How to Open an Interactive Brokers Account in 2024?
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Interactive Brokers is an excellent broker from the United States. It is known for its cheap fees and unique investment product range. It is being used by many personal finance bloggers, for instance.
It is currently the best broker that allows access to U.S. ETFs. And U.S. ETFs are the most efficient ETFs for Swiss investors.
In this guide, I review how to open an Interactive Brokers account. It is not very difficult, but there are a few things you need to know before you start your application. And I also teach you how to optimize your account to save money!
Interactive Brokers
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
So what is Interactive Brokers (IB)?
IB is a brokerage firm from the United States. It was created in 1978 in New York, more than 40 years ago! IB is the largest brokerage firm in the United States and the leading foreign exchange (forex) broker. Interactive Brokers offers access to many instruments, such as stocks, bonds, options, futures, and more.
Interactive Brokers is a very well-known broker with an excellent reputation. It is known to be cheap compared to its competitors. I have already compared IB and DEGIRO in the past. This comparison showed that it is even less expensive than DEGIRO, the broker I used before.
An essential thing with IB is that, by default, they do not lend your shares to other people, such as DEGIRO does by default. But you have the choice, which is good! Indeed, you also can lend shares, and you will get some of the money from the lending.
If you want more information on IB, read my review of Interactive Brokers.
Why open an IB account?
So, why did I open an IB account? It is currently the best broker available to Swiss investors.
There are many reasons to prefer Interactive Brokers over other brokers.
- IB offers access to U.S. ETFs to Swiss investors, while many brokers are not.
- IB has excellent prices.
- IB offers access to many investing instruments.
- IB offers foreign exchanges at an excellent price.
- IB has an excellent reputation.
- IB has good financial strength.
So, we will see how one can create an account on IB.
Create an Interactive Brokers account
First, prepare some time in front of you. The account creation process on Interactive Brokers is not difficult, but it will take some time. You will need to answer a few questions, and you will need to wait a day for your account to be funded.
Interactive Brokers has several entities in Europe. The primary entity is IB UK, but one is in Luxembourg, and one is in Ireland, for instance. For Swiss investors, the best entity is IB UK because they offer access to a Swiss IBAN and give you access to US ETFs. For European investors, it does not make much of a difference.
First, go to the account creation page and click “Open account”.
On the first page, you must enter your email, user name, and password for the account. Make sure to choose a good password and user name.
I would recommend making your password at least 20 characters long. A long password is essential to secure your online accounts! Make sure to remember it correctly as well!
You also need to enter your country of residence. If your country of legal residence differs, you must also enter it. You can then confirm the first page.
At this point, they will email you to confirm your email address. Just check your mail and choose to continue the application.
Personal information
On the second page, you will have to set your account type. I put it to Individual for this example. You can check the kinds of accounts to ensure you choose the one according to your needs. But most people will want either an Individual or a Joint account.
Then, you will have to enter the general kind of personal information. Nothing is special here, only what you are used to entering on each website. You will have to set your addresses as well.
Since this will be related to your taxes, it is essential to enter them correctly. You will also need to enter a valid phone number. IB will use this phone number authentication, so once again, enter it correctly.
IB has several types of accounts. You will need to select the type you want. The primary type of account is a Cash account, which is the type you probably need. A cash account means you need to have the money before each trade.
There are also Margin accounts (IB has some good information about margin accounts). Margin means you can use leverage for investing with money you do not have. Unless you know what you are doing, I recommend a Cash account.
Another thing you need to configure when you create an IB account is the base currency. Since I make most of my payments in Swiss Francs (CHF) and live in Switzerland, I chose CHF as my base currency.
You can always convert money from your base currency to any other currency. The base currency only matters for the interface’s display. If you choose CHF, you can still transfer USD and buy shares in EUR, for instance.
Currently, the CHF balance has a positive interest rate. If it becomes negative again, you will see a warning about the negative interest rate on CHF balances. You can get the current negative interest rate and limit here.
