How to Open an Interactive Brokers Account in 2021?

Mr. The Poor Swiss | Updated: | Financial Independence, Investing
How to Open an Interactive Brokers Account?

(Disclosure: Some of the links below may be affiliate links)

Interactive Brokers is an excellent broker from the United States. It is known for its cheap fees and its unique range of offered investment products. 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 go over the details of 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.

Interactive Brokers

Best Broker for Swiss Investors
Interactive Brokers

Interactive Brokers is an outstanding broker, with extremely affordable fees! Trade U.S. security for as little as 0.5 USD!

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, futures options, and even more.

It 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 was using 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. You also have the option of lending shares, and you will get some of the money from the lending. But, you have the choice, which is good!

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 reasons to prefer Interactive Brokers over other brokers.

  1. They offer access to U.S. ETFs to Swiss investors, while many brokers are not.
  2. They have excellent prices.
  3. They offer access to many investing instruments.
  4. They offer foreign exchanges at an excellent price.

For the story, I had a DEGIRO broker account before. But then, they cut access to U.S. ETFs even though it was not necessary. And they had very poor communication in the process. I found them to be very unprofessional in that matter. So I decided to switch to IB that still has this access and is much more professional.

Finally, DEGIRO only accepts money from a single bank account. With IB, you can transfer money to your account from any bank account. Since I sometimes receive money in USD, this is important for me to transfer USD without costs.

And talking about USD, IB is much cheaper than DEGIRO at converting between currencies. So, in the long term, I will save a lot of money with IB.

So, let’s 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.

First, you can go to the account creation page and Start Application for Individual, Joint, and Retirement Accounts. I needed an Individual account, but maybe you will need type such as Joint if you plan to do it for you and your spouse. The procedure should be mostly the same, but I never tried other accounts than the Individual.

On the first page, you will need to enter your email, a user name, and your password for the account. They have weird conditions for the user name. It needs to be between 8 and 9 characters in length. And it needs to contain at least three numbers.

The password is also a bit limited since you cannot use special characters. I would recommend making it 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 is different, you also need to enter it. You can then confirm the first page.

At this point, they will send you an email 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 set to Individual for my needs. You can check the kinds of accounts to make sure you choose the one according to your needs. But 99% of people will want an Individual account.

Then, you will have to set the general kind of personal information. There is nothing special here, only the thing you are used to entering on each website. You will have to set your addresses as well. Be aware that since this will be related to your taxes in the end, it is essential to enter them correctly. You will also need to enter a valid phone number. This phone number will be used for authentication, so once again, be sure to enter it correctly.

IB has several types of accounts. You will need to select the account type you want. The primary type of account is a Cash account. A cash account is the account type you probably need. It means you need to have the money before each trade. There are also Margin accounts. Margin means you can use leverage for investing with money you do not have. Unless you know what you are doing, I highly recommend going for a Cash account.

Another thing you need to configure when you create an IB account is the base currency of your account. I make most of my payments in Swiss Francs (CHF), and I live in Switzerland. Therefore I went with 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 display in the interface. If you choose CHF, you can still transfer USD and buy shares in EUR, for instance.

If you transfer CHF, you will be warned about the negative interest rate on CHF balances. Currently, there is a negative interest only on balances higher than 100’000 CHF. You can get the actual 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. This procedure is, once again, a standard procedure. Make sure you choose questions from which the answer is not ambiguous (but not easy to find out)!

Investment Questions

After this, you need to answers many questions about your finances.

You need to set 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 in appreciation of capital or for fixed income. All this information is here for regulatory reasons. I would advise you to answer them with honesty simply.

You also need to set which instruments you need to invest in. For instance, if you want to invest and Stocks and Bonds, you need to select these options. I only selected stocks. There are many more options like Stocks, Bonds, Options, and Futures. You also need to select in which country (stock market exchange) you want to invest.

You also need to confirm your phone number with a code.

Confirmations

At this point, you will have to agree to all the rules that 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 interest of the lending. Of course, there is a slight risk to that, and you may also not be able to sell your shares when you want or need to. I did not agree with that. But that may be something I will consider in the future.

At this point, Interactive Brokers will want to get 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. On the same page, you will also have to enter information about your tax status. You will also have to fill in information about your employer and your job occupation. Usually, you also need to submit something as proof of address. But for some reason, I was not able to complete this at this point when I created my account.

