then initiate the transfer from your bank. If you transfer CHF, use the CH IBAN (IB should present it by default). That way, the transfer will be entirely free. Once you initiate the transfer, reaching IB may take a few days. But, generally, it is pretty fast. When my bank executes the transfer, I usually see the money in my IB account the same day.
You may be assigned another IBAN (from Credit Suisse) to wire money to your account, depending on when you created your account. This other IBAN is also a CH IBAN you can transfer to without fees. In this case, follow the instructions given to you by IB.
Convert currency from Account Management
Since April 2024, you do not have to convert currency directly. Indeed, if you have a cash account, IB will automatically buy the currency you need from your base currency. If you want a little more control, you can do the conversion yourself.
If you plan to buy an ETF in another currency, you will first have to buy this currency. It is straightforward to do so from the account management interface.
You can go into the menu and click on Convert Currency.
In this view, you can choose which currency you want to convert and into which currency. Next, enter the amount you want to convert and click Submit. Interactive Brokers will then generate an order for you on the forex market. And once this order is executed (generally instantly), you will get your USD.
If you want more control, there is another way to convert currency. You can buy currency like you buy shares (see next section). For instance, you can purchase shares in USD.CHF, which means buying some USD with some CHF. If you want to buy USD with EUR, you can look for USD.EUR. If you want to buy EUR with USD, you can trade for EUR.USD. You get the idea!
This method will give you more options. But in most cases, the simple conversion will work nicely. I only use the default currency conversion method since it is simpler and saves time.
Buy an ETF on Interactive Brokers
Once you have enough cash in the correct currency, you can buy some VOO ETF shares (or any other ETF). You can use the search function from the top right of the interface.
You can type VOO or the name of any other ETF you wish to buy shares from and type Enter. Interactive Brokers will propose several options (Stock, Futures, Options, and Contracts For Difference (CFD)). ETFs are listed as Stock. And sometimes, you will also see several exchanges. Here, we want the Stock on the ARCA exchange.
If all these values confuse you, do not worry! Here is what they mean:
- 266.42 is the current market price.
- -0.06 is the last change of the market price in absolute value.
- -0.02% is the last change of the market price in percent.
- In red, you will find the ask volume and the ask price (266.70)
- In blue, you will find the bid volume and the bid price (265.36)
And the fact that it is written Frozen Data is because I did not pay to get real-time data for this particular market. Or it could also mean that I am trading out of hours. If you are a passive investor like me, you only need to worry about the current price. You can ignore all the other information.
Then, you can set the amount you want and the Limit price. Since it is a trade, you can use several order types: Market, Limit, Stop, and Stop Limit. If you are trading with a popular ETF, you can use a Market order.
The execution on IB is good enough that you will not have issues with market orders. Otherwise, you can use Limit Orders. You can set the Limit price based on the current data. But be careful about not trying to optimize too much.
I only use Market Orders. They are simple and not nearly as inefficient as some people think.
You can also set the duration of the order. Either the order is valid only today or Good Till Cancel (GTC). If you want to learn more about these options, I wrote an entire article about stock market order types.
I would advise using the Preview option to ensure you want this operation.
This view will give you all the information you want about the order. You need to pay special attention to the amount and the commission.
For instance, I would have paid 5328.60 USD for the purchase of 20 shares, and I would have only paid fees between 0.31 and 0.41 USD (yes, IB is that cheap!). Once satisfied with your order, click Submit to validate it and wait for it to be executed.
If you use a market order and the stock exchange is open, IB will instantly execute. IB will execute a limit order based on the price you set. If you set a price higher than the current price, it will also be executed instantly.
Congratulations, you now have shares of your ETF! You can follow this simple every month and be on your way to using the stock market for great returns!
Warnings from Interactive Brokers
When you trade with IB from the Account Management interface, you may encounter several warning popups on your screen. You will get used to it. But when you are starting to invest, it can be overwhelming. So, here is what the biggest warnings mean.
And do not forget to click the check box to avoid seeing them again!
Warning about small currency transactions
The first warning is when you do a small currency transaction below 25’000 CHF.
In that case, IB will tell you that the order is too small to use IDEALPRO and FXCONV instead. You do not need to worry about that! They are just two different routing systems.
For orders below 25’000 CHF, IB will not guarantee interbank exchange rates. So, you may be getting a slightly worse deal. But the difference is negligible enough that you do not have to worry about it. I have converted many times small amounts with IB without any issues.
Warning about lack of real-time data
The second warning that could pop up is when you buy an ETF without real-time data.
