Author Topic: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund  (Read 4129 times)

less4success

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August update: lured by low margin loan rates and positive recommendations, I transferred my ETFs from Vanguard to Interactive Brokers and my experience has been... truly awful. I give IB an enthusiastic anti-recommendation.

September update: investigating Robinhood's 2.5% margin loan rate (note: requires $5/month "Robinhood Gold" subscription). Also considering Fidelity (despite their terrible margin interest rates) because their site and support have worked well for me in the past.

I'm FIREd and minimizing income and idle cash. I want an emergency fund that is convenient and can handle a five figure emergency (e.g. new septic system), ideally in short order.

Most loan options are probably out since I have no earned income, but margin loans with low interest payments are readily available, with the two lowest rate providers being Interactive Brokers and M1 Finance. Side note: I did read MMM's article on margin loans, but it's general and doesn't cover the details I'm interested in.

Does anyone have extensive experience with both Interactive Brokers and M1? What made you choose one over the other? Any insight into how they meet my personal needs (enumerated below)?

Ideal qualities (ignoring interest rate and speed, which both seem fine for):

  • Simple enough my SO can handle it (in case I'm incapacitated)
  • Secure enough that someone else can't easily take out money (e.g. with just my user name and password)
  • Straight-forward and rarely changed, so I can be sure I'll never get a margin call (loan to current value of max 15%)
  • Able to handle an in-kind transfer in, along with per-lot cost basis info (to simplify tax time)

I'm thinking M1 might have an edge on #1, whereas Interactive Brokers could probably do #4 in their sleep (unclear for M1).

I haven't found information on #2 (e.g. two-factor authentication) for either provider.

For #3, M1 seems more straight-forward for their current terms, but given that it's a Silicon Valley startup in its growth stage, I'm afraid to commit to a low-cost provider that might start ratcheting up fees once venture capital investors start to cash out.

Overall, M1 has a bunch of mainstream convenience features which I may or may not use (automatic rebalancing, a cash-back debit card, probably more to come) vs. Interactive Brokers which supports a ton of investment possibilities I currently don't plan to ever use (options, after-hours trading, and probably many more). M1 also doesn't support limit orders on ETFs which, while probably inconsequential for the big Vanguard ETFs I used, is a bit unnerving for me (even setting aside M1's order flow income--a game I've always been skeptical of).

I'm hoping I won't have to open up accounts at both places to get a better idea of which one works better for me. And I definitely don't want to transfer assets more than once if I can at all avoid it.

Right now, I have a brokerage account at Vanguard and it's clunky but functional, with mediocre customer service when something goes wrong, and noncompetitive margin loan rates.

For what it's worth, I'm leaning towards trying M1 for simplicity, but I could very easily be swayed by e.g. Interactive Brokers' proven track record.

Edit to add: I'm looking at margin loans instead of just selling ETFs as needed to decouple spending from selling investments, for two reasons: a) tax optimization and b) being able to avoid selling deep in a bear market.
« Last Edit: September 11, 2021, 01:34:23 PM by less4success »

boarder42

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #1 on: July 10, 2021, 12:43:52 PM »
I just switched to ibkr from m1. But my m1 account is still active for my iras. I switched bc the margin was cheaper and it's more of a fluid bank account basically you can just spend your margin with out worrying about transferring it to your checking.

But if simplicity is your goal I'd go with m1 just sent a buddy there instead of ibkr. The pie is a mild learning curve at the beginning but once you figure that your it's much simpler and straight forward and easy to understand.

Feel free to use my sign up link or ask me more questions.

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #2 on: July 10, 2021, 01:18:10 PM »
I use IB.  Use margin as my EF, keeping minimal cash in checking.  Equity trades are now "free" (they pass on regulatory fees of about $0.04 per trade).  Options pricing is the best in the market.  Execution speed top notch.  "Smart" routing ensures best bid/ask.  Research tools/reports non-existent.  Customer support via "chat" is top notch.  Has free software to set up algorythmic trading and is a favorite broker for institutional flash boys.  Doing an ACH to/from checking is seamless but takes 2-3 business days to settle, both ways.

IB requires two factor authentication.  Back in the day, it was a printed card with a table to answer a challenge for low balances, and a credit card sized device activated by a PIN for larger balances.  Today, it is a smart phone app that requires your fingerprint to login.  You cannot choose your own username though.  They assign one at signup. 