Fund your account

IB will fully activate your account once they receive funding.

You need to deposit the first amount of money 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 properly copy the IBAN. With banking transactions, you should always double-check all banking information before you do a transfer. Since they have a bank account in Switzerland, the transfer will be free!

And do not forget to include the “Further Benefit to XXX” line! Otherwise, the money will not directly go to your account, and you will have to contact them to fix the issue. You will need to do that for all your future deposits to your Interactive Brokers account.

Finalize your account

After you have funded your account, there are still a few more things you can do.

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 any of this data. You do not want to pay for it.

You can also configure your mobile phone to use it as Two-Factor Authentication (2FA). One excellent thing is that you have to use two-factor, you have no choice. It is great. 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 installed the application, you can register the application as two-factor for your account. You will have to log in with your user and password. You need to enter the code you received by SMS. Finally, you can then choose a PIN for your future two-factor authentication. Make sure to remember that PIN since you will have to use it for each of your connections 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. For me, it only took one day for my account to be created and funded. It is quite fast. The next day, I could directly make my first trade.

Finalize your account

Now that you have access to your account, there are two more things to finalize in your account.

The first thing that remains at this point is to configure 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.

Here are my settings just before I made the change to Tiered pricing:

Interactive Brokers Account Settings
Interactive Brokers Account Settings

The second thing applies if you are a Swiss investor and will invest in U.S. ETFs. In that case, you need to fill the W8-BEN form. That is fairly simple. You can go into your Account Settings. Then, you need to click the (i) blue button next to your name below Profiles. Then, you can click on “Update Tax Forms”. They will then take you to the process, and you will have the choice of filling the W8-BEN tax form. This will halve the dividend withholding from your American stocks and ETFs. This is very important if you want to profit from the great tax efficiency of U.S. ETFs.

Conclusion

Best Broker for Swiss Investors
Interactive Brokers

Interactive Brokers is an outstanding broker, with extremely affordable fees! Trade U.S. security for as little as 0.5 USD!

The procedure is now complete! If you followed this guide, you now have an Interactive Brokers account.

At least for now, 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 almost 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 fairly 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?

Mr. The Poor Swiss is the author behind thepoorswiss.com. In 2017, he realized that he was falling into the trap of lifestyle inflation. He decided to cut on his expenses and increase his income. This blog is relating his story and findings. In 2019, he is saving more than 50% of his income. He made it a goal to reach Financial Independence. You can send Mr. The Poor Swiss a message here.

141 thoughts on “How to Open an Interactive Brokers Account in 2021?”

  1. Hey Mr Poor Swiss,
    thank you for super useful article, I just opened an account with IB and the deposit went rather smoothly too. For some reason, it’s telling me I don’t have permission to trade ETFs, though I tried only with a few basic Vanguard ones. Do you know what could be the reason?

    The other thing I found a bit surprising is the access to relatively low number of Asian stock exchanges. Have you maybe heard about the online broker Monex in Australia, if they are any good? I see they advertise themselves as low cost and they offer access to quite a few ones.

    Thank you for your feedback!

    1. Hi Robert,

      What ETFs are you trying to buy? If you are from the European Union (not Swiss, like me), you won’t be able to buy U.S. ETF like VOO/VT, you will have to buy European UCITS ETF.
      Or, it could be that you did not select the proper stock exchanges when prompted for what you wanted to invest in when you created your account.

      About the Asian stock exchanges, I do not know. I have never tried Monex. I have not invested in any Asian Stock Exchange directly.

      Thanks for stopping by!

      1. hey, thanks a lot for your quick reply. I’m a resident of Switzerland but a citizen of the EU, could that be the issue?

        Regarding the European UCITS ETFs you mentioned, are there any among them that focus on the US stock exchange? Do you know maybe where I can find a list and description about them?

        Thank you!

        1. Hi Robert,

          Yes, that could be the issue indeed.

          Yes, there are plenty of European ETFs, you will find some of each of your needs. They are slightly more expensive and less tax-efficient, but it’s not the end of the world.
          I am using justetf to find them. The ETF Screener is more than enough to find all the ETFs you need :)

          Thanks for stopping by!

          1. Hi Mr Poor!
            really nice Bloog!!
            it is not so clear to me, if you are an EU person but with C permit you cannot buy US ETF or US stocks?