If you are like me, you will not have paid the monthly fee to get real-time prices. Passive investors do not need real-time pricing! The prices you see in the interface are delayed by 15 minutes. If you need real-time data, you can always look at Google Finance to see them.
So once again, do not worry about this warning.
Warning about price caps
The third warning is about mandatory price caps. This warning is probably the least obvious of the three.
In 2016, Interactive Brokers started implementing price caps for market orders. It means that a limit order with a price significantly different from the market price cannot be executed even though it would be valid otherwise. IB uses its way of setting price caps to decide what is fair and what is not.
For instance, if a stock trades at a market price of 100 USD and you open a buy limit order at 50 USD, IB will not take this limit order into account to execute against other market orders.
Thus, using price caps on market orders is simply a protection for investors using market orders. This protection is good for honest investors like you and me.
Once again, you can safely ignore this warning.
FAQ
How much does it cost to convert currency on IB?
Converting currency on IB will cost you 2 USD, regardless of the amount. For medium to considerable amounts, this is very cheap. But you should avoid converting tiny amounts.
Conclusion
The broker you need to buy stocks and ETFs reliably and at extremely affordable prices. Trade U.S. stocks for as little as 0.5 USD!
- Extremely affordable
- Wide range of investing instruments
Now, you are already done! You will now have more shares of the VOO ETF (or any other ETF you want to buy). The entire process is the same for any other ETF. You have to change the name you are searching for, and if it is available in Interactive Brokers, you can buy it.
It is straightforward to trade from the Account Management interface. You can do all the basic investing tasks from this interface. Likely, most simple investors will never need any other interface.
As you can see, you can do much from the Account Management interface. Even though its name talks only about managing your account, it can do much more than that! You can do most things on this interface.
Of course, there are a few limitations. For instance, some Interactive Brokers order types are not available. But that is not an issue for simple passive investors. The account management interface is the only one I use, and I never found anything missing. I invest every month using this interface.
For beginners with Interactive Brokers, I recommend using the Account Management interface. Once you are more familiar with it, and if you are interested, you can start exploring the other interfaces. But you can go your whole investing life only using this single interface.
To streamline your investing, you may consider automating your investments with Interactive Brokers. With that technique, you will have almost nothing to do to invest each month.
If you prefer trading from your mobile, you can buy ETFs from the IBKR Mobile Application. Or, if you need additional information on this broker, read my review of Interactive Brokers.
Do you have any questions on how to use IB? Do you have any tips for the Account Management interface?
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Hi,
I live in Poland. Can I invest to US ETF’s like SPY?
Thank you
Hi Alan
Since Poland is part of the EU, you may not purchase US ETFs.
Hey Baptiste,
short question about ETF, example I want to buy an S&P 500 that use accumulation instead of dividend, how do I know which one is acc? Is IVV in acc?
Thank you
Gionas
Hi Gionas,
You will have to look at the factsheet of each ETF to know that for us.
However, US ETFs are not accumulating, only distributing, so that’s an easy rule of thumb.
And UCITS ETFs generally have either Dis or Acc in the name and the default is generally Dis.
Hello Baptiste,
really useful article! I was trying to perform the wire transfer from Neon to IB, so what I did is try to do a domestic payment in Neon. (since the IB IBAN starts with CH). Is the beneficiary of the transfer the UK or USA bank? From your article, it seems UK, but from what I see in my IB account it’s not really clear (they inverted the order and changed the naming since you have written the article). Moreover, in the Neon domestic payment, I cannot seem to find any slot to insert the “Message to the recipient” (at least in the first screen I see..); does it come after defining Beneficiary, IBAN, Country, ZIP and City?
Thanks !
Hi Giorgio,
Indeed, you have to do a domestic payment. The address of IB (not the bank) is indeed in the US. But Neon does not support addresses with US, so you have to switch to UK instead and it works.
The message to the recipient is on the next screen, where you enter the amount and then the message.
Hi Baptiste,
is it preferable to trade during US market times? Or is it also safe to add market orders while the US market is closed?
Also, about the warnings, I noticed that if you want to convert your full CHF e.g. to USD, you will probably get a warning such as “SELL 1K CHF.USD Forex” YOUR ORDER IS NOT ACCEPTED. THERE IS INSUFFICIENT CASH [-1.85 CHF] IN YOUR ACCOUNT TO OBTAIN THE DESIRED POSITION.”
–> You need to leave some ‘space’ for the conversion fees
Cheers
Hi Ioa,
It’s exactly the same. If you add market orders outside of market hours, the order won’t be executed before the market opens.
Yes, you need to always have cash available for the fees unless you are using a margin account.
Hey thanks for the helpful blog.
