Is Interactive Brokers Safe? An Overview and the Pros/Cons

FT Contributor  | 

Investing is a great way to make your money grow so you can reach your financial or retirement goals quickly. Both beginner investors and seasoned professionals take risks when they put their money into investments and if they’re not careful, these risks may not pay off.

In a survey of experienced investors, 49% of participants agreed that “new entrants are the most vulnerable to making mistakes” in the market. If you want to avoid mistakes as an investor, consider enlisting the help of an investment platform.

Interactive Brokers is an online investment platform that helps investors choose vehicles and strategies to successfully build their investment portfolio. To learn if it’s the right platform for you, review the information below to find out more about the service’s pros and cons and the features offered on the site.

Interactive Brokers Services and Features

Interactive Brokers offers investors a variety of services and features, including the following:

  • Low fees for trades and financing: Investors that use the Interactive Brokers Lite version benefit from $0 commission fees and low financing rates.
  • Variety of investment products: Through Interactive Brokers, investors have access to over 23,000 stocks, penny stocks, mutual funds, exchange-traded funds (ETFs), corporate and municipal Treasury bonds, and certificates of deposit (CDs).
  • Robust online trading platform: Active traders and buy-and-hold traders alike can use the online trading platform and have all the tools they need to analyze the market and make educated moves to grow their money.
  • Mobile app: Technologically savvy traders can use the mobile investment app to learn how their investments are performing and to buy and sell on the spot. The app behaves the same way as the Interactive Brokers website, making it easy to use.
  • Lite and Pro versions: Depending on how actively you plan to trade and your financial goals, you can choose between a free Lite version or a Pro version for higher account balances.
  • Access to research: Both the mobile app and website provide extensive research on current market conditions, including algorithms to predict performance and analysis of past trends. Investors can use online research tools to learn more about investment strategies and to find out how to best make their money grow.
  • Global investments: Interactive Brokers’s stocks, options, bonds, and funds are traded throughout 33 countries, within 135 markets, and in 23 currencies.
  • Investment Portfolio Review: Investors can provide information on their current investments, external accounts, and investment goals to engage in a portfolio analysis on the Interactive Brokers site. By connecting to third-party portfolio analysis software, investors gain expert feedback and analysis on their current investments in the form of easy-to-read tables and graphs that compare their portfolio’s performance to others in the market.

The Interactive Brokers investment platform allows beginner or advanced investors to trade stocks online without a broker or diversify their investment portfolio with other types of investments.  

Who Is Interactive Brokers for?

Interactive Brokers offers both a Lite and Pro version of their software, so it caters to inexperienced and active traders alike. With all activities completed online, it’s best for investors who are technologically savvy and want to use advanced market analysis tools to make trading decisions.

With so many types of investments, those who are looking to diversify their portfolio or implement more complex investing strategies should look into using the platform. Investors with some experience may find Interactive Brokers the most useful since the site presents extensive information and research. The information on the platform is sometimes described as too complex and complicated for beginners to analyze and interpret efficiently.

Pros and Cons of Interactive Brokers

As with any investment platform, users have reported both pros and cons to using Interactive Brokers to build and diversify their portfolio.

Pros

Low Fees

High-volume traders and investors using the Lite software version experience low or no commission fees. Margin investors report low fees when compared to other investment platforms.

Range of Investments

Interactive Brokers is best for investors looking to diversify their portfolio since there are many types of investments available. When building a portfolio, investors can choose from mutual funds, bonds, and ETFs, as well as penny stocks and traditional stocks.

Comprehensive Research Tools

The Interactive Brokers site is known for gathering research and data from other expert resources so investors have access to knowledge from around the world. Investors can review multiple analyst ratings, reports, and updated newswires on the site to decide how to handle trades.

Cons

Too Much Research for Beginner Investors

While Interactive Brokers provides extensive research, some beginners may find the site overwhelming. Charts, graphs, tables, and information are abundant on the platform, which may feel too complex to be helpful when investors are just starting out.

Minimum Trades

There is no minimum account balance or inactivity fees for Interactive Brokers Lite investors. However, there are inactivity fees for investors who don’t engage in minimum activity on the Interactive Brokers Pro site. Accounts with equity balances of $2,000 or less must trade commissions of $20 or more in the Pro version to avoid these fees.

Is Interactive Brokers Right for You?

Interactive Brokers can help you build and diversify your portfolio with comprehensive research and market data. If you’re ready to engage in different types of investment products and plan to be a relatively active trader, this investment platform may be right for you.

Before deciding to open an Interactive Brokers account, review the Lite and Pro versions to choose the one that best fits your financial strategy. Ensure you understand how to use the online platform and research tools to make the most of your investment account. By reviewing the applicable fees and investment products available, you’ll be able to decide if Interactive Brokers meets your investment needs.


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