Now, you will also have to set up three security questions. You will need these questions if you ever need to recover your account. Make sure you choose questions from which the answer is not ambiguous (but not easy to find)! This procedure is, once again, a standard procedure.
Investment Questions
After this, you need to answer questions about your finances.
You need to tell how much your net worth is and how much income you have. You also need to say what your objectives are for your investments. For instance, you may want to invest for capital appreciation or fixed income.
All this information is here for regulatory reasons. I would advise you to answer them with honesty.
You also need to set which instruments you need to invest in. For instance, if you want to invest in stocks and bonds, you must select these options. I only chose stocks.
Stocks, bonds, options, and futures are among many other choices. You must also select which country (stock market exchange) you want to invest in.
You also need to confirm your phone number with a code.
Confirmations
At this point, you must agree to all the rules IB has for trading. Ideally, you may want to read them. But you probably will not!
If you want, you can also join the Stock Yield Enhancement Program. This program will allow IB to lend your shares to other people. With that, you will receive half of the profits.
Of course, there is a slight risk to that, and you may also be unable to sell your shares when you want or need to. I am not using that feature now. But I have tested this feature recently, and it works well.
At this point, Interactive Brokers will want proof of your identification. For this, you can upload a driving license, an ID card, a passport, or an alien ID card for IB to confirm your identity. You will also have to enter information about your tax status on the same page.
You will also have to fill in information about your employer and job. Usually, you also need to submit something as proof of address.
Fund your IBKR account
IB will fully activate your account once they receive funding.
You need to deposit the first amount for IB to validate your account. First, you need to declare how much money you will deposit. Then, IB will give you all the information necessary for the payment.
Make sure you correctly copy the IBAN. With banking transactions, you should always double-check all banking information before transferring. The transfer will be free since they have a bank account in Switzerland!
And do not forget to include the “Further Benefit to XXX” line! Otherwise, the money will not go directly to your account, and you must contact them to fix the issue. You must do that for all future deposits to your Interactive Brokers account.
Finalize your account
After you have funded your account, you can still do a few more things.
First of all, you can configure the market data. You should set your market data status to non-professional. And you should check that you are not buying any market data. Unless you plan to day trade, you do not need this data. You do not want to pay for it.
One great thing is that you have to use two-factor authentication (2FA). You have no choice. You must configure your mobile phone to use it as 2FA.
2FA is an essential part of online security. First, you need to install IBRK Mobile on your phone. This application is available for Android and iOS.
Once you have installed the application, you can register it as a two-factor authentication for your account. You will have to log in with your username and password, and you need to enter the code you received by SMS.
Finally, you can then choose a PIN for your future two-factor authentication. Remember that PIN since you must use it for each connection to Interactive Brokers.
If you do not know about 2FA and why it is necessary, read my article about online personal finance and security.
Wait for your account
At this point, you only need to wait for IB to create and fund your account.
It should not take too long. It only took one day for my account to be created and funded. It is pretty fast. The next day, I could directly make my first trade.
Optimize your IBKR account
Now that you have access to your account, there are two more things to finalize in your account.
The first thing remaining at this point is configuring the Pricing System. I recommend you use the Tiered Pricing system. IB is cheaper than DEGIRO when you use the Tiered Pricing system.
You can make the change in your Account Settings. If you prefer the more predictable Fixed Pricing, you can also opt for it. There are some cases where fixed pricing is cheaper than tiered pricing.
Here are my settings just before I made the change to Tiered pricing:
The second thing applies if you are a Swiss investor and will invest in U.S. ETFs. In that case, you need to fill out the W-8BEN form. That is pretty simple. You can go into your Account Settings. Then, you must click the (i) blue button next to your name below Profiles. Then, you can click on “Update Tax Forms”.
They will then take you through the process, and you can fill out the W-8BEN tax form. This form will halve the dividend withholding from your American stocks and ETFs. This step is essential if you want to profit from the great tax efficiency of U.S. ETFs.
