Interactive Brokers (via Charles Schwab International)

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Topic Author
Neuralgia
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Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

So I've opened an account with Interactive Brokers, since they have the Ireland ETF's I'm interested in (VWRA and VAGU).

But the hard part is funding. I have two options:

1. From my understanding, IB accepts USD checks from "non-us" banks (my bank is from Costa Rica). So sending them via "snail mail" would be an option. A very slow option, but an option. I would have to go every 1-3 months to my post office tomorrow mail the check and wait for it to get to the US, and then wait for the funds to be available. Un practical, but possible.

Since I'll be doing Dollar Cost Average, and I once in a while Lump Sum, it will be basically the same to me.

2. Open a Charles Schwab International account (which from my understanding has a debit card and checks linked in some way to your brokerage account).

Here I would need $25k to open it, but I still have some questions:

A. What is the minimum account balance for this type of account? Monthly fees? Wire transfer fees (to IB)? It would make no sense to have $25k as your minimum account balance... but you never know know.

B. Have you guys used the CS app to make check deposits? I was told you can (just take a photo with your phone and that's it). This would make it much faster than sending it via snail mail. Still, not immediate, but faster.

Unfortunately, information about the Charles Schwab International account is scarce, and I plan to give them a call, but I wanted to know if someone has some experience/information about this 2 options.

I'm inclined towards opening the Charles Schwab International account, if there's no minimum account balance needed and no monthly fees. Just like the US accounts. This way I just open the account with the the $25k and then send it to my IB account and make a $25 Lump Sum buy.

I just want to make be sure I'm making the right decision, and making sure it have plan A and B, an know all its pros and cons.
thegreatPY
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Re: Interactive Brokers (via Charles Schwab International)

Post by thegreatPY »

About CS I don’t know the fees involved but I think I’ve read somewhere complains about the ETFs they offer for international accounts. You should check with them or search in the forum.

About IB:

- They charge monthly fees: $20 if you have less than $2k and no transaction in the month (if you make transactions but the commissions are less than $20, they charge you the difference), $10 if you have more than $2k and no transaction in the month (again if you make transactions but less than $10 they charge you the difference)

- Fee waived with $100k.

- They don’t charge you wire fees for incoming/outgoing operations, you should check carefully with your bank.
Topic Author
Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

Which broker has access to Ireland ETF's (besides IB) with no fees then?

I'm looking for VWRA and VAGU (KISS).

For some reason it didn't realize my account is Pro and the Lite version is only for US clients 😡
thegreatPY
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Re: Interactive Brokers (via Charles Schwab International)

Post by thegreatPY »

Maybe tradestation global (not the US focused although you could take a look too).

What about Fidelity or it’s not available for you?

Another options could be: zackstrade, questrade, td ameritrade, passfolio.

Those are the one I know.
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galeno
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Re: Interactive Brokers (via Charles Schwab International)

Post by galeno »

Our 35 year history of being Costa Ricans trying to invest like Americans.

1. Two years at Banco Banex. CR bank that no longer exists. Very costly poorly managed opaque omnibus funds. Like BAC. Portfolio costs ~ 3%

2. Three years at Bank of Bermuda. This bank no longer exists. Allowed access to the excellent Frank Russell fund family. Charged a 1% gatekeeper fee to access them. Portfolio costs ~ 1.5%.

3. Twenty four years at Schwab International. Used concentrated equity allocations for the first 11 years. Became Bogleheads in 2006. Used passive indexed USA-domiciled equity ETFs and FDIC insured CDs at US banks and 5 yr US treasury bills for FI. Portfolio costs ~ 0.75%.

4. Six years at IBKR. Access to passive indexed UCITS equity and bond ETFs domiciled in Ireland traded on the LSE. Portfolio costs = 0.29%.
KISS & STC.
thegreatPY
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Re: Interactive Brokers (via Charles Schwab International)

Post by thegreatPY »

Undoubtedly IB is the best choice once you get the $100k frontier. :sharebeer :D
Topic Author
Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

galeno wrote: Sun Mar 28, 2021 6:25 pm Our 35 year history of being Costa Ricans trying to invest like Americans.
...
3. Twenty four years at Schwab International. Used concentrated equity allocations for the first 11 years. Became Bogleheads in 2006. Used passive indexed USA-domiciled equity ETFs and FDIC insured CDs at US banks and 5 yr US treasury bills for FI. Portfolio costs ~ 0.75%.
I guess I'll have to go with 3 for the moment. I don't have the 100k liquid without using emergency fund and selling a kidney.

VTI + Vxus + BND(X) until I'm able to go with #4.