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #3 on: July 10, 2021, 01:18:23 PM »
But if simplicity is your goal I'd go with m1 just sent a buddy there instead of ibkr. The pie is a mild learning curve at the beginning but once you figure that your it's much simpler and straight forward and easy to understand.

Thanks! Personally, I don't plan on using the "pie" feature (since my asset allocation is split across too many institutions), but they allegedly handle normal market orders for old timers.

You brought up another good point: if I like M1, it's probably simple enough I could recommend it to acquaintances who don't spend inordinate amounts of time learning about investments.

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #4 on: July 10, 2021, 01:30:05 PM »
I use IB.  Use margin as my EF, keeping minimal cash in checking.  Equity trades are now "free" (they pass on regulatory fees of about $0.04 per trade).  Options pricing is the best in the market.  Execution speed top notch.  "Smart" routing ensures best bid/ask.  Research tools/reports non-existent.  Customer support via "chat" is top notch.  Has free software to set up algorythmic trading and is a favorite broker for institutional flash boys.  Doing an ACH to/from checking is seamless but takes 2-3 business days to settle, both ways.

IB requires two factor authentication.  Back in the day, it was a printed card with a table to answer a challenge for low balances, and a credit card sized device activated by a PIN for larger balances.  Today, it is a smart phone app that requires your fingerprint to login.  You cannot choose your own username though.  They assign one at signup.

Thanks! I like IB's "no frills" approach and required two-factor authentication.

Treasury Direct similarly assigns a "user name" (actually an account number, I think), and it's surprisingly infuriating having to look it up every time I just want to quickly check something.

Edit again: sounds like IB eliminated inactivity fees, so I'm deleting this paragraph.
« Last Edit: July 10, 2021, 01:48:45 PM by less4success »

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #5 on: July 10, 2021, 01:32:20 PM »
I just switched to ibkr ... it's more of a fluid bank account basically you can just spend your margin with out worrying about transferring it to your checking.

Could you actually expand on this? Are you referring to this debit card? https://www.interactivebrokers.com/en/index.php?f=26451

That does sound super convenient. Does M1 really not have something similar?

Any idea how liability works if someone steals that debit card? (Edit: they claim "Zero Liability") Edit again: looks like you can lock and unlock the card, so I'd probably just leave it locked until I needed to use it. This sounds pretty great.
« Last Edit: July 10, 2021, 01:38:10 PM by less4success »

boarder42

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #6 on: July 10, 2021, 01:41:00 PM »
I just switched to ibkr ... it's more of a fluid bank account basically you can just spend your margin with out worrying about transferring it to your checking.

Could you actually expand on this? Are you referring to this debit card? https://www.interactivebrokers.com/en/index.php?f=26451

That does sound super convenient. Does M1 really not have something similar?

Any idea how liability works if someone steals that debit card? (Haven't read up on this myself yet)

So I have a reasonable amount of outstanding margin for various reasons. Your ibkr account is just like any bank account I can tie it to all my credit cards and direct deposit my check. If I have a negative balance bc I have outstanding margin it just grows more negative.

Conversely at m1 finance you have a checking account that is not directly tied to your brokerage or margin account. So I keep a few thousand in that checking account to pay the credit card bills. But since I have a margin balance I'm paying 2% on and I only get paid 1% on my checking balance it's inefficient.

So for example at ibkr if I have 200k of margin available and I have a negative 50k account balance borrow on margin and a 3k credit card bill comes in it just Auto borrows against my margin and now I've got 53k borrowed. When pay day comes it just goes to pay down margin so 2k direct deposit puts me at 51k

At m1 I have a margin account with 50k borrowed and my spend account(checking) is at 0 and a 3k bill comes due they don't pay it, it's an over draft. And when my paycheck comes in it doesn't offset my margin interest.

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #7 on: July 10, 2021, 01:53:52 PM »
I just switched to ibkr ... it's more of a fluid bank account basically you can just spend your margin with out worrying about transferring it to your checking.

Could you actually expand on this? Are you referring to this debit card? https://www.interactivebrokers.com/en/index.php?f=26451

That does sound super convenient. Does M1 really not have something similar?

Any idea how liability works if someone steals that debit card? (Haven't read up on this myself yet)

So I have a reasonable amount of outstanding margin for various reasons. Your ibkr account is just like any bank account I can tie it to all my credit cards and direct deposit my check. If I have a negative balance bc I have outstanding margin it just grows more negative.

Conversely at m1 finance you have a checking account that is not directly tied to your brokerage or margin account. So I keep a few thousand in that checking account to pay the credit card bills. But since I have a margin balance I'm paying 2% on and I only get paid 1% on my checking balance it's inefficient.

