What if there was a way for Swiss investors to pay (even) less in transaction fees at Interactive Brokers?!
Me when I started out with my IB broker
When I opened my Interactive Brokers account in 2016, I, like everyone else, got a IB brokerage account with their fixed tariff (yet no custody fees) applied by default.
I was super happy as with Interactive Brokers LLC I was going to be paying lower fees on the same trade value than with my previous online trading platform Swissquote…
And as I was a beginner at that time, I didn’t want to complicate things by looking at this information about “tiered” pricing…
However, after exploring the various functionalities on their site for a few weeks, I realized it could be worthwhile to optimize the fees charged for trading even further to maximize savings ;)
Interactive Brokers commission: two options
There are two pricing plans available for Swiss and European Investors with Interactive Brokers: fixed or tiered.
As their names suggest:
- Fixed pricing is an always identical amount that you pay as a transaction fee. This amount is already very low compared to all other trading platforms on the market.
- Tiered pricing which reduces the amount of your transaction fees according to the size of the said transaction.
Regardless of which tariff you choose, be aware that each type of product (bonds, options, futures, stocks and ETFs, etc.) has a specific tariff. And that goes for each of the global regions according to the stock market in which you are making transactions.
Which is the best IBKR plan for the lowest fees?
As you’ve likely gathered, selecting between the fixed or tiered pricing plan depends on the transactions you execute through Interactive Brokers.
As a reminder, my blog is aimed at passive Swiss investors with a long-term focus.
Regarding the investment vehicle, I’m only going to be interested in ETFs, which are the core of all investment strategies for any self-respecting Mustachian.
But if you’re just buying single stocks (like Apple, Tesla, or value investments), with Interactive Brokers, the pricing is the same for a stock as for an ETF. So everything you read below is valid if you trade on the Swiss or American stock markets.
IBKR tiered pricing minimum level
For the American stock market, the first tiered pricing band covers investments from 1 share to 300,000 shares per month. I’ll focus only on this band since I doubt many readers are buying over 300,000 shares monthly — haha!
Similarly, for the Swiss stock market, the first tiered pricing band ranges from CHF 1 to CHF 50,000,000 per month. I’ll stick to this band as well, since even fewer readers are likely investing 50 million Swiss francs per month :D
Example 1: Swiss ETF (in CHF) bought on the SIX Swiss Exchange
For a Swiss ETF listed in CHF (such as the UBS ETF (CH) SMIM (CHF) A-dis) that you buy on the SIX Swiss Exchange, this is what you’ll pay in Interactive Brokers transaction fees:
| Transaction value / month in CHF | Tiered | Fixed |
|---|---|---|
| < 50'000'000 | 0.05% of the transaction amount | 0.05% of the transaction amount |
| — | — | — |
| Minimum per order | CHF 1.50 | CHF 5 |
Whatever the case, for a passive and long-term investor in Swiss ETF bought on the Swiss stock exchange, it is more beneficial to switch to tiered pricing.
Example 2: ETF US (in USD) bought on an American stock exchange (NYSE for example)
And for an American ETF listed in USD (such as our favorite VT ETF) that you buy on the New York Stock Exchange, here are the transaction fees that you’ll pay to IB according to the tariff:
| Volume of shares purchased / month | Tiered | Fixed |
|---|---|---|
| < 300'000 | 0.0035 USD | 0.0050 USD |
| — | — | — |
| Minimum per order | 0.35 USD | 1 USD |
Just as for the Swiss ETF, it is more beneficial to switch to tiered pricing for an American ETF bought on a US stock exchange.
My choice of IBKR tariff for all my accounts
For all of our IBKR accounts (private, joint, and professional), I’ve switched to tiered pricing to minimize transaction costs (including clearing fees, foreign exchange fees, etc.), and get the best possible rates with this broker.
How do you switch to tiered pricing on Interactive Brokers?
Setting up tiered pricing on the IBKR trading platform takes less than a minute and just four clicks — just like making a bank transfer with a well-optimized system.
And voilà, you’ve done it, you’re now on IBKR’s tiered pricing plan :)
Conclusion
Interactive Brokers’ tiered pricing is the most economical for a Swiss Mustachian investor who invests in this manner:
- Buys and retains over the long term without selling
- Mainly buys ETFs
- Invests via American or Swiss stock exchanges
While Interactive Brokers was already THE most economical in terms of cost, it’s now become unbeatable!
FAQ
Is IB’s tiered pricing applied across all the broker’s platforms?
Yes, regardless of whether you use the IBKR GlobalTrader mobile app, the Trader Workstation desktop app, or even the IB Client Portal, tiered pricing is applied to your Interactive Brokers account across the board.