Like Thegreatpy said:
thegreatPY wrote: Sun Mar 28, 2021 7:45 pm Undoubtedly IB is the best choice once you get the $100k frontier. :sharebeer :D
I'll do my best to reach those $100k as soon as possible.
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galeno
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Re: Interactive Brokers (via Charles Schwab International)

Post by galeno »

You proposed "VTI + Vxus + BND(X) until I'm able to go with #4."

Better: VT + FI

FI = FDIC insured CD(s) at a US Bank or INDIVIDUAL US Treasury notes, bills, and bonds. Both easily bought and sold on Schwab.

With the above you don't pay the 30% L1/L2 USA withholding taxes. They are also exempt from the US inheritance taxes.

BND(X) is subject to both.
KISS & STC.
Topic Author
Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

Awesome tip Galeno. I'll take a look at it and understand.

I've learned so much from you that I've make public my gratitude. Hope some day I can send you a bottle 😉
Topic Author
Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

galeno wrote: Mon Mar 29, 2021 8:22 am You proposed "VTI + Vxus + BND(X) until I'm able to go with #4."

Better: VT + FI

FI = FDIC insured CD(s) at a US Bank or INDIVIDUAL US Treasury notes, bills, and bonds. Both easily bought and sold on Schwab.

With the above you don't pay the 30% L1/L2 USA withholding taxes. They are also exempt from the US inheritance taxes.

BND(X) is subject to both.
Why does VT doesn't pay 30% L2/L1 tax?

What about estate taxes? (or that's what you mean by inheritance taxes?)

I'm clear about why CDs are OK about those.
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galeno
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Re: Interactive Brokers (via Charles Schwab International)

Post by galeno »

VT is a USA domiciled equity ETF. Bought and sold on the NYSE. You will pay 30% L1 and L2 dividend WH taxes on the USA equities (56% of VT) and 30+% on the non-USA equities (44% of VT).

It is subject to the USA inheritance / estate taxes. In our case (no USA tax treaties) it's 40% of anything over $60K.

I suggested VT because it's a simplification of 56% VTI + 44% VXUS. Nothing more.
KISS & STC.
Topic Author
Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

Now I get it, you were talking only about the CD's.

I guess another option is to to go with VTI 100% until I reach the $100k, and "man up" those 30% taxes on dividends for the time being.

VTI has a lower expense ratio than VT.

PS I'm aware I won't be diversifying for the world until the $100k goal, but our friend Jack was never a fan of international diversification anyways (I'm telling myself that to comfort myself) 😉
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galeno
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Re: Interactive Brokers (via Charles Schwab International)

Post by galeno »

The CDs AND the INDIVIDUAL US treasuries. You use these instruments for your FI allocation.

I was going to suggest 100% VTI. While you use Schwab. With VXUS you will pay additional L1 dividend WH taxes of about 8.5% (non-USA developed stocks) and about 11.3% (EM stocks).

Once you can access the Ireland domiciled UCITS ETFs on the LSE via IBKR the situation changes. USA stocks cost 15%. developed non-USA stocks cost 8.5%. And EM stocks cost 11.3%.


Neuralgia wrote: Mon Mar 29, 2021 11:37 am Now I get it, you were talking only about the CD's.

I guess another option is to to go with VTI 100% until I reach the $100k, and "man up" those 30% taxes on dividends for the time being.

VTI has a lower expense ratio than VT.

PS I'm aware I won't be diversifying for the world until the $100k goal, but our friend Jack was never a fan of international diversification anyways (I'm telling myself that to comfort myself) 😉
KISS & STC.
Topic Author
Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

Sounds like a plan :beer
daze
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Re: Interactive Brokers (via Charles Schwab International)

Post by daze »

Schwab provides a virtual checking account, and you can set up ACH between Schwab and IB. With ACH, no charge to move money into IB. First withdrawal from IB per month is free, then 1 USD per withdrawal.

According to some anecdotes on net, moving more than 30K USD frequently may raise some concerns about money laundering and may result in account closure by Schwab. Moving 29K all the times might be considered as intentionally evading regulation and doesn't look good, either.

The minimum requirement of Schwab to avoid account closure is 1K USD. You can just keep 1K US treasuries in Schwab account to meet the requirement.

It's possible to use Schwab app to make check deposit with photo for checks issued by US banks. I'm not sure for other banks. Last time I used it, it's only available for customers who opened account more than 9 months ago. But several years has passed and not sure if they changed it.
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galeno
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Re: Interactive Brokers (via Charles Schwab International)

Post by galeno »

@daze

Good info regarding Schwab. Yes it has a lot of advantages vs IBKR. The biggest is customer service on the phone. Schwab wins.