          2. Hi Vic,

            Honestly, I do not know. I would think that citizenship matters more than residency, but I am not sure.
            You can try creating an Interactive Brokers account and see for yourself. You do not have to pay custody fees the first three months.

            Thanks for stopping by!

          3. Hi Mr. The Poor Swiss and all others,

            Did you find out if the issue was related to citizenship or residency?
            Did any of you create an account and try?

            I’m quite interested in the answer since I’m also a EU citizen with a C-permit in CH…

            Thank you!
            BR,
            Marco

  2. Thank you for a great article! And do you know maybe how to transfer a degiro portfolio to IB? I don’t want to sell my PF and pay capital gain taxes in Germany. I would like to open a swiss IB account with my wife and transfer my degiro portfolio from germany.

    Many thanks! :)

  3. Dear Mr The Poor Swiss,

    Thank you for writing your blog, I really like it :)

    So you have convinced me to open an IB account, however, I have a doubt. I am a Swiss resident with a B permit, so I do not fill a tax return, I am taxed at source. So, will I have any problem using IB? Will I have to declare anything regarding taxes to the authorities?

    In addition, I think I will not be able to fill that form for getting the witholding taxes from U.S. ETFs back, since I do not fill a tax return… is that correct?
    I also assume that any dividends I receive will be taxed at 35%.

    Thank you for your time,

    C.

    1. Hi C.

      I am glad you like it!

      It should not be an issue, no. You are allowed to have shares when you are taxed at the source.

      That’s not entirely correct.
      * I believe (not entirely sure because of Permit B), that you can still fill the W8-BEN form that will lower your dividends withholding from 30% to 15% for U.S. shares and ETFs
      * Unless you fill a tax declaration, you will not be able to reclaim the 15% withheld by the U.S. government
      * 35% is for Swiss shares, 30% is for U.S. shares.

      I hope this makes sense :)

  4. Hello Mr. Poor Swiss,
    Is IB a good option if you want to start low? I mean, investing a relatively low amount (2000-10000) mostly for learning purpose?

    I am new to investing but interested in the learning-by-doing kind of approach. I know I may lose some cash early on due to the 10$ fee, but that would help me building some confidence before injecting more money.

    Does that make sense or would you suggest another broker for that particular use case?

    Kind regards

    1. Hi Stéphane,

      If you are going lower than 2000 CHF, I would not recommend it. But if you are just starting with more than 2000 CHF and trying to build some confidence, I completely recommend IB over all other options. You will pay very low fees (except for the custody fee) and you will have access to U.S. ETFs which are the best.
      So in your case, yes, I would go with IB :)

      Thanks for stopping by!

  5. Thanks Mr. Poor Swiss for the great article.

    Can you please advice if for starting to invest on IB it is better to use the free TradeStation Global?

    1. Hi Enrique,

      Looking at the fees, the only advantage of TradeStation Global is the absence of inactivity fees. And some of these fees are actually higher than IB Tiered model.
      If you are serious about investing in the long-term, IB is probably better. But for smaller investing, TradeStation Global could be better.
      Keep in mind that I never used TradeStation Global and did very little research, so these are just my two cents.

      Thanks for stopping by!

  6. I’ve been with IB for a few years and am a fan. For reasons that aren’t quite clear to me, my account ended up with IB UK. Did you weigh up the advantages of IB LLC vs. IB Luxembourg, IB UK, etc?
    I need to find out whether accounts can be transferred between IB regional entities.

    1. Hi Roving,

      IB UK is the one for Swiss investors I believe. IB LLC is for U.S. investors.
      I have no idea whether you can change.
      Why do you want to change?

      Thanks for stopping by!

  7. Hello dear Mr. Poor Swiss
    Could you please help me to find information on your blog about IB documentation needed for tax declaration in CH. I am currently using Swissquote, they provide a tax statement for 100 chf.
    Many thanks
    OW

    1. Hi OW,

      They do not have a tax statement. But they have an annual report that you can generate from the web interface. This is what I used for my tax declaration and there was no issue. The report is free with IB.

      Thanks for stopping by!

  8. Hi poorswiss,
    I don’t understand what it means if an online broker is “lending your shares”. IB offers you additional profit when you agree to this. What’s the catch? What are the risks or the disadvantages? And what is actually happening if they lend your shares? I read rick’s comment above but I’m still not sure what it all means exactly.
    Also, did I understand the difference between IB and Degiro correctly (regarding share-lending):
    You can opt-in when using IB, without a penalty for not doing so, and you have to opt-out when using Degiro, with a penalty (higher fees) for doing so, correct?

