Comparing Interactive Brokers Vs. Freedom24: Fees, Features, and More
When I had to choose between Freedom24 and Interactive Brokers (IBKR) it was challenging. Both are renowned online brokers, but they cater to different needs and profiles. This review is based on my experience and I bet it will help you understand their features and offerings.
My Pros and Cons of Freedom24
Pros:
- Listed on NASDAQ and authorized in Europe
- Interest on uninvested funds
- Fixed deposit account with 3.6% (EUR) and up to 8,81% (USD) returns
- Deposits and withdrawals via credit card
Cons:
- No CFDs available
- Margin loan interest rate of 18%
My Pros and Cons of Interactive Brokers
Pros:
- Competitive commission structure
- Extensive range of products and global exchanges
- Advanced trading platforms
- Sophisticated margin and short selling systems
Cons:
- Inefficient customer service in some countries
- No assisted tax management
- TWS platform not beginner-friendly
Security: Which is Safer?
Freedom24:
- Founded in 2008, part of Freedom Finance Europe Ltd, a subsidiary of Freedom Holding Corp. (NASDAQ: FRHC) with a Standard & Poor’s rating of B.
- Licensed by BaFin (Germany), SEC (USA), CySEC (Cyprus).
- Customer funds protected up to €20,000 by the Investor Compensation Fund (ICF).
Interactive Brokers:
- Founded in 1978, listed on NASDAQ (ticker: IBKR) with a Standard & Poor’s rating of A-.
- Licensed by SEC (USA), FCA (UK), and the Central Bank of Ireland.
- Customer funds protected up to €20,000 by the Irish Compensation Scheme (ICS).
Both brokers offer high levels of security, with licenses from top regulatory bodies and protection schemes in place for customer funds. Both brokers can be used for stock trading but also for safer investments.
Costs and Commissions: Which is More Affordable?
Freedom24:
- Two account plans:
- Smart in EUR: No monthly fee, 0.02 €/£ per share (min. 2 €/£ per order).
- All Inclusive in USD: No monthly fee, 0.012 $/£ per share (min. 1.20 $/£ per order).
- US options commissions: $0.65 per contract.
- Margin loan interest rate: 18%.
- Deposit via bank transfer free, credit card deposit 2.5%, €7 withdrawal fee.
Interactive Brokers:
- Fixed and tiered commission structures for US and Canadian markets.
- Fixed commissions: $0.005 (max 1%) and 0.01 CAD (max 0.5%).
- Tiered commissions: $0.0005 to $0.0035 (max 1%) and 0.003 CAD to 0.008 CAD (max 0.5%) based on monthly volume.
- Higher commissions for European stocks compared to Freedom24.
Trading Tools and Markets
Freedom24:
- Access to major global exchanges in Europe, America, and Asia.
- Tradeable instruments include stocks, ETFs, options, bonds, and forex.
- Real assets only, no CFDs.
- Margin trading available.
- D-account with high interest rates on uninvested funds.
Interactive Brokers:
- Access to 150 exchanges in 33 countries with 27 different currencies.
- Tradeable instruments include stocks/ETFs (including fractional shares), bonds, futures, options, warrants, CFDs, mutual funds, forex, and structured products.
- More comprehensive market coverage compared to Freedom24.
Should I Use These Brokers?
Freedom24:
- Suitable for both beginners and experienced investors.
- Offers a simple interface with a proprietary web platform and a mobile trading app.
- Provides educational resources and excellent customer support in many languages.
Interactive Brokers:
- Best for experienced or intermediate investors.
- Uses the TWS platform, which has a steep learning curve.
- Recently launched IBKR GlobalTrader for a more user-friendly experience.
Final Verdict
Both Freedom24 and Interactive Brokers are solid choices, each with its strengths. Freedom24 offers a user-friendly platform with competitive trading costs and excellent customer support. Its high-interest D-account is a major draw for investors looking to maximize returns on uninvested funds.
Interactive Brokers, on the other hand, provides unparalleled access to global markets and a wide range of financial instruments. However, it may be more suitable for seasoned traders due to its complex platform and higher fees for European stocks.
In conclusion, my choice between Freedom24 and Interactive Brokers was be based on my trading needs, experience level, and investment goals.
Additional Information
Freedom24:
- Year of Foundation: 2015
- Parent Company: Freedom Holding Corp.
- Offices in Italy: Yes
- Licenses: CySEC (Cyprus), BaFin (Germany), SEC (USA)
- Deposit Protection: Up to €20,000
Interactive Brokers:
- Year of Foundation: 1993
- Parent Company: Interactive Brokers Group LLC
- Offices in Europe: Yes
- Licenses: SEC (USA), FCA (UK), Central Bank of Ireland
- Deposit Protection: Up to €20,000
Both brokers are highly regulated, offering transparency and security for their clients.
Read the Freedom24 Review
