Last Updated on August 2, 2024
Disclaimer: Nothing in this article should be considered legal, tax, or investment advice. Interactive Brokers may not be the right platform for you and we always recommend conducting independent research before making any financial decisions. I do not work for or have any affiliation with IBKR.
Interactive Brokers (IBKR) is one of the largest online trading platforms in the world with over 170 billion in assets currently held on the platform. Using IBKR, investors can gain access to 135 markets in 33 countries and can trade in 24 different currencies. As a major US/global brokerage and member SPIC/FSCS, funds and securities held in IBKR are heavily protected and insured (read more here).
Important note: all the information in this article refers to the brokerage platform – Interactive Brokers. The Hebrew “version” (אינטראקטיב ישראל) is a completely separate company based in Cyprus, with higher fees. We therefore generally recommend opening an account at Interactive Brokers and not Interactive Israel.
This article will highlight why Interactive Brokers is an increasingly popular option for investing and transferring money across borders – and cover some of the most asked questions about getting your account up and running.
Table of Contents
Why do many Olim use IBKR to invest and exchange currency?
Quite simply, it is extremely low-cost and one of the cheapest options available. Their trading commissions for investing are much lower then any Israeli brokerage or bank and it doesn’t get much lower than their currency conversion fees. For example, you can exchange up to a hundred thousand dollars at the market rate for just $2. Basically, they charge 0.2 bps or 0.002% of the amount you are converting for all conversions up to 1 million dollars. As an example: converting $20,000 would incur the $2 minimum fee, while converting $500,000 would incur a $10 fee.
Additionally, while many US brokerages require a US address to open an account, you can open an IBKR account with an Israeli address alone and use an Israeli phone number (or mobile app) for two-factor authentication. Lastly and maybe most importantly, your Interactive Brokers account connects to bank accounts in multiple countries including Israel and the US allowing it to serve as “financial bridge” for various savings and income streams.
For someone looking to invest a portion of their monthly Israeli income, they can do so easily by transferring directly from their Israeli bank account to their Interactive Brokers account in a quick and cost effective manner (regular bank transfer) – and transfer money back to their Israeli bank account in shekels. There is no other international brokerage that offers all of this. If you need additional assistance with the practical implementation of any of the features outline here, our step-by-step online course will walk you through everything, at your own pace for just 75 NIS.
What is the catch?
As a heavily regulated global investing platform built for professionals, many find both the application process to open an account and using the platform itself to be intimidating at first. That being said, I have found that many people find the process pretty straightforward after they have successfully opened their accounts and completed their first currency exchange or made their first investment.
Hopefully, this article will help you make it through these initial steps. You can also register at anytime for our self-paced mini course which will walk you through everything.
In addition, IBKR is not meant to be used for currency conversion alone – see the next question.
Can I use my IBKR account for currency conversion alone?
IBKR’s policies require that the account primarily be used for investing. It seems that Interactive Brokers is now increasingly enforcing this policy and accounts that are primarily being used for currency conversion and transferring money will be flagged for review and restricted. If you have no intention of using the account for investing, it is best to consider one of the other currency exchange methods.
If you intend to be regularly investing or stock trading, consider making IBKR your primary investment account. This may help ensure that your account stays in complete compliance with IBKR’s rules and policies.
In addition, you can always consolidate existing investment accounts using the ACATS transfer process. This can help ensure that your account stays in compliance and that you have easier access to your investments in Israel. See IBKR’s complete instructions on how to transfer your assets from a different US brokerage, here.
How do I get started?
Simply go to interactivebrokers.com and click on “open account”. I recommend filling out your application on a computer, some have had trouble with the account application when using a mobile device. Brace yourself for a long and detailed application.
To keep your account secure, IBKR requires you to use 2-factor authentication to access your account. This will be set up as part of the process of opening your account. Download their mobile app from the app store so you are ready to set this up when prompted.
For those who don’t wish to use their app, you can elect to receive text messages instead – this does work with Israeli phone numbers. (For Kosher phone users: unfortunately, I don’t believe they currently offer an additional alternative to SMS or mobile-app based authentication.)
Important note: all the information in this article refers to the brokerage platform – Interactive Brokers. The Hebrew “version” (אינטראקטיב ישראל) is a completely separate company based in Cyprus, with higher fees. We therefore generally recommend opening an account at Interactive Brokers and not Interactive Israel.
