I just realized that I lost ~3.4% of my investment in form interest payment to IB. Here’s how:
- I opened an account in late 2018 - I chose margin, however, I didn’t intend to use it
- I wired my investment in CHF to IB
- I then bought ETFs in USD and EUR for the rough amount of the CHF, assuming that my CHF were used for these purchases.
What really happened:
IB treated my purchases in USD and EUR as loans, and charged me interest on it
In addition, I paid interest on my (idle) CHF (negative interest)
The total interest paid to IB came to around 3.4%
I checked the total value of my portfolio monthly, but didn’t go into details. Since it was still growing, no alarm bells rang.
The cash section did show positive CHF and negative USD and EUR, but because I hardly understand anything on IB, I thought that was some kind of IB-way of showing what I’ve spent and didn’t bother to investigate
Only now, when I looked at 2019 as a whole for tax purpose did I find out how much I’ve paid in interest.
Feeling like a massive fool - hope this will prevent others from doing the same mistake.
Given how little I understand IB despite a few attempts to dig deeper, I’m re-considering my overall investment strategy at the moment, and thinking of moving everything onto my exisiting Swissquote account (much more user-friendly), and accept the downsides of that.