Some people have told me that it sometimes takes about one day for the account currency to be changed on the interface. You have to wait one day, and the issue should disappear. In the meantime, you may see some numbers in other currencies (likely GBP).
Another thing you can choose to do is to allow IB to lend your shares. By doing so, you will get 50% of the profits. This feature is called the Stock Yield Enhancement Program. However, there are some risks. I have tried it on and off over the last few years, but whether you think it is worth it is up to you.
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
The procedure is now complete! If you followed this guide, you now have an Interactive Brokers account.
With this great broker, we have access to U.S. Exchange Traded Funds such as VT, which makes the most significant part of my portfolio.
I have now been using IB for more than two years. And I am delighted with IB. Interactive Brokers is the best broker available to Swiss investors.
The next step is now to buy an ETF from Interactive Brokers. It is also relatively simple and only takes a little time.
What do you think about Interactive Brokers? Do you already have an account? If not, which broker are you using?
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Hello Baptiste, thanks for the very useful info that you are offering and thanks for doing it in English. I’m actually following some of your advises since I need to reorganise all my finances here in Switzerland, and I also need to start thinking on my Pension.
I would like to ask you.. I want to change my online broker from DEGIRO to Interactive Brokers, I think you did the same in the past. Can I migrate my stocks from one to the other without needing to sell them?
Thanks
Joan
Hi Joan,
I have not tried the migration myself, but both of these brokers support share transfers, so it is possible. I have heard of some people who did exactly that.
Normally, you will pay only on DEGIRO side for the outgoing transfer, per position.
Hi B.W.
Thank you for so much useful information.
In fact, I am new to investment and by now I have spent few weeks in your blog reading nearly all the articles.
I have a question. I reside in Norway and I want to buy and hold Vanguard ETFs domiciled in Irland.
I transferred NOK though a bank account in IB’s name and that had no fees. Though, my base currency in IB is USD and the equivalent of my NOK currency is shown there.
1. It is better for tax reporting to keep the base currency in IB similar to the currency I fill out my taxt report for? in my case, NOK. or it doesn’t really matter?
2. I want to buy Valguard deloped world UCITS ETF Acc – but it seems it has many listings, and it comes with different currencies for purchase (EUR / USD). how to ensure I am choosing the right one?
Hi Vahid,
1) I think it does not matter. Your local tax office may prefer having a report in NOK, but since some of your stocks will be in USD or EUR anyway, it should not make much of a difference. This is just a reporting currency.
2) The currency makes little difference, it’s the trading currency. I recommend using the same currency hold by the fund (USD in this case). So, only London Stock Exchange (LSE) remains. If you had several stock exchange, choosing the one with the highest volume and lowest trading fees would make sense.
Hi Baptiste,
I just opened an IBRK account with your help, thanks.
I spent some time in “Additional Products” section because I didn’t understand that an ETF is a “Stock” for IBRK. This should be clearer, imo. My problem was “Where are the ETFs?”, because I wanted to invest in ETFs.
When I answered I have “Limited Knowledge” about stocks, it opens a window saying “… You may be able to qualify for Stocks by our teaching exam”. I had to change my knowledge status to “Good Knowledge”, that is true for ETFs.
Hi Pedro,
Yes, that’s a good point, ETFs are treated as stocks by IB. I will make that clearer.
Interesting, I thought you would be able to trade stocks with limited knowledge as long as you don’t go short. It somehow makes sense that you need some knowledge of stocks (which are relatively simple) to trade them.
Superb insight from you once again, Baptiste, especially regarding Form W-8BEN (you have typoed ‘W8-BEN’). Thank you so much.
Thanks! I have amended the article with the proper name, I am doing this mistake a lot, will fix it everywhere later.
Hi Baptiste,
Amazing article, have you ever transferred USD from a CH bank account?