So for example at ibkr if I have 200k of margin available and I have a negative 50k account balance borrow on margin and a 3k credit card bill comes in it just Auto borrows against my margin and now I've got 53k borrowed. When pay day comes it just goes to pay down margin so 2k direct deposit puts me at 51k

At m1 I have a margin account with 50k borrowed and my spend account(checking) is at 0 and a 3k bill comes due they don't pay it, it's an over draft. And when my paycheck comes in it doesn't offset my margin interest.

Thanks for the explanation! Prior to this thread, I would have guessed those two scenarios would be flipped around (with M1 doing the seamless checking account and IB doing something that works, but isn't convenient). I really underestimated IB.

I am now strongly leaning towards Interactive Brokers because it sounds like it provides what I want, and I'm not worried about features getting deprecated (or fees going up once VC money runs out).

boarder42

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #8 on: July 10, 2021, 01:56:38 PM »
The only thing with ibkr is it's not intuitive the gui is crappy I'm still learning it. I dunno its ehh very financially jargony where m1 is very clear and explicit. But I have sign up links for both if you'd like to use either that'd be sweet. The other nice thing about ibkr is you get 1% of your invested assets in ibkr stock up to 1k so that was really nice.

boarder42

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #9 on: July 10, 2021, 02:00:09 PM »
So if margin is just something you plan as an efund. It's probably perfect at ibkr. Your spouse sees a negative balance and can go replenish it to 0 thru whatever system you prefer. But having outstanding margin m1 makes everything really clear like you have x borrowed you can borrow y more and if you account falls by z based on your current balances we'll make a margin call. At ibkr I havent been able to even find that data on the website. But in the app it's all there just in financial code jargon.

boarder42

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #10 on: July 10, 2021, 02:03:05 PM »
That said I'm at ibkr now for a reason and if you're going to learn a new system may as well do the better overall system imo which is ibkr. I converted everything to m1 a year ago mainly to borrow at 2% to install solar panels. And now I'm going thru new learning curves and redoing everything to move to ibkr. And resetting everything.

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #11 on: July 12, 2021, 04:47:09 PM »
Ugh, I wish I had read more about the founder of Interactive Brokers (who supposedly still owns 75% of the company) before submitting an application--he's definitely no John Bogle...

Oh well, at least it looks like a good product.

effigy98

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #12 on: July 12, 2021, 06:11:26 PM »
Have one of my M1 accounts maxed with loan to invest in monthly dividend ETF, fully automated.

Setup a new M1 account, invested 300k in NUSI, borrowed 90k, made the auto-invest above the loan payment, fully automated loan payment with the NUSI monthly dividend payment and the extra gets reinvested. Getting about .5% return on the spread PER MONTH. I may do this with JEPI next.
« Last Edit: July 12, 2021, 06:15:34 PM by effigy98 »

MustacheAndaHalf

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #13 on: July 14, 2021, 08:34:33 AM »
For those who don't like IBKR's website interface, I prefer "Trader Workstation".  It's a computer program you download from IBKR which lets you trade using more specialized software.  There's no cost to doing so, and it's both faster and more flexible.  But you'll have a learning curve to switch, so I'd only suggest it if you place trades regularly.

I like it for limit orders.  Sometimes ETFs or options will have a wide bid-ask spread, so I'll start a sell order with a limit at the high end of the range.  To update the price, I click it, scroll, then click update.  On Vanguard or IBKR's website, it's far more painful to change a limit order - it involves visiting multiple screens.

I've taken out a margin loan at IBKR before.  If you're going that route, the $10/month for IBKR Pro account is probably worth it.  The non-pro rate is 1% higher, if I recall correctly.  From reading about IBKR, I believe they can offer lower margin rates because they monitor and act on your account in real time.  If your asset values are rapidly approaching the value of your margin loan, IBKR can sell your assets to pay off the loan.  I think the more conventional approach involves a margin call, and waiting a few days to do that.  But that's just a rough impression - I haven't yet had them liquidate (automatically sell) my positions.

catccc

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #14 on: July 14, 2021, 11:17:56 AM »
This is all really interesting and helpful information, thanks for sharing, everyone, esp. @boarder42

