How to invest automatically with Interactive Brokers

You know how much I like Interactive Brokers, who are the best broker in Switzerland for any self-respecting investor.

Well, today, with the announcement of their new automatic investment feature, I can tell you that they have retained their position as the number one broker in Switzerland ;)

I’ve been waiting for ages for this so I can automate my investments, and it’s finally here!

What is automatic investing with Interactive Brokers (“IBKR”)?

Interactive Brokers’ recurring investments feature enables you to set up purchase orders for ETFs or stocks which will be executed automatically over a specified time period.

But why would you want to automate your investments, I hear you ask?

Why set up automatic recurring investments with Interactive Brokers?

For me, there are four main reasons:

1. Encourage financial discipline: automated investing instills financial discipline, which makes you stick to your predetermined investment plan.
2. Remove emotions: you avoid making impulsive decisions based on emotions such as fear, greed, or thrill. In particular concerning the performance of your chosen ETF at the time of purchase.
3. Save time: while we like making an effort as a Mustachian, I also like to make life easy when it comes to trivial matters such as doing a few clicks to transfer and invest money.
4. Magic effect of compound interest: the most important thing is that investing regularly and as early as possible in your life will bring you incredible fortune in the long term. This is all down to the returns generated on your existing investments that begin to generate returns themselves.

In short, automatic investing on a recurring schedule can encourage discipline, reduce the impact of emotions, save time, and above all maximize the effect of compound interest, which is particularly beneficial for long-term investors like us.

My investments in autopilot mode, and me in 'I'm enjoying REAL life in the mountains around Montreux' mode 🤩'

Requirements for IBKR recurring investments

If you really want to invest in an automated way, you need to be able to buy “fractions” of a certain ETF (or another share).

You can’t be on full autopilot if you say “Buy me 4 shares of VT ETF every month”.

Why?

Quite simply because you wouldn’t know how much to put in each month in order to make such a transaction.

Why? Because the amount that you need to pay for an ETF share changes every day, according to the value at which the ETF is being traded on the stock market.

That’s where fractional shares trading comes in.

This feature, already well-known by savvy investors, exists with IBKR.

Let’s say that you want to invest 400 CHF per month in our favorite VT ETF.

Now imagine that this same VT ETF costs 95 CHF per share today.

Well, fractional shares trading means you can say: “Buy me 400 CHF worth of VT ETF per month”, and IBKR will then buy you 4.21 shares of VT ETF.

So you need to request the authorization to trade in fractions of shares (and ETFs) in your IBKR account settings in order to be able to invest automatically.

I’ll show you how to do that in the section below.

I’m not going to go into more detail about fractional shares trading, but please note that it doesn’t change anything with regard to your dividends and taxes (you will just have shares in decimal points rather than full shares).

Now let’s move onto the practical side of automating your investments :)

How do you create automatic recurring investments with IBKR?

Once you are connected to your IBKR Client Portal, you just need to go to the menu section: “Trade” > “Recurring investments”.

You will then see the list of active recurring investments.

Recurring Investments homepage on Interactive Brokers

As mentioned earlier, you now need to activate the Interactive Brokers “Trade in Fractions” feature by clicking on the “subscribe” link in the screenshot above.

Then you need to tick “Global (Trade in fractions)” (and the “All Global” box will also then be ticked automatically):

Activating the Trade in Fractions feature on IBKR

You are now ready to create your first IBKR recurring investment.

Here is how to create an automatic investment on Interactive Brokers in 8 easy steps:

1. Click on “Create a Recurring Investment”
2. Search for your ETF (recommendation: by ISIN to be 100% sure)
3. Specify the start date
4. Enter the recurring amount (in USD) that you want to buy (don’t worry: IBKR will automatically convert your CHF into USD in order to undertake the automatic purchase of ETFs)
5. Recurrence interval of the automatic investment (probably every month or quarter — since we don’t have thousands of CHF to invest every day :D)
6. No end date, as we’re in it for the long term, baby!
7. Review the information entered + the summary of your recurring investment order
8. Confirm 🎉

This is what it looks like:

Screen for creating a new recurring investment on Interactive Brokers

Check the details of your recurring investment before confirming it

Your IBKR recurring investment has been successfully set up!

