Transcription
How to deposit your money into Interactive Brokers. Honestly, I can't really believe that I'm making a video about such a straightforward topic, but sadly, it isn't quite as straightforward as it is with many other brokers.
Interactive Brokers is an amazing stock broker. It's actually my broker of choice, where have the majority of my funds sitting. However, even myself, in the beginning, struggled quite a bit to get my money into Interactive Brokers, and I keep on getting questions about the best way to do so. That's why I thought, in this video, I'm going to show you my process, how I do it, and actually, I think it's the cheapest way, especially if you want to get US dollars into your Interactive Brokers account. With this, let's get started.
So here we are in my Interactive Brokers account. If you want to follow along, it helps if you do have an account. If you don't have an account yet, please use my link in the description below to get you started. So once you log in, you're obviously going to be greeted with your dashboard. This is where all the action happens, and here you have your portfolio, the setup cash, and your buying power. Normally, that is about the same, and of course, the most recent dividends that you've been paid, and then later on, they go into your buying power as well. But obviously, we want to talk about depositing the money. Withdrawing is pretty straightforward. If you have any questions on that, let me know in the comments. Happy to make a video on that in the future as well. But most importantly, obviously, in order to invest money, we need to deposit money first.
So what you want to do is click on deposit, and it will open up the transfer fund section over here. So if you're doing it the first time, you may not have any of those boxes that you can see over here filled out. That might be blank, and all you will see is "Use a new deposit method." So once you do that the first time and you set something up, it will always be there, which is good because that will save you quite a bit of time. So you do the setup once, and you might do that for different currencies or for different banks that you're sending money from. So you have like a kind of preset, and once it's done, it will be so much smoother.
So rather than using one of my presets, I want to click on "Use a new deposit method." So let's click on that over here. First of all, you want to select the currency you want to deposit, and there are different schools of thought, right? I mean, obviously, a lot of my viewers are from Europe, European investors, and if you only want to invest in European stocks, European ETFs, that's totally fine. Obviously, just go ahead and send your euros. You could technically also within the app exchange. It's a little bit cumbersome in order to do so. You would first have to change your base currency within Interactive Brokers to dollars, and then if it's in dollars, which is a bit strange, don't ask me why, then you can go ahead and exchange your euros into dollars. There will be a $2 exchange fee, but actually, the exchange rate is extremely good. So it's one of the best exchange rates out there. But yeah, it's a little bit cumbersome because if you invest mostly into euros and you just want to have a bit of dollars, then you would have to change your base currency afterwards back to euros. It usually takes a day to adjust, so it's a little bit clanky.
So that's why for myself, I keep my entire account a Euro. I have about a 50/50 balance of euros to dollars, I would say, of my various investments, but still, my native currency is Euro-based. But at the same time, I like to send my dollars, and I do that through Revolut. I'll come to that in a second, how I do it exactly. So yeah, in this example, obviously, if you want to send euros, it's very straightforward. You select your currency over here, do a bank or separate transfer, which is super fast to be in your account, and the same is true for your Wise balance. So I remember when I did the Euro transfer, it was there same day, and I could go ahead and invest it.
But you might want to invest your dollars, which I want to do in this example. So obviously, go ahead and select dollars over here, and then you'll be presented with a different set of options that are available to you. So you could have, obviously, the most common one, which is a usual bank wire transfer, and you can see a couple of things here. Without indicating exact fees, it does say "determined by your bank, generally fees do apply." That just means Interactive Brokers is not actually taking any fee, but usually, your sending bank, from where you send your money from, usually they will charge you a fee. But when, once again, I'll show you with Revolut how I end up paying zero fee for it, which is pretty cool.
You can also link a new bank account. So there you directly link up with your bank account, but sadly, when you actually go ahead and click on it, "Link a bank account," you will see the option, "Your bank account must be held at the bank in the United States." So most of you, it may not apply. So that's why I think if you're based in Europe or outside the US, anywhere really, it doesn't really apply for you.