I used to sit on a pile of cash for a potential home purchase.  Maybe it was $80K in 2008 and grew to $150K in 2014.  In Jan-Feb 2014, I decided I should not have so much cash.  We did our usual start-of-the-year maxing of our IRAs ($12K), threw some into 529s for our kids ($10K), and dumped $80K into VTSAX and VBTLX.  Since 2014, our cash balance has hovered in the $40-$60K range.  Next week we settle on a house, and we are essentially using all of it (plus some liquidated VBTLX) for down payment/closing costs.  I'm glad we had that cash on hand to quickly get our earnest deposit out and mitigate tax impact of liquidating investments.  But I don't know that I want to go back to holding that much cash.  Leveraging our taxable investments for a margin loan e-fund seems like a great idea.  I have a little over $300K in a taxable brokerage account with Vanguard and I'm thinking of moving it to Interactive Brokers to do this.  Is there any reason I shouldn't move all of this over?  I'm assuming I should just leave all other assets (IRAs and UTMAs) in Vanguard, right?  Any reason to move those over?

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #15 on: July 14, 2021, 10:21:19 PM »
For the record: I might end up going with M1 after all because the Interactive Brokers application process doesn't seem to understand the concept of early retirement and living off investments. Isn't that the whole point of having investments?

catccc

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #16 on: July 15, 2021, 07:10:20 AM »
For the record: I might end up going with M1 after all because the Interactive Brokers application process doesn't seem to understand the concept of early retirement and living off investments. Isn't that the whole point of having investments?

Does this translate to a functionality issue or is it just a principle thing?  Just curious for my purposes!

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #17 on: July 15, 2021, 09:07:16 AM »
For the record: I might end up going with M1 after all because the Interactive Brokers application process doesn't seem to understand the concept of early retirement and living off investments. Isn't that the whole point of having investments?

Does this translate to a functionality issue or is it just a principle thing?  Just curious for my purposes!

Nothing to do with functionality, and likely nothing most people need to worry about.

You have to submit an application to open a new account, and they perform some opaque due diligence process (to root out money launderers and other criminals, I assume). One piece of information you have to include is your employment status, which I entered as "retired". Apparently, this does not compute, because they keep asking me if I made a mistake. When I explain that "yes, I'm retired; I'm not seeking employment and my income is derived solely from my investments", they just send the application back to me so that I can make changes to the employment status section.

Additionally, they keep indirectly indicating that I need to upload some sort of documentation, but they haven't told me what I'm supposed to be documenting or what documentation would be acceptable.

Honestly, I'm mostly just annoyed because their application process encouraged me to initiate an asset transfer from my old brokerage (Vanguard) before my application was accepted, but now it's looking like they might reject my application -- at which point I'm worried it will be a chore to get them to send my assets back, in full, with correct cost basis information.

Financial.Velociraptor

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #18 on: July 15, 2021, 04:41:24 PM »
I joined IB before going FIRE.  After FIRE, they ask every year about my employment.  Retired doesn't compute so I keep my last employer and salary as my official record.

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #19 on: July 15, 2021, 10:42:10 PM »
I joined IB before going FIRE.  After FIRE, they ask every year about my employment.  Retired doesn't compute so I keep my last employer and salary as my official record.

Apparently being retired has thrown me into their high risk bucket because I got an "enhanced due diligence" questionnaire. Naturally, the person performing the due diligence doesn't seem to understand the difference between wealth and income (the application talks about net worth, but the follow-up questions ask about annual income). They also flagged my income selection (of "less than $40,000 per year") as too high for my employment status (!).

I sure hope the rest of their offering is more competent (assuming I even get to eventually see it :)
« Last Edit: July 15, 2021, 10:45:55 PM by less4success »

boarder42

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #20 on: July 16, 2021, 07:07:44 AM »
I joined IB before going FIRE.  After FIRE, they ask every year about my employment.  Retired doesn't compute so I keep my last employer and salary as my official record.

Apparently being retired has thrown me into their high risk bucket because I got an "enhanced due diligence" questionnaire. Naturally, the person performing the due diligence doesn't seem to understand the difference between wealth and income (the application talks about net worth, but the follow-up questions ask about annual income). They also flagged my income selection (of "less than $40,000 per year") as too high for my employment status (!).

I sure hope the rest of their offering is more competent (assuming I even get to eventually see it :)

Well this is good to know. Sorry I wasn't aware of this I've got 5 months left before I hit this

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #21 on: July 16, 2021, 01:08:21 PM »
Apparently being retired has thrown me into their high risk bucket because I got an "enhanced due diligence" questionnaire. Naturally, the person performing the due diligence doesn't seem to understand the difference between wealth and income (the application talks about net worth, but the follow-up questions ask about annual income). They also flagged my income selection (of "less than $40,000 per year") as too high for my employment status (!).

