If you've been thinking about opening an account with Ally Invest, this review is for you.
I've been using Ally Invest as my primary stock brokerage for years. I started with TradeKing, stayed on during the acquisition, and have held a sizable portion of my investments with Ally Invest.
I'm a fan because they offer free trades, a rich suite of research tools, and an interface that is intuitive and easy to navigate. They don't offer free trades of mutual funds but I invest in mutual funds directly with Vanguard so this isn't an issue for me. (Ally Invest offers free trades on ETFs though)
Read on to discover this in-depth Ally Invest review.
Who is Ally Invest?
Ally Bank got into the brokerage game through acquisition in 2016 and renamed it Ally Invest Securities, or Ally Invest for short. They're regulated by FINRA, you can look up their listing on BrokerCheck, and they're licensed to operate in all 50 states plus Washington D.C. and Puerto Rico.
Ally Invest has self-directed trading accounts (taxable brokerage, IRA) as well as “Managed Portfolios,” which is their term for their robo-advisory-like automated investing services. We will dig more into both of those account types.
Self-Directed Trading Accounts
Ally Invest supports taxable brokerage accounts as well as individual retirement accounts with no minimum. You can trade practically everything – stocks, bonds, mutual funds, ETFs, options, and even forex. The only asset not on that list is cryptocurrencies but I don't invest in cryptocurrencies – and here's why.
Best of all, with the exception of mutual funds, all those trades are commission-free. Options have a $0.50 per contract fee but no base commission is charged.
The platform is pretty sophisticated and offers everything you could need from your basic brokerage account. There are real-time quotes, research, a customizable dashboard, and it is all accessible online. You don't get Level 2 market data though.
You can customize it but the default shows you a lot of data very quickly, with threads you can pull for additional research. The best way to use this is as a snapshot into your account to see how your portfolio is performing.
The Dashboard is very well designed and intuitive to use. When you click on a stock in your Holdings, all the other panels update to that stock – the Chart automatically updates to show you the trailing three months, Options Chains updates to show you all the call and put contracts (the option chains), etc. You don't have to enter it manually each time into each panel. When you enter a ticker into the search box within any panel, it updates every other panel too. That's smart.
For customization, you can change what's shown within each panel. You can also move the panels around but you can't add or remove panels – though I'm not sure if there is a panel that I'd add that isn't already here.
Within the Option Chains panel, you can dive into the chain of a stock and build an options strategy using their workbench (here I am buying out of the money calls on AAPL):
Ally Invest has good options forecasting and pricing tools because TradeKing catered to options traders (more volume meant more commissions, a smart business strategy!). As a result, Ally Invest now has great options trading tools.
If you don't want to use Ally Invest Live, the legacy platform still exists and makes it easy to build more positions.
Want to write a straddle? Here's the screen you use to enter it:
The fee structure on the self-direct account is pretty much as low as you can get:
- $0 commission-free trades on stocks, options, and ETFs. Options have a $0.50 per contract fee.
- $9.95 per trade on no-load mutual funds, fees to trade funds with a sales load will vary
- $0 account minimum
- No inactivity fee
- $150 ACAT fee – if you transfer your assets in-kind out of your account to another brokerage, they reimburse other broker's ACAT fees up to $150 when you transfer in at least $2,500 in assets
Personally, if you want to trade mutual funds, the best way to do that is to open an account with the company that offers the funds. For example, if you want a Vanguard fund, open a Vanguard account because you can buy and sell shares for free. And if you want a Vanguard ETF, you can buy and sell those for free on Ally Invest or Vanguard.
Ally Invest's mobile app has all the features you'd expect in a brokerage's mobile app – including the ability to complete any transaction on the app that you'd be able to do on the website. I don't use the mobile app because I don't like making major money decisions (like buying and selling shares of stock) on my phone. I prefer to sit at a desk, look at a computer screen, and “get into work mode.”
It's a little harder to do research on the phone as the only place where “news” is pulled into the app is on the research page and the only source appears to be from MT Newswires.
But if there was some kind of emergency or urgent need, I could do it.