Too bad Schwab does not offer the same access to the Ireland domiciled UCITS ETFs as does IBKR.
KISS & STC.
Topic Author
Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

daze wrote: Sat Apr 10, 2021 5:01 am It's possible to use Schwab app to make check deposit with photo for checks issued by US banks. I'm not sure for other banks. Last time I used it, it's only available for customers who opened account more than 9 months ago. But several years has passed and not sure if they changed it.
In a private conversation I was told that they do accept international checks via app photo.

Maybe Galeno can confirm that information, since from his posts it looks he use Charles Schwab to deposit his checks and then transfers them to IBKR.

At least that's what I understand reading his posts.
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galeno
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Re: Interactive Brokers (via Charles Schwab International)

Post by galeno »

The only transfer of money between Schwab and IBRK we've done was when we changed brokers.

We had to sell everything and transfer the cash. Then we bought our UCITS ETFs.

Then we closed our Schwab account.
KISS & STC.
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typical.investor
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Re: Interactive Brokers (via Charles Schwab International)

Post by typical.investor »

Neuralgia wrote: Sat Apr 10, 2021 12:13 pm
daze wrote: Sat Apr 10, 2021 5:01 am It's possible to use Schwab app to make check deposit with photo for checks issued by US banks. I'm not sure for other banks. Last time I used it, it's only available for customers who opened account more than 9 months ago. But several years has passed and not sure if they changed it.
In a private conversation I was told that they do accept international checks via app photo.

Maybe Galeno can confirm that information, since from his posts it looks he use Charles Schwab to deposit his checks and then transfers them to IBKR.

At least that's what I understand reading his posts.
I’m really not sure what the rules for everyone are, but as a US Expat using Schwab’s International Brokerage account, I am not eligible for check deposit or for brokered CDs.

The rules on brokered CDs were tightened in the last few years, and I am no longer able to see or purchase the CDs.

Schwab banking services and credit card are only for US residents. The International Brokerage account does have check writing and a debit card, but that’s it.

Perhaps NRAs have a different range of services, but I’d make sure I was talking to the International Brokerage people when asking questions.
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galeno
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Re: Interactive Brokers (via Charles Schwab International)

Post by galeno »

@typical.investor

We used Schwab International for 24 years. But NOT in the last 7 years. Things can change. We did have access to the brokered CDs.

Right now we wire $$ monthly from IBKR into our local CR bank. Then we pay our living expenses from there.

I'm wondering if we should re-open our Schwab International brokerage account again? We miss the Schwab debit cards.

We would keep the minimum USD in the MMF and wire our IBKR money into Schwab once a month. Then use Schwab instead of our local CR bank to pay our living expenses.

Good idea?
KISS & STC.
Topic Author
Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

My understanding is that your CS debit card would have no international use charge. And if they do, they'll credit you the same amount at the end of month. So it sounds like a good idea. Unless IBKR doesn't charge you to transfer to CR, in which case it would basically be the same thing.

The question I have right now is if you can use the CS app to deposit non us bank checks... At least that's my question since I'm still adding funds for quite a while until retirement.
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galeno
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Re: Interactive Brokers (via Charles Schwab International)

Post by galeno »

@neuralgia

IBKR allows one free wire transfer per month. My wife then pays our bills from oir local bank.

Two advantages of using Schwab vs our local bank to pay for living expenses.

1. Better USD to CRC exchange rates.
2. All spending done outside of CR. Like a tourist and not a local.

I'm wondering if this is a good idea?
KISS & STC.
Topic Author
Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

The ONLY downside is that, when my wife and I pay our monthly bills (which all go through BAC local CC), we earn some miles, which we then use for travel (we're both health workers so our second dosage is around the corner).

But besides that, it seems like it's basically the same thing. Paying locally means one more step with one advantage (only if you earn miles), if you don't use CC for all this, then it should be the same.

PS o don't know how much it takes to get a wire transfer from ibkr o CS to your local bank

I saves a couple of hours to call CS and see what they can tell me about recent policies, access to CD's, non us-bank check deposits thright the app, wire transfer policies/fees, etc.
daze
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Re: Interactive Brokers (via Charles Schwab International)

Post by daze »

Neuralgia wrote: Sun Apr 11, 2021 2:37 pm The question I have right now is if you can use the CS app to deposit non us bank checks... At least that's my question since I'm still adding funds for quite a while until retirement.
According to other users at our local forum, some local bank's international money orders can be deposited by Schwab mobile deposit. We don't really find out why some banks work while others don't, though. But at least 3 local banks is confirmed to work.
I'm Taiwanese so your experience with your banks might be different.
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galeno
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Re: Interactive Brokers (via Charles Schwab International)

Post by galeno »

Duplicate.
Last edited by galeno on Sat Apr 17, 2021 6:46 am, edited 1 time in total.
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galeno
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Re: Interactive Brokers (via Charles Schwab International)

Post by galeno »

Call Schwab International in Corral Gables (Miami FL USA) collect and ask them.
KISS & STC.
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Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

I just ended a Skype call with Charles Schwab International.

