IB no interest on first 10K rule, what do you do with the money?

I guess where I was going with this was when I read the $200K cash example above. If you invested $50K in T-Bills, you would still have $150K in cash left where you would earn IB interest on $140K and earn nothing on $10K. In order to earn money on the $10K which is the entire point of this discussion, you would have to buy T-Bills on the entire $200K in cash. If you do this, then yes, you earn extra interest on the $10K, about $165 based on current t-bill rates, but you lose $2,000 in trading power. If you make 8.25% on your trading money, then it's a washout.

For those trding accounts that are being used as sources of income, such as paying out your salarly, paying monthly bills, etc..., I think it would require a bit more work continually monitoring your accounts to make sure you're 100% invested and then selling off exactly enough t-bills to support yourself.

I'm sure there are many accounts where it is worthwhile to earn the extra interest by buying t-bills, but I think in this example, a large cash account supporting underlying investments, buying t-bills does not seem the best way to go.
 
Quote from joeactuary:

I guess where I was going with this was when I read the $200K cash example above. If you invested $50K in T-Bills, you would still have $150K in cash left where you would earn IB interest on $140K and earn nothing on $10K. In order to earn money on the $10K which is the entire point of this discussion, you would have to buy T-Bills on the entire $200K in cash. If you do this, then yes, you earn extra interest on the $10K, about $165 based on current t-bill rates, but you lose $2,000 in trading power. If you make 8.25% on your trading money, then it's a washout.

For those trding accounts that are being used as sources of income, such as paying out your salarly, paying monthly bills, etc..., I think it would require a bit more work continually monitoring your accounts to make sure you're 100% invested and then selling off exactly enough t-bills to support yourself.

I'm sure there are many accounts where it is worthwhile to earn the extra interest by buying t-bills, but I think in this example, a large cash account supporting underlying investments, buying t-bills does not seem the best way to go.
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Yes. Every customer is different. Is up to the customer to do what is best for them. But the key is that the brokerage house has to supply enough product so that the customer can have more choices.
I would think t-bills are great for small account customers. If they only have 10-20K in their account, then buying t-bills would make a big difference.
 
there is some new money market etfs that might work for us. YYY and USY, havent looked at the prospectus but maybe you guys can figure out if they are any good
 
i suspect interactive broker is using your $10,000 cash to trade his own account by prop trading. and depositing in a fund generating returns returns and no risk.

free money to use your money to trade. brokers and maker makers i assume have 10:1 or 20:1 intraday margin as professional traders have or even more. retail only have max 4:1 and majority of clients rarely use the full leverage.

i don't see the point of not paying interest for $10,000 Deposit because they don't want to..





Quote from Daal:

there is some new money market etfs that might work for us. YYY and USY, havent looked at the prospectus but maybe you guys can figure out if they are any good
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Quote from vince111:

i suspect interactive broker is using your $10,000 cash to trade his own account by prop trading....
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Is that as in "Mr. I. Broker". Does Mr. Broker have a Social Security number and a wife?

Why don't you call Mr. Broker and ask if he's hiring. Genius is always in demand.

PS Another 'last 30 days register' talking nonsense. Same guy, or a large family?
 
Quote from Daal:

there is some new money market etfs that might work for us. YYY and USY, havent looked at the prospectus but maybe you guys can figure out if they are any good
More...

wait for mr Hussein in whiite house...


http://au.blogs.yahoo.com/futureinvest/52/obama-clinton-and-mccain-on-tax-policy/

if no new tax laws are passed, the tax rates on capital gains and dividends will revert back to the old rates of 20% on capital gains and as high as 35% on dividend income next year. Find out what the leading candidates would do if elected president.
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it looks like USY is excellent, they invest on a bunch of money market instruments and they target to earn the LIBOR annualy(looks like they have avg 90 duration). it doesnt pay a dividend equivalent to the interest income earned. it rather increases its own NAV and pushes the share price with it. this is great for us non-US traders, because we pay witholding tax on any type of dividend plus you can delay the tax bill by not selling ever(again for non-US, the IRS I dont think allows this)
 
Quote from vince111:

i suspect interactive broker is using your $10,000 cash to trade his own account by prop trading. and depositing in a fund generating returns returns and no risk.

free money to use your money to trade. brokers and maker makers i assume have 10:1 or 20:1 intraday margin as professional traders have or even more. retail only have max 4:1 and majority of clients rarely use the full leverage.

i don't see the point of not paying interest for $10,000 Deposit because they don't want to..
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How do you manage to come up with nonsense like this?

IB uses the interest earned on the first $10k to cover fixed costs such as general account overhead and the "free" data feeds.

IB is in business to make a profit and you are free to take your business elsewhere if no interest on the first $10k is a major issue for you.
 
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