Now that IB has been paying zero interest on all USD balances for awhile, has anyone come up with any good ways to earn interest on cash sitting with IB? There's always the carry trade but then you're subject to FX risks. Is there any way to buy a money market fund type vehicle which would pay interest? I see they now sell mutual funds but specifically exclude any kind of money market fund.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=163992 i was trying to tell this to ET long time ago. the way they deal with buying power by changing the margin rate EVERY DAY for every possible security is very creative,and it's impossible for customer to earn any money on idle cash in IB. i do believe they doing this for purpose. my accounts are perfect example. it have nothing (or very little to do with risks) i use to day trade on margin,while having pretty decent return on corporate bonds. not anymore. they change rate to 100% regardless to bond maturity,rating,liquidity. now i have to maintain huge amount of cash and even after that i have no idea, how they calculate buying power. examples are in link above.
tbills and money market funds are paying jack s*** interest rates right now. bil is an etf that's practically a mmf and it pays 0.1%. you have to take a bit higher risk if you want a reasonable dividend: shv, shy, usy
Yes this low interest rate scenario creates a problem for our Interactive Brokers balances. I'm in the same boat and not happy about it.
I'm considering moving a large portion of my cash elsewhere, to Fidelity or someplace else that will allow you to earn interest. Obviously this is a huge moneymaker for IB, even if they earn 1/2% on all the customer's combined cash balances that's a huge amount of money. There's a claymore money market etf but it's Canadian so you have FX risks....although I guess you could probably hedge them somehow.
there is not "safe" investment right now to earn "a little interest" on cash right now. It has nothing to do with IB in particular. If short rates go up the Rates IB pay should go up as well, unless they have a new policy of not passing interest on to customers (like the other retail brokers). IB so far as I know is one of the fairest brokers in terms of the rates they both pay and charge. Just compare margin rates at IB vs. most the others, IB is a terrific deal.
(Not investment advice, nor am I selling anything).... However, I was checking on some of the money set aside for grand kids and all that, not "big money" (Under $100K)....noticing we're not getting any interest. I checked with Schwab, and I was surprised with a 1.75 interest "investor savings" account. No minimum, no holding period etc. Not great, but better than nothing. Also, getting about .75% on Investor Checking, no minimum etc. All free. Obviously, trading with Schwab is nothing I've ever done, probably costly. I was irritatied when I noticed that, for some stupid reason, Wells Fargo was actually charging me for a couple of checking accounts, geez, I guess I gotta keep better track of this stuff. The other thing was "Ally" Bank, all online, fair rates. Not sure what to do about IB, because we're not getting much from GS either. FWIW, Don
fatwallet is a great place to find good rates - http://www.fatwallet.com/forums/finance/783099/ there is a bunch of internet banks, that pay you 4% on 10K and all you have to do is 10 debit card transactions. but-the question still remains-how to earn some interest in IB on idle cash?