I sure hope the rest of their offering is more competent (assuming I even get to eventually see it :)

Well this is good to know. Sorry I wasn't aware of this I've got 5 months left before I hit this

Much to my surprise, shortly after answering their EDD questionnaire, I got a notification that my application had been accepted. I'm probably going to be their most boring "high risk" client ever.

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #22 on: July 20, 2021, 10:06:56 AM »
But having outstanding margin m1 makes everything really clear like you have x borrowed you can borrow y more and if you account falls by z based on your current balances we'll make a margin call. At ibkr I havent been able to even find that data on the website.

Someone can correct me if I'm wrong, but I think you can see this information on the IB web site if you go to "Portfolio" -> "Positions", then click "Details +" (upper-right corner).

boarder42

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #23 on: July 20, 2021, 10:41:14 AM »
But having outstanding margin m1 makes everything really clear like you have x borrowed you can borrow y more and if you account falls by z based on your current balances we'll make a margin call. At ibkr I havent been able to even find that data on the website.

Someone can correct me if I'm wrong, but I think you can see this information on the IB web site if you go to "Portfolio" -> "Positions", then click "Details +" (upper-right corner).

X10 thanks. Was digging everywhere for it.

boarder42

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #24 on: July 22, 2021, 09:34:12 AM »
has anyone successfully setup IBKR to pay your credit card bills?  I'm using the routing number provided and the account number is everything after the "U".  I enter this on chases' site and my payments are all rejected.  Needless to say i'm pretty unhappy with IBKR as everyone I talk to is completely ignorant of how any of this might work.

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #25 on: July 22, 2021, 10:52:18 AM »
Did you already try IB’s bill pay facility?

I haven’t set either approach up yet, but I was also wondering if IB would reject ACH transactions that weren’t initiated through IB’s interface. Sounds like that may indeed be the case?

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #26 on: August 01, 2021, 09:28:18 AM »
Does anyone know how to view tax lots in Interactive Brokers' web interface?

I thought, being marketed towards day traders, this is the one thing that would be super easy to do at IB :). The IB help bot just returned web results explaining what cost basis is.

Edit: my web searches indicates you have to use their (Java!) application, and even then you can only view tax lots for sold positions. This can't be true... right?

Edit again: spent another hour and I was able to find tax lot information from my incoming (to IB) ACATS transfer (it was buried in the asset transfer pages) -- but I still can't find a way to view all the tax lots for my current portfolio. I'm kind of shocked at how terrible Interactive Brokers' interface is. I kept hearing it was so powerful, but it seems to be missing very basic features. Oh, and their support options appear to be offline at the moment... what a joke...
« Last Edit: August 01, 2021, 10:14:36 AM by less4success »

less4success

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #27 on: August 01, 2021, 12:31:49 PM »
Does anyone know how to view tax lots in Interactive Brokers' web interface?

Answering my own question: it looks like this isn't possible without installing a Java runtime environment and running their Tax Optimizer app (which is also accessible from Trader Workstation--another Java app). In Trader Workstation, you can right-click on a holding in the portfolio view and select "Change tax lots" to directly view your tax lots (in Tax Optimizer).

At this point, I'm beyond disappointed with Interactive Brokers. Their app login doesn't even default to using SSL for encrypting your password (!!!), the web site and apps frequently just fail to load content, there's no obvious way to say you want specific identification for all your ETF sales, etc. I was expecting their baseline brokerage experience to be better than Vanguard's minimal interface, but even basic features are difficult to find/use, and most of the features beyond what Vanguard offers just seem distracting (e.g. news headlines) or like thinly-veiled upsells. Edit: Oh, and they send a ton of useless "FYI" emails.

They offered me a $1k bonus (well, $1k in their stock) if I stick with their platform for a year, but I'm not sure that putting up with their awful software is even worth $1k to me. It's that bad. At least I didn't pay for their Pro account!

It's a shame because margin loans with low rates would be a great tool for post-FIRE cash management.
« Last Edit: August 04, 2021, 12:21:16 PM by less4success »

boarder42

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Re: Interactive Brokers vs. M1 Finance for margin loan emergency fund
« Reply #28 on: August 01, 2021, 12:34:59 PM »
Does anyone know how to view tax lots in Interactive Brokers' web interface?