What type of account should I open?
IBKR offers 2 types of accounts – IBKR lite and IBKR pro.
IBKR lite is only available to users who can prove US residency. IBKR pro is available to all. Both offer the same price for currency exchange. IBKR lite offers commission-free trading for US stocks/ETFs and the ability to buy fractional shares – but as noted above, you will need to upload proof of a US address to proceed with this account type. Recently, some users who claimed to be both US and Israeli residents were rejected from using IBKR lite, especially in cases where you list an Israeli address as your working address.
There are no longer any monthly maintenance fees or minimum balances required for either account option. IBKR pro does charge commissions but the commissions are relatively low when compared to Israeli brokerages. IBKR offers Tiered and Fixed pricing plans – Tiered is almost always the best options unless you are trading (stocks, bonds, etfs, etc.) in massive quantities. You can read more about the difference between the account types, here.
What should I select as my “Base Currency”?
Your base currency is the currency you will use to pay fees when you make a currency exchange. This is also the currency that will be used to display the total value of your account on account statements and on the online portal. You can always change your base currency in your account settings.
The main reason for changing your base currency to ILS is in order to withdraw shekels. If you open a IBKR account as a US resident without listing Israel as a second residency, you will likely need to change your ‘base currency’ to ILS in order to withdraw shekels from your IBRK account and transfer them to your Israeli bank. Once changed, it can take 5 business days before you will be able to make an ILS withdrawal.
In general, the currency that you will first be sending to your IBKR account is also the base currency that you should use when you first open the account.
Once I have transferred money to my new IBKR account, how do I convert currency to the currency I want?
Once your funds have arrived in your IBKR account, exchanging them for the funds you want is just a matter of clicking a few buttons. For their step-by-step video presentation on how to convert currency, click here and then click on the desktop or mobile links for a demonstration based on the device you are using. Trades usually complete seconds after they are submitted.
Many consider the best time for trading currency to be when both the NY and London currency exchanges are open, generally between 3 pm to 7 pm Israel time, Monday through Thursday. It is never recommended that you make any currency trades on the weekends or on US/Israeli holidays.
For most people looking to convert currency, using this “convert currency” tool is the most simple and easy way to do it. If you are looking to make a more advanced limit order to try and lock in a specific exchange rate, see the next question.
What is the best way to transfer Shekels from my Israeli account into my IBKR account?
The good news is that Interactive Brokers has direct partnerships with Israeli banks and is therefore setup o receive regular bank transfers directly from your Israeli bank account – the only US based brokerage that offers this. No need to make SWIFT transfer or העברת זהב.
The bad news is that they only give you can IBAN number (International account number) which can make it a bit confusing to set up a transfer for the first time. Wise provides some helpful resources for breaking down an IBAN in to regular bank transfer details. If you need additional guidance with this, our comprehensive crash course offers step-by-step videos and downloadable guides for exactly how to transfer money from both an Israeli and US bank account in the cheapest and most efficient way possible.
What is the best way to transfer USD from my US bank account into my IBKR account?
Generally, the cheapest and simplest option is linking your US bank account to IBKR and initiating a “direct ACH transfer from your bank”. Login into your bank and follow the procedure for linking a new account. Generally, it takes 1-2 business days to connect your account and requires verification of micro/trial deposits before you can transfer funds using this method.
For large transfers (generally more than $50,000), most US banks will require you to wire the money instead of using direct deposit or bill pay. This is also the quickest way of transfering money. US banks generally charge between $20-$50 for outgoing domestic wire transfers. IBRK does not charge any fees for receiving a wire transfer.
For direct deposits and wire transfers from US banks to IBRK, you will be able to invest or convert the funds to shekels immediately once they arrive in IBKR. You will only be able to withdraw those shekels to your Israeli account after 3 business days.
To avoid long holding periods on withdrawals (44 days!!), make sure all transfers to IBKR are initiated from the bank you are transferring money out of and not from within the IBKR portal. Do not use the “(ACH) Transfer Initiated at IBKR” or “Link a new bank account” option if you plan to withdraw the funds to an Israeli bank account in the near future. For a full breakdown of the different deposit options and required holding periods, click here.
How do I set a limit order?
