Fidelity Investments vs Interactive Brokers: Which broker is the right one for you?

By establishing an online brokerage account, investors may buy and sell individual stocks, options, ETFs, and mutual funds with a few mouse clicks or smartphone taps. The well-known brokerage firms Fidelity and Interactive Brokers each month execute millions of deals.

Interactive Brokers and Fidelity permit commission-free transactions on a variety of investment kinds. Self-directed brokerage accounts have the exact $0 minimum requirement across brokerages; however, fees vary by account type.

Interactive Brokers have long been professional traders’ preferred broker. Nonetheless, in 2019, the business created IBKR Lite, a second service tier for less serious clients. With IBKR Lite, you can access unlimited free trades of stocks and ETFs listed on U.S. exchanges.

Interactive Brokers is appropriate for seasoned traders seeking professional trading experience. However, suppose you like trading platforms with complex tools and modules. In this situation, Interactive Brokers may be an excellent option for you. Interactive Brokers may also provide forex traders with extensive currency market exposure.

For the last few years, the leading brokerage firm has been Fidelity. The company continues to improve its offerings while decreasing its investment expense. The Fidelity trading platform is best suited for individual investors. Fidelity offers a variety of tools, research, and services to its traders. Active investors can download Active Trader Pro, a tool that streams real-time data and provides a configurable trading interface.

Fidelity is also suitable for expert traders. Those who prefer active trading will value Fidelity’s expanded capabilities. If you search them, Fidelity will surprise you with an extensive database of no-fee ETFs.

Fidelity Investments Overview

Fidelity was formed in 1946 and debuted on the internet in 1995, over 50 years later. The firm has developed into a significant player in the internet brokerage industry. Fidelity has continuously provided investors with outstanding research, helpful tools, and vast educational materials. Notably, the firm has continued to enhance its platforms and is dedicated to reducing investment expenses.

To help you determine if Fidelity is a good fit for your trading or investing preferences, we’ll examine the broker’s features, pricing, and resources in total. If you’re interested in Fidelity’s robo-advisory services, we’ve assessed Fidelity Go separately from its brokerage service.

As one of the major brokers in America, Fidelity serves all sorts of clients, from novices to experts, those who want highly tailored guidance, and those who are self-directed. For the buy-and-hold investor, Fidelity offers a vast array of tools, information, resources, and simple order input. Fidelity offers Active Trader Pro, with streaming real-time data and a customizable trading platform for more serious investors and traders.

A few prominent trading items, such as futures, commodities, and cryptocurrencies, are absent from the company’s portfolio, despite the company’s wide variety of offers.

Interactive Brokers Overview

Thomas Peterffy founded Interactive in 1977 when he purchased a seat as an independent market maker on the American Stock Exchange; Interactive Brokers is one of the largest electronic brokers in the world, completing millions of deals every day. In addition to its headquarters throughout Greenwich, Connecticut, Interactive Brokers maintains offices in North America, Europe, and Asia. Currently, they have approximately 2,100 workers and are a Nasdaq-listed public corporation.

Interactive Brokers has lately achieved significant brokerage advancements and, in 2022, ascended to a five-star grade. The broker has endeavored to make its platforms and customer service more user-friendly and accessible for active and professional traders. And these enhancements complement its robust trading platform and astonishingly cheap margin rates. The basic service tier of Interactive Brokers is free trading. Clients can upgrade to the broker’s renowned transaction execution on the broker’s pay tier (Pro). In addition, investors have access to the industry’s most extensive collection of no-transaction-fee mutual funds. Interactive Brokers has gradually tailored its services to novice investors, and it is a fantastic choice for serious investors.

Interactive Brokers is the preferred choice for professional traders, investors, and day traders. Their flagship IB Trader workstation is among the most potent investment research, monitoring, and execution tools.

Interactive Brokers’ commissions and costs are among the most competitive in the online broker industry, including the lowest margin trading rates in our assessment. They provide access to foreign markets in 33 countries and a comprehensive menu of investment options encompassing virtually every essential asset class. Serious investors will discover almost all they want and should be satisfied with the experience.

Interactive Brokers also provides advantageous features for novice and infrequent traders. IBKR Lite provides commission-free transactions on U.S.-based equities, exchange-traded funds (ETFs), and mutual funds and is a more user-friendly platform for beginners. The mobile and online interfaces of Interactive Brokers are also easier to manage than the desktop IB Trader Workstation, albeit having less functionality. The AI tool of Interactive Brokers may also assist with answering inquiries and making trades.