In case, which method do you suggest? from my understanding non of them is for free, Beneficiary Bank is a US bank, and I have some fee because it is an international transfer.
many thanks
Hi joel,
I think you can transfer USD from a CH based account, but I have never tried it. I have sent USD from the US, but never from Switzerland.
You should simply transfer from your CH IBAN to the CH IBAN of IB, that’s what I would try.
Hi Baptiste,
Do you know what the 14-day free trial of IB Pro entails?
I am confused. I thought there were no monthly costs and only actually buying/selling something would generate costs. Am I wrong? What happens after 14 days when the trial ends?
I opened an account because I want to slowly learn but I might not be investing anything for a few months yet. Is my account going to cost me money if it just sits there unused?
Thanks!
Hi James,
I think it’s a leftover from the time there was a 10$ per month fee if you had less than 100K USD. These days, the free trial means nothing indeed. Your account should not cost you anything past the free trial.
Thank you!
Hello Baptiste, thank you very much for these very useful guides.
We opened an account recently, and it seems it is domiciled in the US. I ran an activity statement and the address it gives is Interactive Brokers LLC, Two Pickwick Plaza, Greenwich, CT 06830 Paxos Trust Company.
We also called customer support and they said the account was in the US. However, when we wired the deposit we did it to an IBAN starting with DE (German, I suppose).
When I look for US etfs in the search bar they appear correctly.
Any idea if this makes sense — maybe someone else is in this same situation? I am wondering whether to close this account and open a new one explicitly in the UK.
Thanks.
AM
Hi Andres,
I guess that you have selected cryptocurrencies during the onboarding. IB is using Paxos for crypto. And its’ only available in the US.
Now, it was my understanding that they did not accept CH investors in the US accounts, but this seems to be wrong.
Having a US account should not prevent you from using CHF, but you may pay fees for the transfer. Did you get the full amount of the deposit in your account.
If you can deposit CHF for free into your account, there should not be much differences between a US and UK account.
Hello, thank you for this interesting article! I have opened my account but struggling to update my tax profile to fill out the W8-BEN form, I have the feeling the interface changed since you wrote the article and I cannot really find it..any way you could help?
Hi Francesca,
You are right, it seems to have changed slightly. Into account settings, click on Profile then on the (i) button next to your name and you should then be able to see the “Update Tax Forms” button.
Hi Baptiste,
I’m so grateful for what you’re doing with your Blog! I just opened my Interactive Brokers account and was wondering if you have a referral code for me to use?
I’m not sure I can still use a referral code if I already opened my account but i thought you’d know for sure.
Many thanks in advance
Hi martin,
Thanks, I am glad this is useful for you.
Unfortunately, I have no real referral code for you.
Hi Baptiste,
Another very helpful article that answers many of my questions!
Many thanks for providing usefull info as always.
I’d like to point out that the CHF account givem by IB for deposits resides in UK.
Do you see any obscure fees when you transfer from your swiss bank account?
I’d prefer to deposit CHF to IB using wise but unfortunately they force me to convert first to USD, EUR or GBP since they offer no swiss account in your name
Hi Dimi,
The account itself is in Switzerland (the IBAN starts with CH), but the recipient is indeed in the UK.
You can transfer for free to this account without any issues.
Hi Baptiste,
Regarding the diferent money locations to invest with IB (US and UK), as a Swiss resident, do I have to declare taxes to US and UK because the money is there or just to Switzerland? this is a big thing for me to feel good and begin investing with IB, this haven’t let me do it because I’m worried about it.
Thanks and have a great day!
Jose
Hi Jose,
If you are a swiss resident, you only need to declare taxes in Switzerland.
There may be exceptions if you are a US citizen, but usually, using a foreign broker does not make you eligible to pay taxes in its country.
Hi Baptiste,
I have check the CH Iban and the final bank is Citybank and not a Suisse Bank. It’s normal? we can change? thanks
It’s normal. Citibank has a presence in Switzerland and sending money to this account has always been free for me.