Answering my own question: it looks like this isn't possible without installing a Java runtime environment and running their Tax Optimizer app (which is also accessible from Trader Workstation--another Java app). In Trader Workstation, you can right-click on a holding in the portfolio view and select "Change tax lots" to directly view your tax lots.

At this point, I'm beyond disappointed with Interactive Brokers. Their app login doesn't even default to using SSL for encrypting your password (!!!), the web site and apps frequently just fail to load content, there's no obvious way to say you want specific identification for all your ETF sales, etc. I was expecting their baseline brokerage experience to be better than Vanguard's minimal interface, but even basic features are difficult to find/use, and most of the features beyond what Vanguard offers just seem distracting (e.g. news headlines) or like thinly-veiled upsells.

They offered me a $1k bonus (well, $1k in their stock) if I stick with their platform for a year, but I'm not sure that putting up with their awful software is even worth $1k to me. It's that bad. At least I didn't pay for their Pro account!

It's a shame because margin loans with low rates would be a great tool for post-FIRE cash management.

Yeah I'm starting to feel the same way man. Sorry I may have pointed you here but I'm probably back to m1 in a year. Everything about ibkr is wildly annoying for a .5% margin edge over m1 finance

less4success

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #29 on: September 07, 2021, 03:12:18 PM »
It looks like Robinhood offers 2.5% margin loans to "Robinhood Gold" ($5/month) subscribers with their "margin spending" option enabled: https://robinhood.com/us/en/support/articles/robinhood-gold-cash-management/

Does anyone have experience withdrawing margin loan cash from Robinhood? Also, more generally, how well does specific identification work (can I easily view cost basis per lot, etc.)?

I'm asking because I tried Interactive Brokers and didn't like it (so, so many complaints) and M1's "not actually a normal brokerage account" setup isn't what I want either. I just want to dump VTI into a brokerage account and take loans against it, and maybe occasionally buy/sell more shares.

I never really considered Robinhood, but at least it's just a normal brokerage account and (since they cater to small time investors) it will probably be easier to test out without as big of a commitment (but note that they have a $75 fee for outgoing ACATS transfers).

less4success

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #30 on: September 07, 2021, 03:46:34 PM »
… and it looks like Robinhood doesn’t support joint accounts. Cross that one off my list.

whywork

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #31 on: September 08, 2021, 08:16:59 AM »
I am on IKBR as well and echo your frustrations with the UI.

The low margin is great. Staying put for that reason. How about keeping only 50% on IKBR and rest on other broker. You can have that 50% be long term holdings so that you don't need to worry about tax lots

M1 Finance is the best option especially as you are only investing in VTI. Great UI, low margin rate and can take out 30% margin

MustacheAndaHalf

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #32 on: September 11, 2021, 09:48:22 AM »
While I've been a passive index investor for decades, last year I chased the Covid-19 recovery.  Part of that involved putting money in IBKR to be able to buy leveraged ETFs (which Vanguard doesn't allow).

I've filtered the FYIs down to stuff that's interesting.  They mention when my assets move from short-term to long-term, when analyst change ratings, and when stocks on which I sold put options have an upcoming dividend.  For me, each of those pieces of information is useful.

I dislike figuring out my cost basis on IBKR, but I've just learned to use their reporting, and display realized/unrealized gains YTD.  Trader Workstation shows the overall gains and daily gains, so I don't need the reports as much.

In my opinion, IBKR has better security than Vanguard.  I added a Yubikey to my Vanguard account, which means when I login I need username, password, and to touch the Yubikey.  Unfortunately when my tax software downloaded my forms, it only needed my username and password (I switch my password to a temp one, provide that to the tax software, then afterwards switch it back.  They only have access to my account for a short window).  So it seems like two factor authentication doesn't apply to all logins on Vanguard.

Once your IBKR account has $500k in assets or more, you can request a security device.  You might be able to just pay $50 for it, also.  When I login on the website or through their Trader Workstation, I need my username, password, and an interaction with the security device.  They prompt with a challenge, and I use a device to provide an answer.  The device is a piece of hardware without any network access, so it's very secure.

IBKR also allows access to some kind of hedge fund marketplace for accredited investors, but I haven't been interested so far.  They also allow you to loan out your stocks and ETFs, and share the profits with IBKR.  I like that IBKR asks permission, while many brokers do it without permission.