    Thanks for your blog and being active in the comment section answering questions, it’s really helpful :)

    1. Hi EarnestPear,

      You understand very well the difference between IB and DEGIRO.

      Securities lending means that the broker can lend your shares to another investor. This something they do when investors are short selling. This means that investors are selling shares they do not have. They do this to gamble on shares going down.
      The risk is smaller than people think. When the investor borrow share, they provide collateral instead. So, if the investor default while borrowing your shares, you still get the collateral back. The problem is when both the investor and the broker default at the same time. It is a very small risk. But I prefer tha approach of IB where you can opt-in for a bonus instead of opt-out for a fee.

      Thanks for stopping by!

  9. Hello Mr Poor
    I recently came accross a discussion about Interactive Brokers.UK’s custodian…which apparently is also in US (as the main IB website).
    Does this mean that, even if we are buying Irelend domiciled, UCITS ETFs we are still falling under the foreign investor witholding tax on profit, rom US? (this being as high as 30%…if your country doesn’t have a tax treaty)
    Does this tax apply to all income: from dividends as well as growth, in case of acc. ETFs? Or when/how it applies?
    And in this case, what’s the point of owning iShares Irelend domiciled and EU approved ETFs if I still pay taxex to US through IB?
    I hope I missunderstood something because this just got really complicated to me :)
    Btw, I am from Romania and Degiro is not an available option.
    I plan to passively invest on the long run, by buying accumulating ETFs:
    IWDA + EMIM + IUSN + AGGH
    Thanks!

    1. Hi IronM,

      I am not sure I understand your question.

      What matters generally is the domicile of the fund, not of the broker. For instance, if you buy VT (U.S. ETF), you profit from the U.S. CH tax treaty and you save 15% in withholding in the U.S. dividends.
      IE ETFs are still efficient, but not as efficient as the U.S. ETF. The reason is that U.S. Dividends will be taxed (in the united states) before they even reach the IE ETFs.
      So, if you have access to U.S. ETFs, you should go for it. If you do not have access, you should go with Ireland ETFs, they are the next best thing.

      But that’s for Swiss people :) If you are Romanian, it will depend if you have a tax treaty with the U.S. (I have no clue) or not. If you have one, you can invest in U.S. ETFs, for the best tax-efficiency. Otherwise, it does not matter between U.S. ETF and IE ETFs (except that U.S. ETFs are slightly cheaper).

      Does that make sense?

      1. It almost makes sense. I mean, when we’ll we be taxed and by whom?
        I own all my ETFs from iShares and they are all domiciled in Ireland. And yes, Romania does have a treaty, like Swiss, for 15%.
        What you are saying, is that before the profit reaches Ireland (and eventually my account on Interactive Brokers), it will get taxed by US according to their treaty with my country?
        And then I will need to declare it again in my country and pay my country’s specific taxes on income/gain?
        That just sucks, if you pardon my french :)
        Then the only reason I’m buying the more expensive ETF from Ireland is because Europe decided to ban the purchase of the more cheaper ETFs directly from US.
        Comming back to my question, I was talking about a different, additional tax (I hope I’m wrong and missuderstood) that I will pay just because all ETFs custodians are in US and not Ireland. I’m just as confused as before :( I need to further research and come back…maybe I’m just mixing some terms here.
        Thanks a lot for your time and your nice blog!!!

        1. In Switzerland, you will be taxed only on the dividends and not for the capital gains. In Romania, I have no clue.

          For Ireland ETFs that holds U.S. ETF, the U.S. governement will take 30% of the U.S. dividends before it even touches the fund.
          For U.S. ETF, they will only take 15% and you can reclaim them later on.

          On top of that, you will have to declare dividends as income. But capital gains will not be taxed (in Switzerland at least).

          If that’s still not clear, maybe do a little more research indeed.

          Cheers

          1. Hi, so am I correct in understanding that for US domiciled ETFs they end up deducting 15% at source on your dividends which you can completely reclaim? (so net zero) but then you still pay your normal Swiss income taxes on the dividend income.

          2. Hi Melissa,

            Yes, that’s correct. After you have filled a W8-BEN form with IB, only 15% will be deducted. And then you can count that as already paid taxes in your tax declaration.
            And your total dividends will indeed be counted as income.

            Thanks for stopping by!

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