And lastly, a new feature that they actually added recently is transferring your money from Wise. So if you're using Wise to send money internationally, that can be a great option because it natively integrates with your Wise balance. That's actually the fastest way. The first time you do it, if you click on "Transfer" over here, you just have to link your Wise account with your Interactive Broker account. You enter your passwords, and then it will basically have direct access to your USD holdings on your Wise account. So if you have euros in your Wise account, you can instantly exchange it to dollars, and once you have dollars in your account sitting, Interactive Brokers will see that and it can withdraw the entire balance or partial amount of the balance and immediately send it to your account, which is quite fast, actually. I mean, you will see the transfer happening immediately. There's a little lock-up period, I think a day or so, and then next day you can basically use that balance and start investing it. There's no fee from the Interactive Broker side. The only fee would be from Wise to send it plus the small exchange fee. So it's quite attractive.
But actually, I did find it a little bit more expensive than if I go through the way that I will show you in this video, which is using Revolut, which in my experience always ended up giving me a better exchange rate than Wise, and of course, being on a higher plan on Revolut, I actually get free international transfers. So basically, I don't have any expenses on that side. That's why I really prefer to go back over here and then click on "Bank wire transfer."
So then basically, you want to go ahead and click on "Get instructions," and here it walks you through the entire process of what you want to be doing. So first off, I'll be sending the wire from the following bank institution. "Save bank information." Yes, you want to go ahead to save it unless it's a one-time transfer, but probably you're better off saving it. You can give it a name, and as you saw before, I have quite a number of presets, so it makes things so much easier and faster. In my case, sending institution is Revolut. Just go ahead and pop it in there. Then you're going to go and set an account number. It's optional. You can give your account number if you have one, but again, it's not necessary. So I just skip on that for the time being.
Then you want to give it an account name because, as you saw before, I have a number of those presets from different banks, etc., and different currencies also. In my case, I'm going to call it "Wire Revolut USD," and then I'm just going to give it a test so I know it's just set up because otherwise, I have too many. So I know I can delete it afterwards, but in your case, you name it what you want, but make it very distinguished in case you have more, so easily find it. And then you want to put the amount that you will be sending. So that you should be doing every time. Now, you don't have to do that in the future. You could technically from your bank, once everything is set up, just send it straight into Interactive Brokers, but from my experience, if you don't tell Interactive Brokers that there is a wire coming to them, it will take an additional few days for them to identify the payment, link it to you, and then deposit it to your account. So it's always best advised to go on Interactive Brokers and say that you plan to send, you know, X amount of money, and then make the transfer from your actual bank. That just speeds up the process from my experience.
So for this example, let's say you want to transfer $2,500. And then you can also choose to make it recurring transactions. Go ahead and click on this if you wanted to, and then fill out all the details, you know, the frequency, how often, etc. And then Interactive Brokers knows that every, you know, first of the month, that amount is coming into your account, and then you can go into your sending bank so that on every first of the month, that specific amount will be sent to Interactive Brokers. But in my case, I like to do it manually. I usually send a bigger amount and then invest until I get almost close to zero, and then I just make another investment and just to see how I feel not to have too much money sitting around there. But yeah, that's really up to you. Good.
So from here, you want to click on "Get wire instructions," and these are the exact wiring instructions that you should be following in order to make the transfer from your bank. So it's very straightforward. So let me show you how I do it with Revolut. So basically, what you want to do is go ahead and open the Revolut app. And if you haven't been using Revolut before, I have a whole playlist dedicated to it because I really love the app. It's so powerful, it can do so many things, and especially for exchanging money and sending it internationally, I think it's one of the best apps that you can be using if you have access to it.
And then over here, I have all my past transfers. One of them is actually "Interactive Brokers USD" already. It's set up. So now it's very easy for me to just click on "Send again," and then I can just stipulate the amount, and I will be sending it. So it's very straightforward. I don't have to do all these processes once again. So once you set it up once, that's it. Set it and forget it.
But what you want to do if it's the first time, you want to click on the top right over here where it says "New," and then you want to click on "Bank recipient." Unfortunately, somehow Revolut doesn't allow me to screen record while I'm showing you this process, which is really strange. So the app just goes into black mode. So sorry for that. But basically, it's very straightforward. Once you click on "New," the main thing you have to do when you click on "New bank transfer" is to change the country because most people, they look within Europe and they have the SEPA transfer and the IBAN, etc., but that's very different to the US. So make sure you send it to the US as an individual. And then just fill in all the details. I can show you from past transfers how it basically looks.