For those outside the U.S., I think M1 Finance doesn't have any offerings, so for them, Interactive Brokers might be their only choice between the two:

"At this time, only US Citizens and Permanent Residents (Green Card holders) over the age of 18 with a current US residential address and US phone number can apply to open an M1 Account"
https://support.m1finance.com/hc/en-us/articles/221052687-Open-my-account

less4success

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #33 on: September 11, 2021, 01:32:52 PM »
In my opinion, IBKR has better security than Vanguard.

Good points (not all applicable to me, of course), but I still can't get over the fact that the "SSL" option is turned off by default for Interactive Brokers' mobile app and Trader Workstation. I suspect it doesn't actually send your credentials and all other information unencrypted, but I certainly don't want to risk leaving that selector alone to find out! Note that once you enable SSL, it does persist across launches, so at least you won't forget to turn it back on. It's mind boggling to me that they haven't changed this default, if not at least to give a better first impression (with respect to security).

Unrelated to the above: Fidelity with cash management and margin enabled appears to provide all the features I want (with a "normal" brokerage interface that isn't too bad)... but their margin rates are much, much higher (although someone on Bogleheads claimed they called in and got their rate lowered). Despite the high rates, I might eventually end up using their offering if I don't like M1, simply because I don't actually plan to carry a large margin loan balance -- I'm treating it more like a temporary emergency fund (and, to date, I don't think I've ever had to tap an emergency fund).

MustacheAndaHalf

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #34 on: September 12, 2021, 09:37:23 AM »
In my opinion, IBKR has better security than Vanguard.
Good points (not all applicable to me, of course), but I still can't get over the fact that the "SSL" option is turned off by default for Interactive Brokers' mobile app and Trader Workstation.
That default might fit traders who require low-latency when placing orders.  SSL does take some time, adding latency.  But you make this sound like something they've hidden from you, when it's literally right next to where you enter your password.  The login box has a "username" field, and a "password" field, and inside the password field on the right side is the on/off switch for SSL.  It's clearly visible.

I'm much more worried about Vanguard's two-factor authentication hole, which allows my tax software to login to my account with just a name & password.  When I had a U.S. Treasury Direct account for a few tiny bonds, I had to reference a "pad", which was maybe a grid of letters and numbers.  The chance of beating that seems rather high, worse than 1 in 50.  Meanwhile IBKR sends a challenge, and I have to provide an 8-digit number, meaning 1 in 100 million.

You also mentioned tax lots were horrible on IBKR, and I agree.  I couldn't find cost basis separated lots.  I couldn't find where to select the method for deciding which lots to sell on IBKR.  Or even someplace to change the method used - if anyone knows that, I'd like to know.

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #35 on: September 12, 2021, 10:00:38 AM »
I'm much more worried about Vanguard's two-factor authentication hole, which allows my tax software to login to my account with just a name & password.  When I had a U.S. Treasury Direct account for a few tiny bonds, I had to reference a "pad", which was maybe a grid of letters and numbers.  The chance of beating that seems rather high, worse than 1 in 50.  Meanwhile IBKR sends a challenge, and I have to provide an 8-digit number, meaning 1 in 100 million.

The tax software probably has read-only access. If the credentials were leaked, no one would be able to withdraw money from Vanguard or make any trades (I hope). Of course, a good hacker would use that username/password (and account balance?) to social engineer their way past the lack of 2fa.

Really, brokers and banks need a 2nd set of passwords for read-only access to tax forms. It'd be auto-generated and you'd just go to the tax section and c&p it into your tax software.

less4success

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #36 on: September 12, 2021, 04:58:28 PM »
You match tax lots after selling using the Tax Optimizer app. Or at least that is what their documentation made me think (I haven’t sold any of my lots yet).

MustacheAndaHalf

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #37 on: September 13, 2021, 10:01:22 AM »
For those dealing with tax software, I'd recommend changing your password just to allow tax software to use it, and then change it back.  They don't get your real password - just a temporary one.

I don't use IBKR on my phone, but I did see a claim online that within Trader Workstation, you can right-click on a position, and select "Choose Tax Lots" from there.  I'll give that a try, since I didn't see anything about doing it on their website.

less4success

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #38 on: September 13, 2021, 04:17:22 PM »
The Tax Optimizer app is a Java-based desktop application. I shouldn’t had used the term “app” since that means “smartphone app” to most people :)

JJ-

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #39 on: November 13, 2021, 09:21:31 PM »
Digging this thread back up... I wonder if I should make accounts with both IBKR and M1 to see which I like better. However, is there a recommendation in which to start with?

