IG Trading review from an experienced and long-term investor. Find out whether this complex trading tool heavy, low cost broker is the right choice for you.
IG provides access to a diverse range of financial products with competitive brokerage rates for conventional share trading. IG is not a financial advisor and all of its services are provided on an execution only basis.
Founded in 1974 in the United Kingdom, IG has since grown into a global share trading platform with headquarters in over 19 countries. IG claims to be the biggest CFD trading platform, providing over a quarter of a million individual and institutional (corporate) investors with access to over 17,000 markets and 24 hour indices.
This article will review IG, and explore whether they are an appropriate and cost effective share trading platform for those on the path to Financial Independence.
The Good
- Some of the cheapest brokerage available in Australia
- A range of investing products for those with different investing styles
- $0 brokerage of US and UK shares
- Extended trading hours on over 70 popular US stocks
- Weekend trading available for indices
- Demo accounts for those starting out
The Bad
- Heavy emphasis on CFDs and more complex/risky trading tools
- Encourages regular trading by increasing brokerage for low frequency traders with less than 3 trades per month
Verdict: IG offers competitive brokerage and a simple share trading platform for those on the path to Financial Independence.
CaptainFI is not a Financial Advisor and the information below is not financial advice. This website is reader-supported, which means we may be paid when you visit links to partner or featured sites, or by advertising on the site. For more information please read my Privacy Policy, Terms of Use, and Financial Disclaimer.
IG Trading
IG provides access to a diverse range of financial products, but those on the path to Financial Independence are mostly looking at IG for its basic share trading features and will steer clear of the rest. This is so we can buy and hold conventional shares, like the low fee ETFs and LICs we know and love!
Basic share trading is a relatively new addition to IG, who previously specialized in CFDs (Contract For Difference) which are speculative derivative investments, as well as FOREX (Foreign exchange) trading and options. IG’s main product is still CFDs, which are speculative investments where people bet on price movements across different markets and asset classes… This is something I personally stay away from and these products, CFDs are actually banned in countries like the US with over 70% of retail investor accounts losing money using them.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.
IG
Where did IG come from?
IG was founded in 1974 in the United Kingdom, but has since grown and is now listed on the London stock exchange with corporate offices in over 19 countries as well as providing access to basic share trading in 5 major markets (Australia, USA, UK, Germany and Ireland) as well as over 17,000 CFD and FOREX markets.
IG gives investors access to trade on some of the worlds biggest stock markets; the Australian, US, UK, German and Irish stock markets.
In this way, you can invest directly in over 13,000 shares and ETFs including over 2185 Australian, 3500 US, 2600 UK, 765 German and 50 Irish stocks.
Of course, my favored way of investing is to simply own them all through ultra low-cost Exchange Traded Funds!
On IG you can buy ETFs that track the ASX200, ASX300, S&P500, NASDAQ100, FTSE100 and many other indexes such as small cap or industrial indexes.
Starting to sound too complex? You can actually own a majority slice of all global markets with a fairly simple construction of three ETFs, and I show you exactly how I do this in CaptainFI’s Investing Strategy.
Brokerage fees of IG
IG provides very competitive brokerage rates for share trading on Australian shares. Their fee structure is fair and based on your trade frequency.
IG Frequent Trader brokerage
If you trade at least three times per month, you receive a very favorable discounted brokerage structure for Australian listed shares as the greater of either $5 or 0.05% of the trade.
This fee structure does try and encourage more frequent active style trading, which is not the style of long term index EFT investing I follow. However, for those following a more active style, these are very competitive rates.
Of course, there is ‘zero’ brokerage for international shares – you can buy and sell US and international shares at $0 commission! the only catch here is that you pay IG a 0.7% currency conversion fee as well as their FOREX rates, which depending on market conditions and the strength of the dollar could mean paying a hefty premium for access to international shares at the time.
“For relevant transactions, we will convert currencies at the time of execution based on the best available bid / offer exchange rates, plus an admin fee of just 0.7%.”
IG
IG infrequent Trader brokerage
If you trade less than three times per quarter, you lose the discounted brokerage on Australian shares – but international shares are still brokerage free.
The cost of buying Australian shares rises to $8 commission, or 0.1%, whichever is greater. Using our ‘1% max brokerage rule’ you would only need to invest $800 a month to achieve this, but a more ‘realistic’ investment for those on the path to Financial Independence is likely in the order of a few thousand per month – making the brokerage fee only a quarter of a percent, and one of the lowest I have ever seen across any brokerage platforms for Aussie shares.
The lack of a subscription or custody fee is another advantage for IG trading and is a new addition as this was previously available for those meeting the “frequent” trader requirements.
IG and the W8-BEN-E Tax form
A word of warning on the Dreaded W8-BEN-E form – if you don’t supply a correct and updated W8 (or W9) form to IG prior to a dividend being announced for one of your US holdings, you will get schwacked with a US $50 fee. IG will notify you if you need to supply the form beforehand, so it’s not just as simple as completing it through your registrar like with other brokers.
“We charge a US$50 fee on accounts which have not supplied a mandatory W-8 or W-9 form prior to the dividend ex-date of a qualifying trade on a US-incorporated stock. We do not apply this fee to accounts with up-to-date documentation or accounts which have not entered into qualifying trades. We will notify you if you have entered into a qualifying trade and need to complete a form.”
IG
Does IG have CHESS sponsorship?