So you can see over here, the account number is the same that they previously gave me on the screen. You also have the routing number, which is very important. So again, quite different from the bank details that we used to in Europe. So it's similar to the IBAN, but here it's called account number and routing number. Then country, obviously, United States, and currency USD. So make sure you're actually sending USD. You don't want to end up sending euros to your USD account. So make sure it's also sent in dollars. And then you have the recipient address, which is in the United States as well.
And there's one very important thing that you must pay attention to, and that is including the payment reference for the payment of the transfer because otherwise, it might end up getting lost. So it's very important that your that number with your name as part of your transfer details. There's always a box with either numbers or you can change it to description. Just copy-paste it into your sending instructions, and that way you are sure that basically the sending institution will match up with the receiving institution, right?
Once you've done that on Revolut or any other bank that you use to send your money, you're just going to click on "Finish." Basically, that way Interactive Brokers knows that there is an incoming wire about to happen very soon. And you will see, if I click once again on "Make a deposit," you will see that in the future, it will be so much easier because, as you can see over here already, "Wire Revolut USD transfer test" - it's there. So I can just click on it, put the amount, say "Confirm," and then just go back to my Revolut and send the amount, or any other bank institution that you use to send your money. So it will be so much easier. But always make sure that you definitely put it here first so they know that that amount is coming. And also, if you say you send $2,000, make sure you send $2,000. Don't say you send $2,000 but then end up sending $1,000 because then they might wait for more and not validate the transaction as it happened.
One thing, in case you change your mind or you want to send more or less, you can actually edit this. Go over here, "Transfer and Pay," and then click on "Transaction status and history." And here you will see all the transaction status and history, basically what is about to happen. I've also informed them that there is an incoming wire of $25,000. It's still pending because it hasn't happened yet. I haven't sent it from Revolut yet, but once it's actually been received, it will be marked as "Done" and then added to my balance, which I can then use to invest and buy more stocks, ETFs, or whatever I have to. You can also click into this over here, and from here, I could either modify it or even cancel it if I wanted to.
Since I'm myself on the Revolut Ultra plan, I should get international transfers free of charge. So if you go on Revolut.com, you can see here, "Save on international transfers." On the Standard and Plus plan, there will obviously be a fee attached to it. On the Premium plan, you get 20% discount. Metal, 40% discount. And then on the Ultra plan, you get free international transfer. So if you're sending quite a bit, maybe also to other institutions or to friends or other businesses, what have you, that can really pay for itself because usually I ended up paying $2.50, which is not too bad, but still, you know, this does add up if you send more than once a month, for example. Plus, of course, the exchange rate that I'm getting, if I exchange money Monday to Friday, at least in my experience, has really been the best. And that's why I love sending my money with Revolut to Interactive Brokers because this is the cheapest possible way that I found of getting my euros into dollars and then into Interactive Brokers.
Now, one thing I do need to mention here, while the transfer is actually fairly quick, usually if I send it during a business day, next business day, it will be already in my account. So you'll get notified that the money has arrived. But then, for whatever reason, don't ask me why, it usually will be sitting here. I can see the amount, but it's kind of locked up. I can't do anything with it. So it takes another, I think, three to four days usually until I can actually use that money to invest. So you really want to be planning in advance that you still have money left. In my case, I, for example, now have $940 left. So if I buy one more round of stock, I'm pretty close to zero. So definitely I want to go ahead already today to transfer new funds into my Interactive Brokers account. When I do my next weekly round of stock buys, I have that money already there and don't have to wait until it's unlocked. So yeah, that's just the thing Interactive Brokers does, sadly.
And once it's been cleared and settled and you can use it, usually they will send you an email, so you know that the money is available to invest, and you can go ahead and invest it wisely. When I look at apps like Trading 212 or even Lir, which makes it super, super easy, I can do a transfer within a second from my Revolut account or even my local bank account into Lir. It's lightning fast, literally, and then it's already there right away. I can use those funds to buy stocks. That's literally a matter of seconds from transferring the money from my banks to the broker and then owning the stock. So that's how it should be. I hope Interactive Brokers will do a better job in the future to improve on the speed of execution. But for the time being, that's what it is. And probably the fastest and cheapest way to get your euros into dollars into Interactive Brokers.
Next up, check out this video over here where I'm going to run you through a couple of tips how you can get the most out of Interactive Brokers. Thank you so much for watching. Stay healthy, get wealthy, and I'll see you in the next one. Ciao.