A limit order allows you to set a specific exchange rate that is above the current market rate. If this rate is reached by the market, your funds will automatically be converted at or above the rate you set. The closer you set the limit exchange rate to the live market rate, the more likely the trade will go through. (These types of orders can be confusing for some – make sure you understand the trades you are making before placing any order and that you are not accidentally submitting a buy order instead of a sale order)
To submit a limit order: click “trade” at the top and then “order ticket” – then click on “Forex” (see picture below). Once in the forex order ticket, assuming you are looking to exchange dollars into shekels – type in the symbol USD.ILS and select “Forex” – click “sell order” and then type in the amount of dollars you want to exchange in to the “quantity” field. Make sure the order type is set to limit (not market) and type in the exchange rate you are looking to convert at into the “limit” field.
How do I use my IBKR account to Invest?
As Interactive Brokers is a global trading platform offering access to many different stock exchanges, some users get confused by the terminology when they try and buy a stock or ETF. When searching for a US listed ETF, expect to see ARCA next to it – most ETFs are listed on the New York Stock Exchange Arca. When searching for a US listed stock, expect to see either NASDAQ.NMS, NASDAQ or NYSE.
If you are not an American citizen it may be advisable for you to avoid US based stocks and ETFs and purchase Irish domiciled ETFs via the London exchange instead. For more info please read Schwab International’s guide to US taxes and Bogleheads Non-US investor’s guide to navigating US tax traps
If you are looking to learn how to confidently invest on your own, join our guided investment program for step-by-step support on how to get your money out of the bank.
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I help Olim make more confident decisions by sorting through the complexity around personal finance in Israel and delivering a well organized path forward.
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Hi,
Which is a better governing entity on IBKR for a Israeli resident I also hold a UK passport IBLLC-US or Ireland?
Whats the difference
Thanks
Hi Rob,
I couldn’t advise about the different legal structures. When you sign up for an account, if you are an Israeli resident, you should select “Israel” in the country field. IBKR will automatically register you with the relevant entity based on your residency.
Hi,
What is the cheapest way to invest in the Israeli stock exchange, the banks and most of the investment companies here change a high fee and a monthly fee? Do IBKR do it?
Thanks
Hi Rob,
Generally, opening an account with one of the local investment houses. Interactive Brokers does not provide access to the TASE if you are an Israeli resident.
See our comparison on this, here: https://bluewhitefinance.com/us-vs-israeli-brokerage/#Buying_on_the_TASE
As a new Oleh with dual US and Israeli citizenship, I have funds in Israel that I plan to invest in US stocks/ETFs through Interactive Brokers. I understand that I would need to pay taxes to Israel on these investments since I’m using Israeli money. However, if I also transfer money from the US to this account, convert it into Shekels, and then invest, where would I be required to pay taxes—in Israel, the US, or both?
Hi Shimi,
I don’t believe your understanding is correct.
Where you transfer the money from isn’t likely to be relevant with regards to taxation. In addition, investments in Interactive Brokers will be purchases in USD not in NIS.
In general both Israel and the US tax you on your worldwide income, with a tax treaty ensuring that you don’t get double taxed. Israel also has a 10 year Aliyah benefit exempting you on tax from non-Israeli sourced income. People often get confused on the definition of “non-Israeli sourced”, I recommended reading our full guide on this to understand further: “What you didn’t know about the aliyah tax holiday“. You might also gain value by watching a recent interview we hosted breaking down How the US-Israel tax treaty actually works.
Hi, small correction “To avoid long holding periods (45 days!!)”
I am pretty sure that this should read “4 – 5 days”
At least that is the impression I got from their documentation.
Thanks
Hi Dovid,
The holding period would be 44 days, if you are trying to withdraw the funds to an account other than the one your transferred from. See here: https://www.interactivebrokers.com/en/support/fund-my-account.php (Click on “More information” in the “Link a new bank account” section)
Hi Aaron,
I have an account with interactive Brokers Israel (managed by Israel Interactive Trading – Mexem Ltd) with the regulation in Ireland. I have been told that if I use Ireland directly its cheaper, Is this really the case?
Thanks
Opening an account with אינטראקטיב ישראל will not be cheaper.
It’s possible you were told about Irish domiciled ETFs which can be advantageous for non-Americans. But these can be purchased in any brokerage account, there would be no advantage to specifically opening an account with “regulation in Ireland”
Thanks for the reply. Can i legally open an account with Interactive brokers in Ireland?
The service אינטראקטיב ישראל is not great, Also how can i move my stocks between my Israeli account and Ireland. When I spoke to someone yesterday they said they wont do it, I will need to sell the stocks and buy again elsewhere.