Unfortunately, depositing checks through the app, is only possible with checks from US Banks.

You can, however, use regular snail mail to send your local bank checks ($) and it will be deposited between 3-4 weeks, depending on how snail is your mail 😉.

Since as bogleheads we should be DCA I guess this is a way to do it. Once the funds are there, you just transfer them to IBKR via wire transfer, to invest in Ireland ETF's.

I didn't ask if there's a fee for this wire transfers, but I understand that you can do 1 per month, without fees.

I also asked that if there's a minimum balance to have in the account once it's open. The answer is NO. There are no monthly fees.

You'll get the debit card and you can also ask for a checks. You can use your debit card to withdraw cash and every month you'll have a credit for the fee that the ATM charged you for using this card.

Si again, it seems that the magic numbers are:

1. $25k for opening the CS International Broker account (with debit card)

2. $60k as a limit due to state taxes (60%) in case of death

3. $100k to open a IBKR Pro account, and pay no monthly fees

I didn't ask for CDPs or any other non equity options available, but I had to work so it was a fast call.
brrio
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Re: Interactive Brokers (via Charles Schwab International)

Post by brrio »

Updating this wonderful thread:
3. $100k to open a IBKR Pro account, and pay no monthly fees


The $100k is not needed anymore.
Balance1
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Re: Interactive Brokers (via Charles Schwab International)

Post by Balance1 »

galeno wrote: Sat Apr 10, 2021 2:23 pm The only transfer of money between Schwab and IBRK we've done was when we changed brokers.

We had to sell everything and transfer the cash. Then we bought our UCITS ETFs.

Then we closed our Schwab account.
Hello,

Can you please share the Ireland UCITS ETFs that are available thru IBKR.
if possible share the ones you checked and have in your portfolio.
I am new here and just learned that it is better for me to buy Ireland ETFs vs the USA.

Also, if you could clarify if Ireland have their own stock exchange. When I search by USD ETF ticker at IBRK, I only find London stock exchagne, not Ireland.
TedSwippet
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Re: Interactive Brokers (via Charles Schwab International)

Post by TedSwippet »

Balance1 wrote: Fri May 20, 2022 4:41 am Also, if you could clarify if Ireland have their own stock exchange. When I search by USD ETF ticker at IBRK, I only find London stock exchagne, not Ireland.
Ireland has a stock exchange, but (ironically!) most if not all Ireland domiciled ETFs are listed on and trade on other European exchanges. Most popular seem to be London, Frankfurt and perhaps Milan. This wiki article gives a decent overview, though it is far from a full list of every Ireland domiciled ETF (rather, just the most Boglehead-ish ones):

List of non-US domiciled ETFs - Bogleheads

Is there a particular reason that you are looking only for USD traded ETFs? What is your home country currency? If it is EUR, for example, then you would generally want to use EUR traded ETF variants, if available.
Topic Author
Neuralgia
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Re: Interactive Brokers (via Charles Schwab International)

Post by Neuralgia »

I use VUSD
Balance1
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Re: Interactive Brokers (via Charles Schwab International)

Post by Balance1 »

TedSwippet wrote: Fri May 20, 2022 8:29 am
Balance1 wrote: Fri May 20, 2022 4:41 am Also, if you could clarify if Ireland have their own stock exchange. When I search by USD ETF ticker at IBRK, I only find London stock exchagne, not Ireland.
Ireland has a stock exchange, but (ironically!) most if not all Ireland domiciled ETFs are listed on and trade on other European exchanges. Most popular seem to be London, Frankfurt and perhaps Milan. This wiki article gives a decent overview, though it is far from a full list of every Ireland domiciled ETF (rather, just the most Boglehead-ish ones):

List of non-US domiciled ETFs - Bogleheads

Is there a particular reason that you are looking only for USD traded ETFs? What is your home country currency? If it is EUR, for example, then you would generally want to use EUR traded ETF variants, if available.
Thanks a lot, another helpful post.
My home country and current country of residence are outside of EUR or USD zones, so both these currencies work for me. I receive my paycheck in USD and my IBKR account has USD as the main currency. When I buy stocks in different currencies or just buy other currency (EUR) IBKR ( I am not sure, but i think so) charges me interest on that. Therefor, I try to invest in USD.
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