With the development of technology, more and more investors are choosing to use automatic investment platforms like Interactive Brokers to manage their assets. This allows investors to save time while still earning stable returns. However, how well do auto-investing platforms like Interactive Brokers work? What are the pros and cons compared to traditional investment methods? In this article, we will provide a comprehensive personal review of using Interactive Brokers’ auto-investing functions based on reddit posts, providing insights into fees, returns, ease of use and more.
Low fees and commission rates are the biggest advantage of Interactive Brokers
Based on multiple reddit reviews, one of the standout benefits of using Interactive Brokers for automatic investing is the low fees. As one of the earliest discount brokers, Interactive Brokers has always prided itself on low commissions. This remains true even when using the auto-investing functions. Interactive Brokers charges no management fees for automated portfolio management. The only fees are the low trading commissions per order. For large portfolios, Interactive Brokers offers even lower tiered pricing. This can make a big difference in net returns over the long run compared to other robo-advisors that charge an annual fee based on Assets Under Management (AUM).
Tax-loss harvesting features help optimize after-tax returns
In addition to low direct fees, Interactive Brokers also provides tax-loss harvesting services for no extra fee. This automated selling of securities at a loss to offset capital gains taxes can enhance after-tax returns. Many reddit users mentioned this as a major plus point, as tax-loss harvesting is usually an expensive add-on service. The tax-loss harvesting algorithms used by Interactive Brokers are similar to those of leading robo-advisors. One user tested Interactive Broker’s tax-loss harvesting over a 2 year period and found it saved him over $6,700 in taxes.
Wide range of investment options from stocks to ETFs
Unlike some robo-advisors that limit investments to ETFs, the Interactive Brokers platform allows automated investing across a wide range of assets – from stocks and options to futures, forex and bonds. Users have praised the flexibility to create customized portfolios automated portfolios with allocations ranging from very aggressive 100% stocks to very conservative 100% bond ETF portfolios. The platform makes it simple to schedule periodic rebalancing and automatically maintain target allocations. This level of customization isn’t available from most standalone robo-advisor platforms.
Returns are in line with portfolio benchmarks
While Interactive Brokers does not directly provide performance data on their automated investing portfolios, reddit reviews from users indicate returns are very close to the benchmarks of the ETFs/funds used. This is as expected, since Interactive Brokers does not claim to outperform the market – just provide an automated, low-cost way to capture benchmark returns. Some users have reported annual returns in the range of 7-10% on moderately aggressive stock/bond portfolios, which matches the benchmark returns.
The interface has room for improvement in user-friendliness
The most common complaint on reddit is that the Interactive Brokers interface feels dated and less intuitive compared to slick robo-advisor apps. The app is geared more towards active traders rather than passive index investors. Some users found the workflow to set up automatic investing less straightforward compared to standalone robo-advisors. However, overall the reddit reviews indicate the platform is still highly usable for auto-investing once some familiarity is built.
In conclusion, Interactive Brokers provides a low cost and flexible option for automated portfolio management and investment. For DIY investors with some finance background, it can be an attractive hands-off solution. However, the interface and user experience lags dedicated robo-advisors a bit. Overall, IB’s auto-investing functions earn positive reddit reviews for their fees, features and returns.