Primary use will be margin on taxable account.

boarder42

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #40 on: November 14, 2021, 05:52:35 AM »
Digging this thread back up... I wonder if I should make accounts with both IBKR and M1 to see which I like better. However, is there a recommendation in which to start with?

Primary use will be margin on taxable account.
.

M1 simpler but more expensive margin

Ibkr cheaper margin terrible ui

MustacheAndaHalf

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #41 on: November 14, 2021, 06:19:17 AM »
Digging this thread back up... I wonder if I should make accounts with both IBKR and M1 to see which I like better. However, is there a recommendation in which to start with?

Primary use will be margin on taxable account.
Reading about M1 Finance, they charge $0/trade for stocks and ETFs.  You can pay 3.5% margin for their free account, or upgrade to M1+ and pay 2.0% (and $125/year, about $10.42/mo).  You might got with a free account initially, and pay extra fees when you need the margin loan.

I have IBKR Pro, which unfortunately charges fees for stocks and ETFs.  Not much, but the more you trade the more it adds up.  Their IBKR Lite (free) account has a 2.58% margin rate, but you can pay $10/mo for IBKR Pro and a 1.58% margin loan.  Unlike M1, after $100k the margin rate drops to 1.08%.  For very large margin loans, you'd want to have an IBKR Pro account.


Ibkr cheaper margin terrible ui
Instead of using their website, use (free) Trader Workstation (TW).  My favorite feature is adjusting the price of a limit order, which is easier in TW than any other interface I've used.  Click, scroll, click - price is changed.  At Vanguard that takes several screens and several seconds.  Using the web interface is much worse than using their free downloadable program.

JJ-

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #42 on: November 14, 2021, 07:01:28 AM »
Thanks @boarder42 and @MustacheAndaHalf

I am leaning IBKR only because half a percent is still half a percent. I don't plan on frequent trades so that's not a huge deal.

The loan total right now would likely not exceed $50-70k as a majority of our investments are in tax advantaged accounts. That may change in the future which makes that a 1% difference.

I'm also unable to run the software, which is a downside.

M1 does look just, simply put, easier to use. Am I willing to pay $300 for that premium? It also looks like they are waiving the plus plan pro fees for the first year.

MustacheAndaHalf

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #43 on: November 14, 2021, 07:16:34 AM »
Thanks @boarder42 and @MustacheAndaHalf
I'm also unable to run the software, which is a downside.

M1 does look just, simply put, easier to use. Am I willing to pay $300 for that premium? It also looks like they are waiving the plus plan pro fees for the first year.
0.42% difference is $252 on a $60k loan for a year.  Slightly more with compounding.

With only a few trades/year, I'd suggest using the website.  There's less of a learning curve, and that's where key account settings reside.  As to the lack of support, you don't have Windows, MacOS or a mobile phone?  IBKR supports all of those - and some non-IBKR apps as well.

IBKR has two pricing tiers: "fixed" and "tiered".  Because I traded options and individual stocks this year, I switched to "tiered", charging me $3.50 per 1,000 shares (that's $241,750 worth of VTI!).  But you can select "fixed", and ETFs cost $0/trade.  Good thing I checked, because now I mostly have ETFs, so I'm switching back!

JJ-

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Re: Interactive Brokers vs. M1 Finance vs. other for margin loan emergency fund
« Reply #44 on: November 14, 2021, 07:49:38 AM »
Thanks @boarder42 and @MustacheAndaHalf
I'm also unable to run the software, which is a downside.

M1 does look just, simply put, easier to use. Am I willing to pay $300 for that premium? It also looks like they are waiving the plus plan pro fees for the first year.
0.42% difference is $252 on a $60k loan for a year.  Slightly more with compounding.

With only a few trades/year, I'd suggest using the website.  There's less of a learning curve, and that's where key account settings reside.  As to the lack of support, you don't have Windows, MacOS or a mobile phone?  IBKR supports all of those - and some non-IBKR apps as well.

IBKR has two pricing tiers: "fixed" and "tiered".  Because I traded options and individual stocks this year, I switched to "tiered", charging me $3.50 per 1,000 shares (that's $241,750 worth of VTI!).  But you can select "fixed", and ETFs cost $0/trade.  Good thing I checked, because now I mostly have ETFs, so I'm switching back!

Thanks for the math. I usually estimate.

Forgot to add - no access to MacOS or Windows but I do have an Android phone. Thanks.

Glad the conversation helped you !
« Last Edit: November 14, 2021, 08:06:04 AM by JJ- »