IG are registered with the Australian Securities Exchange using a custodian model sponsorship in Australia through Citibank Finance. They are not CHESS (Clearing House Electronic Sub-register System) sponsored directly by the ASX and therefore hold the shares in your name through a custodian model. It holds a derivatives issuer licence from the New Zealand register. I would personally prefer to see them adopt CHESS sponsorship on the ASX.
Does IG let me trade on Margin?
Currently no, you cannot trade shares on margin with IG. This is a good thing!
IG Customer support
Some critics of IG have complained that their customer support is less than stellar, however, IG offers round the clock 24 hour support (except for Saturday mornings on AEST) via both phone and email. I personally thought their customer support was pretty good when I contacted them without even being an existing customer!
Additional features of IG
As mentioned earlier, most of us are interested in IG for their basic share trading feature which we can use to buy conventional shares and listed ETFs. However, IG also allow investors access to the following additional markets;
- Foreign Exchange
- Contracts for Differences (Derivatives similar to ‘futures trading’)
- Indices
- Commodities
- Cryptocurrencies
- Options
- Bonds
- Binary options
- Interest rates
Further, IG allows investors the option of using a demo account so they can get experience before trading live for the first time. In this respect, I feel that IG might have moved into conventional share trading and offered such low brokerage as a way to attract additional investors into the platform with the hope that they might eventually move across to using the more complex and dangerous high frequency trading side of the house.
IG Mobile app
IG have a mobile app that supports both Apple and Android smartphones and tablets.
Extended Trading
IG has two forms of extended trading, Extended US market trading on 70 popular stocks and weekend trading on indices. While this is not the style I follow, I can see the advantage this would offer those based in Australia with restrictions based on time zones or with limited time during the week. Going forward, I can see other brokers adopting these types of offerings.
How to sign up for IG
Signing up for IG is pretty straightforward. I went to their homepage and followed the bouncing ball to create a personal account. You can set it up and provide all necessary documents in under an hour or so, and it will take a few days to be reviewed and activated.
You can create the following forms of accounts with IG;
- Personal Account
- Joint Account
- Corporate Account
- Trust Account
- Self Managed Super Fund Account
For most of us, setting up a personal IG account is the way to go. After you select ‘Create Personal account’ you are directed to the following screen
Fill in the bouncing ball to continue, and when you get to choosing your accounts select ‘Share trading’ – I personally am staying as far away from CFD and FX trading as I possibly can.
They do ask some interesting questions though, and I’m sure you might have some fun answering them like I did.
This took me about half an hour to complete because I wanted to take my time and read the fine print. There is nothing too onerous in here and it is full of the standard questions and details you would expect from a financial services provider.
How to trade with IG
Once my account gets activated and verified, and I have transferred across some Money, I will update this to show a user guide of how to make trades with IG. It is pretty straightforward from everything that I can see though.
Conclusion
IG Markets offers competitive brokerage and a simple shares trading platform for those on the path to Financial Independence. IG gives investors access to both domestic and international markets with direct access to Australian, US, UK, German and Irish stock markets. You can easily use IG Markets to create your own diversified investment portfolio with strategic use of a few key ETFs, but you also get the option to choose to directly own shares in individual companies from some of the worlds biggest markets – something which many other trading platforms don’t offer.
Other brokers to choose from
Big 4 banks
- CommSec Share trading [this is who I started out investing with]
- NAB Trade
- ANZ Trade
- Westpac Trade
Fintechs and smaller banks
- Pearler
- SelfWealth
- Stake US Share Trading
- Superhero
- OpenTrader
- eToro
- CMC Markets
- IG MarketsGroup
- Superhero
- Moomoo
Microinvesting platforms
Financial Disclaimer
Financial Disclaimer: CaptainFI is NOT a financial advisor and does not hold an AFSL. This is not financial Advice!
I am not a financial adviser and I do not hold an Australian Financial Services Licence (AFSL). In this article, I am giving you factual, balanced information without judgment or bias, to the best of my ability. I am not giving you any general or personal financial advice about what you should do with your investments. Just because I do something with my money (or use a particular service or platform) doesn’t mean it is automatically appropriate for your personal circumstances. I do not recommend nor endorse any financial or investment product, and my usage or opinion of any product should not be interpreted as an endorsement, advertisement, or intent to influence.
I can only provide factual information based on my journey to Financial Independence, and that is provided for general informational and entertainment purposes only. I make no guarantee about the performance of any product, and although I strive to keep the information accurate and updated as it changes, I make no guarantee about the correctness of reviews or information posted.
Remember – you always need to do your own independent research and due diligence before making any transaction. This includes reading and analysing Product Disclosure Statements, Terms and Conditions, Service Arrangement and Fee Structures. It is always smart to compare products and discuss them, but ultimately you need to take responsibility for your use of any particular product and make sure it suits your personal circumstances. If you need help and would like to obtain personal financial advice about which investment options or platforms may be right for you, please talk to a licensed financial adviser or AFSL holder – you can take the first steps to find a financial advisor by reading this interview, or by visiting the ASIC financial adviser register and searching in your area.
For more information please read my Privacy Policy, Terms of Use, and Financial Disclaimer.
Captain FI is a Retired Pilot who lives in Adelaide, South Australia. He is passionate about Financial Independence and writes about Personal Finance and his journey to reach FI at 29, allowing him to retire at 30.