And… that’s it!

You can now see the following columns in the list view:

• Name of the ETF (or share) that you want to buy regularly
• The interval at which the recurring purchase will be executed
• The amount of the automatic purchase on IBKR
• The start date of your recurring investment
• The next occurrence of your recurring investment
• The last time your automatic purchase was made
• The end date of your automatic purchase order (if you have specified one)

List view of your recurring investments on Interactive Brokers

But we’ve still got one more thing to do.

You now need to ensure that every month (or quarter, or any other frequency you chose), you have enough cash in your Interactive Brokers account for your order to be executed.

So we’re also going to automate this deposit with IBKR.

How do you deposit money into Interactive Brokers automatically?

It’s the same procedure as when you make a one-off deposit with IBKR, except that you need to tick an extra box.

Go into: “Transfer & Pay” > “Transfer Funds” > “Make a Deposit”.

Then choose the bank account you normally use to deposit funds.

Specify the amount and then tick the box “Make this a recurring transaction?”

Creating a recurring bank transfer from your bank account to your Interactive Brokers account

Then all you need to do is:

• Name this recurring transaction
• Specify the frequency (monthly / quarterly / annually)
• Set a start date
• Leave the end date blank so that the recurring transaction remains active

Now, as this is just a payment notification, you also need to create an automatic payment in your internet banking (for me via my neon account).

Conclusion

And there you are, you’ve now got yourself a fully automated investment strategy with Interactive Brokers!

I really recommend that you set this up, especially if you lack financial discipline.

The “you” in 10-20 years will thank you when they’re financially independent thanks to a decision that took 20 minutes to set up.

Incidentally, I’m interested to know, how much you invest automatically with your Interactive Brokers account, and how often?

FAQ

What frequency of recurring investment can I choose on Interactive Brokers?

You can choose between the following intervals in order to automate your investments with IBKR:

• Every day
• Once a week
• Every fortnight
• Monthly
• Quarterly
• Twice a year
• Annually

How can I modify a recurring investment order on Interactive Brokers?

You can modify a recurring investment on IBKR by going to the list view “Trade” > “Recurring investments”. Then click on the little pencil on the line that you want to modify, and that will take you to the editing view. Make your change and save it.

Modifying a recurring investment on IBKR

How can I cancel an Interactive Brokers recurring/automatic investment?

You can delete your recurring investment on IBKR in two ways:

1. By clicking on the “cross” icon
2. By clicking on the line of the recurring investment, which opens the detailed view, and then clicking on “Cancel investment”

All you then need to do is specify either the end date of your recurring investment or if you want to cancel it immediately, tick the box “Effective immediately”.

Canceling a recurring investment order on IBKR

Where can I see the active IBKR recurring/automatic investments?

Active IBKR recurring investments are only visible in the Interactive Brokers Client Portal (web application). They are not currently visible on the IBKR mobile app, the IBKR GlobalTrader mobile app, or the TWS desktop platform.

How can I see the recurring investments made in the past on IBKR?

You can see the recurring investments made in the past on IBKR by clicking on the clock symbol on the line of the share that you want to see in detail. You will also see your recurring investments that have been made in the view “Trade” > “Orders & transactions”.

Here is how to see recurring investments made on IBKR

Where can I see expired or canceled recurring investments on Interactive Brokers?

Expired or canceled recurring investments on IBKR can be seen below the list of active ones. You just need to click on the link “Show Expired and Canceled” in order to bring them up.

And here is how to see your expired or canceled recurring investments on IBKR

What is the purchase price of my ETF in the recurring investment mode?

The price of the recurring purchase order for your ETF will be calculated according to the average price on that day. The actual purchase order will be placed when the stock market opens (the New York Arca in our case for the VT ETF).

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