Hi Rob,
You can open up an account with Interactive Brokers, here.
No need to open an account with אינטראקטיב ישראל.
I am not familiar with transferring open positions from an Israeli bank to Interactive Brokers. I imagine this is possible, but I don’t think your bank is likely to make this process easy.
Hi Aaron,
Thanks for your reply, to clarify I meant I have a current account with אינטראקטיב ישראל. and would like to transfer my stocks out and put them in my Foreign Interactive account. They say they cant transfer my current stock as its not their policy and will need to sell what I have and buy elsewhere. Does this make any sense, anything I can do?
Interactive Brokers can make an internal transfer of your assets from one account to another. Make sure you are speaking to the support team at Interactive Brokers and not אינטראקטיב ישראל after you have a new account set up that is not connected to the “introducing broker” אינטראקטיב ישראל
Hi Aaron, thank you so much for this article. I’m a dual US and Israeli citizen. i have opened an account with The Hebrew “version” (אינטראקטיב ישראל) about a year ago.
is there any way to transfer all stocks i have in my current account to a new account at Interactive Brokers and not Interactive Israel?
Unfortunately this can be challenging. I would start by logging on to Interactive Brokers (not אינטראקטיב ישראל) and opening a support ticket. You can ask them “what steps they recommend for removing the introducing broker from my account.” You may need to open a new account that is not affiliated with אינטראקטיב ישראל and than request that they transfers your assets internally from the old account to the new account.
Thank you!
This is a fantastic article. Thank you so much. When attempting to setup the Israeli side, it wouldn’t let us. We received a screen explaining “Funds Transfer Restrictions”. In the 7 bullets enumerating the restrictions, we got: “Clients may only withdraw funds in their base currency, their home country’s currency or common currencies (e.g. USD, EUR, HKD, AUD, GBP, CHF, CAD, JPY and SGD). Your article above suggests changing the base currency to ILS.”
Do we need to use an Israeli address as well (does it matter? Is it preferable?) or is it good enough to just change the base currency?
Changing the base currency should be sufficient. I would not add your Israeli address to the account at this stage assuming you are not yet an Israeli resident.
Would you recommend interactive brokers for gaining interest on uninvested cash (their rate on deposits over 100k USD seems higher than any pikadon in Israel). Specifically, what are there tax implications both in Israel and the US?
Thanks!
Hi Adam,
Generally we would not. The first reason is that you don’t earn any interest on the first 10K. In addition, for someone living in Israel and saving up for a short-term goal, it generally makes much more sense to be saving in NIS rather than USD. Taking risk on the currency rate is usually not worth it. You can learn more about this, here: https://bluewhitefinance.com/managing-exchange-rate-risk/
As far as the tax implications, they would be very similar to a situation where you had earned money from investing the money. You will generally need to report any income earned to both US & Israel. If you are within 10 years of Aliyah, see: https://bluewhitefinance.com/aliyah-tax-holiday/
Aaron,
Why do you say better to leave it in NIS?
I’m an exclusively American citizen in Israel with 370k NIS in Mizrachi, and was going to transfer to USA to get %5.30 on Raisin.
Is that sensible?
What is better than that in Israel?
Thanks
Hi Zev,
It completely depends on what you are saving for and when/where you expect to need the money. Exchange rate fluctuations can easily wipe out whatever extra interest you are earning in a US based account and it is often hard to argue that the potential reward is worth the risk you are taking.
Earning 5% is USD is not necessarily better than earning 2.5% in ILS. It really depends on your goals and what currency you need the money in. Many get confused by the % but are really not comparing apples to apples.
Aaron, thank you so much for the article!
I have a question.
You’re saying:
If you are not an American citizen it may be advisable for you to avoid US based stocks and ETFs and purchase Irish domiciled ETFs via the London exchange instead.
I’m oleh hadash, so I don’t have to pay taxes on foreign stocks’ profits for 10 years. Am I right that for me the US based assets are as preferable as Irish (at least for the period of 10 years)?
No. The Aliyah benefit is very beneficial when it comes to Israeli tax. But the general recommendation for non-Americans to consider Irish domiciled ETFs has nothing to do with the Aliyah benefit but rather on avoiding US tax traps that can be imposed on non-Americans who hold US assets.