Fidelity vs. Interactive Service & Feature Comparison

Costs

Fidelity and Interactive Brokers allow clients to purchase and sell various assets at a pitiful cost. Numerous brokers provide discounts to investors who execute more monthly trades or choose trading services with lower fees.

However, low-volume traders may pay more for an Interactive Brokers account than a Fidelity account. Any month a client’s account produces less than $10 in commissions, the client must pay Interactive Brokers $10.

According to our research, Interactive Brokers has earned a reputation for having the lowest commissions and fees in the industry. There are two primary programs available: IBKR Pro and IBKR Lite. IBKR Lite provides unlimited commission-free trading for U.S. equities, ETFs, and select mutual funds, primarily oriented at individual and recreational investors.

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IBKR Pro, which targets institutional and professional investors, levies fees and offers both fixed and tiered pricing options. According to the fixed pricing structure, stock trades cost $0.005 per share, with a minimum charge of $1 and a maximum price of 1 percent of the total trading value. Those clients that execute a high number of transactions each month have the option to convert to the firm’s tiered pricing structure, in which the charge falls as trading volume grows. Interactive Brokers employs similar fixed and tiered commission structures for investments such as options, bonds, currencies, and mutual funds.

Interactive Brokers margin rates are the lowest among the online brokers we studied. For IBKR Lite, all margin transactions are financed at a rate of 2,6 percent. It is much more advantageous for IBKR Pro users, whose margin prices vary from 0.75 percent to 1.6 percent, depending on the amount borrowed.

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Account Types

Fidelity ranks among the brokerages with the most account types for individuals, families, corporations, and managed accounts.

In addition to standard joint and individual taxable brokerage accounts and tax-advantaged retirement accounts, the organization offers every conceivable form of account a person or business may want. Among the more unusual account types are Solo 401(k)s for the self-employed and small enterprises and 529 college savings accounts.

Regarding the variety of products, Interactive Brokers was the apparent victor in our survey. As part of our investigation, they provided practically every form of investment we were searching for. Depending on your budget, they also provide fractional share trading, where you can purchase less than a whole share of stock. Among the things that made them stand out was the wide variety of foreign investment options. Interactive Brokers provides access to 33 nations’ marketplaces.

The one thing they did not provide was assistance with portfolio planning. In addition, they do not yet offer cryptocurrencies but want to do so by the end of summer. Nonetheless, they are also minor drawbacks, and Interactive Brokers’ breadth of services is a significant strength. Fidelity ranks among the brokerages with the most account types for individuals, families, corporations, and managed accounts.

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In addition to standard joint and individual taxable brokerage accounts and tax-advantaged retirement accounts, the organization offers every conceivable form of account a person or business may want. Among the more unusual account types are Solo 401(k)s for the self-employed and small enterprises and 529 college savings accounts.

Regarding the variety of products, Interactive Brokers was the apparent victor in our survey. As part of our investigation, they provided practically every form of investment we were searching for. Depending on your budget, they also provide fractional share trading, where you can purchase less than a whole share of stock. Among the things that made them stand out was the wide variety of foreign investment options. Interactive Brokers provides access to 33 nations’ marketplaces.

The one thing they did not provide was assistance with portfolio planning. In addition, they do not yet offer cryptocurrencies but want to do so by the end of summer. Nonetheless, they are also minor drawbacks, and Interactive Brokers’ breadth of services is a significant strength.

Education and Research

We believe that investors with access to more information may make more educated investment decisions. Customers of Fidelity’s brokerage may select investments using screens, read news from many of the leading newswires, and access upgrades and downgrades from more than 100 businesses, to mention a few of its research capabilities.

Interactive Brokers offers a variety of tools, such as a Daily Lineup of the top 10 news pieces, Morningstar reports, and access to historical analyst ratings for specific companies. At any broker, investors may access much research to bolster their analysis.

First, they provide hundreds of courses for traders of various skill levels at their Traders Academy. The courses range from introductions to getting started on the platform and the fundamentals of trading charts to more advanced sessions on utilizing options and the platform’s sophisticated research capabilities.

The free online classes contain study aids such as videos, quizzes, and articles. In addition, they operate a Student Trading Lab to aid in teaching students online trading and finance.

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Range of Investments

Considering the breadth of its services, Interactive Brokers was the apparent victor in our analysis. As part of our investigation, they provided practically every form of investment we were searching for. Depending on your budget, they also provide fractional share trading, where you can purchase less than a whole share of stock. Among the things that made them stand out was the wide variety of foreign investment options. Interactive Brokers provides access to 33 nations’ marketplaces.