I recently tried to buy VOO stocks but I got this message on IB:
“Trading Restricted
This product is currently unavailable to clients classified as retail clients. Note: Individual clients and entities that are not large institutions generally are classified as retail clients. There may be other products with similar economic characteristics that are available for you to trade.”
Do you know what this is about? How did you circumvent this?
Hi,
Are you a Swiss resident or an EU resident? In the first case, you should contact support because you should be allowed to trade VOO. In the second case, there are European regulations against that, and you won’t be able to trade VOO as an EU resident.
Ahh right, that makes sense. I am in the UK, it seems that I am able to only get VUSA which is Vanguards European ETF.
Thanks a lot for clarifying that, I really appreciate it.
Hi,
I have the same question.
I am residing in Switzerland (I work & live here since 3 years), but I hold European passport.
Is it possible for me to trade US ETFs?
Thank you!
Normally, yes. Normally, what matters is tax residency. There may be exceptions in some cases but I don’t know them all.
Hello Baptiste,
Thank you very much for your blog- I’ve found here the answers to the majority of questions I’ve had so far about investing in Switzerland :)
I wanted to ask you about the following: I bought today a few shares of CH SPI, paid just over 900 CHF, and the commission was 3.52 CHF. My commission system
is tiered at the moment. Feels like this is a bit much, as compared with your example. Do you have any idea why it was so high? Maybe because the trade was small?
Thank you again and all the best wishes!
Veronika
Hi Veronika,
Thanks for your kind words!
3.52 CHF is actually correct for a Swiss ETF.
The example from this post is with a US ETF that is about 10 times cheaper than a Swiss ETF.
Hi Baptiste,
Thanks for the great info you share in the blog; super inspiring!
I am about to set up a Family Advisor account in IB with 4 linked accounts: one for me, one for my wife, and one for each of my underage kids (joint under my and my wife’s name for the moment). The plan is to invest monthly in Vanguard ETFs, actually the same strategy for each account, just different amounts.
I have 2 questions:
1. What would be your recommendation to fund these accounts monthly? It seems with this set up I can only fund each account independently thus paying 4x 2 USD every month. Any advice?
2. What’s your take on fractional trading? I wonder if you have experience purchasing VT monthly on a fixed amount (i.e. 500chf, converted to USD). Have you tried? Are fees the same as for purchasing full shares? Is the purchasing operative similar from the Account Management interface?
Thanks a lot in advance!
E
Hi Erik,
Keep in mind that I have never used a family advisor account. I have a joint account and a sub-account directly. In my case, since all the accounts are mine, I can do internal transfers. I do not know if you can do that as well.
1) The 2 USD is only for conversion, not for deposit. But if you want to buy US ETF, you will need to pay 2 USD indeed. If possible, I would wire money to the main account, convert it there as well and then do internal transfer to the other three accounts.
2) I have never tried. I much prefer to buy full shares of VT. But the fees should be the same.
Hi Baptiste,
Thanks for the article, it is really useful!
I just moved from the UK to Switzerland. I have some index funds invested directly in the UK Vanguard website but it doesn’t seem to be available in Switzerland for individual clients. I have a IB account but as I have read in one of the comments, US ETfs are not available to buy anymore in Europe. I wonder if the same applies to traditional mutual/index funds, not ETFs? Is there any way I can re-buy VTI or similar in Switzerland?
Thank you so much for your content!
Olga
Hi Olga,
That’s correct, we don’t have access to Vanguard index funds in Switzerland, unfortunately.
However, we have access to US ETFs in Switzerland!
You can buy VTI using Interactive Brokers if you are in Switzerland :)
I don’t think it exists, but I thought of double-checking with you Baptiste. Is there a way of setting a monthly order to buy X amount of shares (or shares for a value of Y) from a specific ETF?
That’s right, it does not exist :)
Seems they released this feature recently and named it “IBKR’s Recurring Investment Feature”.
https://ibkr.info/article/4470
https://www.youtube.com/watch?v=yYXbOPWPezc
Interesting, Thanks for sharing. It seems currently limited to US users. I have checked my account, and I do not see it. It’s definitely interesting and I know that many people are looking for something like this.
Hey Mr Poor Swiss, thanks for the guide.
I was wondering how do you find the right ETF symbol? For example, Id like to buy MSCI world.. how do I find the right stock, and where do I see management fees and other relevant information?
Thanks
Hi Danny,
Glad you like it :)
MSCI World is an index, so you need to find an ETF that tracks this index. You can find some of them on justetf.com, but I don’t think they have US ETFs. I usually use google like “ ETF” and I find some ETF for that index. Then, I go on each ETF website to find the datasheet for the ETF and compare it.