a new IRA account, it could easily take a decade or more, before the account reaches $100,000. During that time, it would incur the $10/monthly fee and the $7.50 quarterly IRA fee. Of course, if your IRA is in the 6 figures, and you make more than 4 trades/year, it might be worth switching over to Interactive Brokers. Honestly, a $30 annual fee on an IRA worth $100,000 is a much lower annual cost than even the lowest cost index fund out there.
My experience with Interactive Brokers
To some this will sound like too much hoops to jump through. Once you familiarize yourself with the pricing, it seems pretty straightforward however. To others like me, this looks complicated only on the surface – in reality this is the cheapest alternative out there for experienced dividend investors. Interactive Brokers provides direct access to the stock market, and super low commissions, for a service I would be using anyways ( though the same service would be much more expensive at another broker). Therefore, one of the errors I had made for a few years after Zecco stopped offering free trades is pay $4 – $9 more per trade than I have to. I like cutting costs, without incurring any additional effort on my part after the switch. With Interactive, I have cut costs to trade without any additional effort and without really changing the way I invest.
This is the type of analysis that has helped me save money on everything in my life – from taxes, housing, transportation to brokerage costs. To some, a few dollars saved here and there is not worth their effort. However, small amounts accumulate easily – even a small leak can sink a ship. If you save $150/year, and invest those savings at 10%/year, you will have over $66,000 to your name in 40 years. In other words, to earn $150 in dividend income, you need something like $5,000 to invest. This is why I closely track each dollar that is spent – I want to make sure I do not spend a dollar more than I have to.
I transferred enough securities from my Tradeking account to not have to worry about paying the $10/monthly fee. Transferring shares to Interactive Brokers is as easy as entering share symbols and share numbers and broker account number. It took a few business days to transfer the shares from my Tradeking account to my Interactive Brokers accounts.
I like the fact that everything about Interactive Brokers is very transparent. They offer a lot of bells and whistles, which cost a little more. As a passive dividend investor for example, I do not really need streaming quotes. I do like the fact that I only pay about 1% on margin, which is much lower than any other brokers.
Since I started using this broker, I have saved a lot of money – hundreds of dollars, since I make several purchases every month. I expect that over the next 10 – 20 years, I would save tens of thousands of dollars in commissions. I love the interface, the low commissions, the ability to have my orders directly routed to the stock exchange and receiving the best price. As a result, I have been doing all my dividend investing in my taxable Interactive Brokers account since 2014. I should have signed up for an account much earlier.
If you are interested in opening an account with Interactive Brokers, you can try it by using this link. Alternatively, I can send you a referral e-mail if you would like to support the site directly. Just send me a message at [email protected]
Full Disclosure: I will earn a commission for each customer that signs up for Interactive Broker. However, you will save tens of thousands of dollars in commissions over your investing timelilife.
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