The one thing they did not offer was assistance with portfolio planning. In addition, they do not yet offer cryptocurrencies but want to do so by the end of summer. Nonetheless, they are also minor drawbacks, and Interactive Brokers’ breadth of services is a significant strength.

Fidelity provides a vast array of acceptable products for most investors, including stocks, options, and fixed income, as well as one of the most outstanding selections of mutual funds. Fidelity is distinguished by its international trading capabilities; the company gives access to 25 foreign marketplaces.

Fidelity was also among the first major brokers to provide fractional share trading. Futures and cryptocurrencies are the only assets Fidelity lacks.

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Managed Accounts 

Fidelity offers both traditional and automated managed accounts. The second program charges $3 per month for balances above $10,000. The program is free for balances below that threshold. Manual and automated independently maintained accounts with varying minimums and price structures exist.

Interactive Brokers lack automated trading accounts. It also does not provide conventional portfolio management. It does, however, collaborate with independent investment adviser representatives for a range of institutional accounts.

Trading Technology & Mobile App

Interactive and Fidelity provide online trading services, but they are not similar. Interactive’s trading desktop is designed for investors with a buy-and-hold strategy, and the desktop interface lacks distinctive extras. It is suitable for passive and buy-and-hold investors but falls short for daily traders who want a responsive platform.

This is more consistent with Interactive’s business strategy. It is a buy-and-hold corporation at its heart. Interactive’s “low-cost exposure to passive management, which historically outperforms most actively managed assets over extended periods.” To fully benefit from what Interactive offers, investors must have a solid grasp of the buy-and-hold strategy.

The Fidelity website is more intuitive for all sorts of investors. Those who choose a hands-on approach to their holdings will value Fidelity’s configurable tools, such as Active Trader Pro’s charts, screeners, and advanced order types.

This becomes even more evident when comparing the two mobile app experiences. While Interactive has intended to improve its mobile app capabilities for some time, the present version is severely outdated. It offers little functionality beyond basic buy-and-sell operations. Fidelity, on the other hand, offers a mobile and desktop interface that is elegant and simple.

Customer Service

Both brokerage firms in this competition offer websites with several self-service options. Each is equipped with an Artificial Intelligence capable of answering specific fundamental queries. Simply put “human” in the chat form to connect with a Fidelity representative. The chat feature provided by Interactive Brokers is AI-only.

In addition to chat, both sites provide internal message widgets with attachment capabilities. If neither chat nor texting would suffice, both companies have personnel available by phone. The Fidelity line is operated 24 hours a day, seven days a week. In contrast, the Interactive Brokers line is staffed 24 hours a day, five days a week.

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Automated Investing

The minimum first commitment for Interactive’s automatic investing program is $3,000. Without this service, you can still purchase and hold individual exchange-traded funds. Still, the robo-advisor will not assist you in building a diversified portfolio.

Fidelity Go, the firm’s version of Interactive Digital Advisor, is simpler to establish. The business will inquire about your identification, preferred risk tolerance, and available investment capital. Fidelity Go will then construct a portfolio in which you can invest any available amount.

Fidelity may be a preferable option for novice investors who wish to keep a portfolio unless they have sufficient cash on hand or a solid understanding of the ETFs they wish to purchase.

My Preference: Fidelity Wins Over Interactive

Fidelity and Interactive provide excellent, low-cost trading for all sorts of investors; therefore, the first step in selecting a platform is determining the type of funds you wish to participate in. Remember that Interactive is designed for long-term investors who need simple ways to monitor the performance of their assets over time. Interactive may be pretty advantageous for buy-and-hold investors. Those willing to trade somewhat higher expenditure ratios for additional functionality and options can choose Fidelity. It includes a reduced investment minimum for portfolios and several customization options for the user interface.

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Fidelity vs. Interactive: The Bottom Line

It appears that Fidelity narrowly won this head-to-head match. However, Interactive Brokers is an excellent platform for bitcoin trading. In addition, we like its superior foreign-asset trading service compared to that of Fidelity.

Depending on their specific requirements, most long-term investors’ needs might be met by a Fidelity or Interactive Brokers brokerage account. Fidelity offers low account minimums, a vast choice of NTF funds and commission-free ETFs, and a wealth of research to keep you abreast of your portfolio’s performance. Interactive Brokers offers discounted commissions, access to a vast array of overseas marketplaces, and many research and screening tools.

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