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Fidelity vs Interactive Brokers
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Fidelity vs Interactive Brokers 2012: Commissions, Fees and Investments
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- Stocks and ETFs: $0.005 per share with $1 minimum per trade for SMART routed orders
- Options: $0.70 per contract plus exchange fees
- Mutual funds: $14.95 per transaction
- Investment products: stocks, options, ETFs, bonds, futures, currency transactions
- Minimum to open Interactive Brokers account: $10,000 for non-IRA account, $5,000 for IRA account
- All Interactive Brokers fees
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- Stocks and ETFs: $7.95
- Stocks and ETFs broker assisted: $32.95
- Stocks and ETFs FAST (automated service phone): $12.95
- Options: $7.95 plus $0.75/contract
- Mutual Funds: $75 per transaction, 1,400 NTF mutual funds
- Bonds: U.S. Treasury Auctions, incl. TIPS Auctions, U.S. Treasury Bills, Notes, Bonds, incl. TIPS - free
- GSE (Agency Securities), secondary CDs, Municipals, Corporates (BBB- or higher), CATS/TIGRS, Corporates (BB+ or lower): $1 per bond, $8 minimum,
$250 maximum
- Commercial Paper: $50 per transaction
- Investment products: stocks, bonds, mutual funds, options, commercial paper, forex, foreign stocks, UITs, precious metals, ETFs
- Minimum to open Fidelity account: $2,500
- All Fidelity fees
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Low stock commissions for orders with 800 shares or less
- Professional trading platform
- Great margin rates
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- Great research tools with largest selection of independent research
- Low-cost Fidelity mutual funds
- Rich selection of investment products
- No surcharges, except for $0.0192 per $1,000 of principal in addition to commission that is added to sell orders
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- $10,000 minimum to open most accounts
- $30/month minimum commission requirement to avoid $10/month fee ($20/month fee if account balance less than $2,000)
- $10/month for IB market data feed (waived if trade commissions are more than $30/month)
- $7.50 quarterly fee on IRA accounts ($30 per year)
- Fees on modified or canceled orders
- Trader Workstation is designed for professional traders, it is not intuitive; difficult to learn
- Expensive to make trades with over 1,500 shares
- A lot of complains about snobby customer service (experienced it ourselves)
- $1.20 fee to modify or cancel an option order
- Merciless margin tightening and margin calls - IB doesn't care if their customers get completely wiped out
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- Extremely high commission ($75 per transaction) on non-Fidelity mutual funds
- Website is going down or becoming slow on high-volume days
- $12 annual Low Balance Fee for each noncore Fidelity mutual fund if balance is under $2,000
- $75 (minimum) mutual fund Short Term Redemption Fee (if mutual fund sold in less than 180 days after purchase)
- High margin rates
- Foreign currency wires: up to 3% of principal
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Interactive Brokers vs Fidelity: Comparison Summary
Interactive Brokers (Interactive Brokers Review) and
Fidelity (Fidelity Review)
couldn't be more different. IB is targeting very active and experienced traders. Fidelity customers mostly invest in Fidelity mutual funds
and don't trade much. Interactive Brokers has much better commissions on small orders, charging just $0.005 per share with $1 minimum
per trade. Fidelity in 2011 left the ranks of one of the most expensive brokerage firms in the country and is now charging much
more reasonable $7.95 per stock and ETF trade.
Interactive Brokers, however, has $30 per month minimum
commission requirement to avoid $10 monthly inactivity fee ($20 per month for accounts with less than $2,000) and $10 monthly market data fee. This means that clients who rarely
trade might pay up to $360 per year in fees! Interactive Brokers is also known to have the rudest customer service in the industry.
Investors should be extremely careful when using margin: IB liquidates positions almost as soon as they
get into negative territory without giving clients a chance to add funds. The firm tightened margin requirements at the worst possible times in 2008-2009
and many customers who used margin got wiped out. It came without a warning and it showed that IB does not care
about their clients at all when its own money could be at risk. We think it was completely unfair to the account
holders.
We would recommend Interactive Brokers to very active traders. For everyone else we suggest reading our
Best Online Stock Brokers article, where we list firms
that are not as expensive as Fidelity Investments and don't have customer service issues and fees that plague Interactive Brokers.
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