Hi Aaron, thank you for the excellent article. I’m a dual US and Israeli citizen residing in the USA. I’m planning to transfer funds to the USA and use some of that money for investments in ETFs through IB. Should I open a ‘lite’ account as a US citizen living in the USA? My plan is to transfer the funds in Shekels, convert them to USD within IB, and then transfer the USD to my US bank account. Is this the correct process?
Thanks!!
Hi Moshe,
IBKR doesn’t allow you to use your account to primarily be used for currency conversion and money transfer. Your account will likely be restricted or closed if you use this process.
Hi Aaron, great and useful article!
I am a US citizen, residing in the US and I have some Shekels in a bank account in Israel. What will be the best “Base Currency” to choose if I plan to transfer my Shekels from an Israeli bank account to Interactive Brokers, convert it to USD inside Interactive Brokers and mainly invest in US stocks?
Using ILS as your base currency probably makes the most sense.
Thanks! Can you explain why?
Your base currency is the currency you will pay your fees in. If you are transferring shekels to start with, that is the base currency you will need to start with. If you won’t have USD in your account to start with, you shouldn’t use USD as your base currency.
Hello, thanks for this excellent guide. I have an account with IB and an account with Bank Hapoalim. I am looking to transfer shekels from my account at Poalim to IB and exchange to dollars at IB. I have your guide to help break down the IBAN, which is great.
I am wondering what to enter in the first field on the online transfer funds form at the Poalim web site: שם המוטב. When I normally use this feature this field contains the name of the owner of the target account (most often a payee or family/friend). In this case, should it be Interactive Brokers or my name with possibly the IB account number?
I understand that in the field: הערה I would enter my name and IB account number.
Thank you, David
I would just put “Interactive Brokers”
Hey, great post thank you for writing this!
How does it work when paying taxes once you cash out of IBKR?
From what I understood the Israeli Brokerages will take care of that for you, how does it work with IBKR?
Unlike with an Israeli brokerage, taxes will not be withheld for you automatically and you will need to report it. Learn more about this here: https://bluewhitefinance.com/us-vs-israeli-brokerage/#Step_3_Determine_which_factors_apply_to_you
Thank you a lot for explanations . 2 questions:
1. If I am Ola Hadassah and I have money that I brought from Russia, what TIN should I use to make an account? I have no TIN yet here, in Israel.
2. Is it possible to transfer money from dollar account? Is it expensive?
Hi Tatiana,
1. Your TIN is your Teudat Zehut (Israeli ID #).If you made Aliyah, you should use that number.
2. Transferring money from a dollar account (in an Israeli bank) to IBKR will probably be expensive. You will need make an international wire to IBKR’s US bank account and Israeli banks often charge for high fees for this. Interactive Brokers only accepts ILS in their Israeli bank.
Has anyone else seen this? It looks like one has to have first transferred from their Israeli bank account to IBKR, before they can withdraw funds from IBKR and send them to that Israeli bank account.
Dear Client,
In order to approve your withdrawal instructions to ILS/Discount Bank Checking, we need to ensure, for AML purposes, the account you are withdrawing to is an account under your name that you have used previously to deposit funds into your IBKR account.
Please respond to this ticket with a copy of your bank statement showing a deposit being made to Interactive Brokers for the account you wish to withdraw funds to. All other information can be redacted, but we do need to see the deposit, your name and the account number.
Sincerely,
Funds & Banking
IBKR Client Services
It’s a not so uncommon request in order to verify an account you have never used before with your IBKR account. You should be able to rectify this by transferring a small amount from you Israeli account. You can download our guide for this, here: https://hub.bluewhitefinance.com/ibkr
Hello, thank you for your instructions on topping up your Interactive Br account from an Israeli bank account. However, I have a question. In the online form of Hapoalim Bank, you need to fill in the name of the recipient and a comment for the recipient. Is it filled in Hebrew? Or in English, as indicated in the IB details?
In English, matching your IB details
After liquidating a brokerage account, or otherwise converting USD to ILS, what is the most painless way to return that money to Israel? Taking into consideration Israeli banking regulations etc.
Maybe consider adding this section above? Thanks!
Hey Noah,
Thanks for your comment. Unfortunately, when it comes to dealing with Israeli banks and transfering money to Israel, I am not aware of any consistently painless option for that – especially if you are transferring significant amounts. I have shared some specific tips for a smoother process with your bank, here.