Ally Invest Managed Portfolios
With a minimum of $100, you can get a cash-enhanced managed portfolio with practically no fees – no advisory fees, no annual fees, and no rebalancing fees. They do this because they set 30% of your portfolio into cash, earning a rate of interest comparable to their online savings account. Charles Schwab Intelligent Portfolios operates this way too – no fee but you have to put a set percentage of your allocation into cash. The upside of the cash allocation at Ally is that it's close to the prevailing rate you'd get with a savings account though you can't get access it as easily as you would a savings account.
If you want to avoid the cash allocation, you can get a “market-focused” Managed Portfolio but it also comes with a 0.30% annual advisory fee, charged monthly. With market-focused, you still have cash (roughly 2% of your balance) but much much less of it. 0.30% is similar to what other robo-advisors charge – for example, Vanguard's Personal Advisor Service charges 0.30% on assets up to $5 million.
With Managed Portfolios, you answer some questions about your goals, they'll build a mix of ETFs that meet your goals, and then you can tweak it as you wish.
Additionally, you can pick from four portfolio options:
- Core: “Highly diversified across domestic, international, and fixed-income assets. You can choose the amount of risk you are comfortable with, from conservative to aggressive. If you’re more of a hands-off investor, consider this portfolio type.”
- Income: “This portfolio type offers higher dividend yields while maintaining a more conservative risk profile. Consider this portfolio type if you’re most focused on yield and income.”
- Tax-Optimized: “If you make after-tax contributions to an investment account, this type of IRA may help maximize your investments. If you’re looking to invest using a diverse mix of tax-advantaged, low-cost Exchange Traded Funds, consider this portfolio type.”
- Socially Responsible: “Shaped by companies with ethical track records, you’ll only invest in businesses that actively practice sustainability, energy efficiency, or other environmentally friendly initiatives. Consider this portfolio type if eco-friendly practices are important to you.”
Then, their systems (and people) monitor your portfolio and rebalance as needed. It's similar to the robo-advisory services of other companies (in theory).
Integration with Ally Bank
They are both under the same branding but the two systems still feel a little separate because they're still separate entities. When you log into Ally.com to visit your banking, you can see your Ally Invest information.
If you want to take action in your brokerage account, you are transferred to investor.tradeking.com. This means that if you want to transfer money back and forth between, say, your checking account and your brokerage account – there's a delay depending on the accounts in question:
- To and from Ally Bank to self-directed accounts: 1-2 minutes
- From Managed Portfolios to Ally bank accounts: up to 5 business days
- Ally self-directed accounts to other institutions: up to 3 business days
- From other institutions to any Ally Invest account: up to 3 business days
Ally Invest Alternatives
Ally Invest has carved out a nice spot as a discount brokerage that does everything well, but how does it compare with some others?
Ally Invest vs. Robinhood
Robinhood's claim to fame was a slick mobile application with free trades. While not every other brokerage has a great mobile experience, many of them have matched them where it counts the most – free trades. Ally Invest offers free trades too and Ally Invest's mobile app does everything Robinhood's app does but it just doesn't look as slick.
But when it comes to tools, Robinhood doesn't have the analysis tools that Ally Invest offers. While they give you access to the same tradable securities, Ally Invest's options tools far exceed those offered by Robinhood. Robinhood doesn't have the breadth and depth of research either – they keep costs low so they've opted not to offer any research from other firms. You can still get publicly available news, conference calls, etc – but anything extra is unavailable.
The area where Robinhood beats Ally Invest is in cryptocurrency – Ally Invest doesn't offer cryptocurrencies and Robinhood Crypto lets you trade several cryptocurrencies for free. If fractional shares are important to you, Robinhood has that too whereas Ally Invest doesn't. Robinhood's new account promotion is a free share of stock without a deposit requirement, Ally Invest offers cash but you have to transfer in funds.
In the realm of tradeable securities, they both offer stocks, ETFs, and options. Ally Invest offers bonds and forex but Robinhood doesn't.
Bottom line is that Ally Invest offers everything Robinhood does (except crypto and fractional shares) plus you can tack on a solid online banking experience all in one spot.
Ally Invest vs. ETrade
While they're very similar, ETrade's big differentiator is that it lets you create paper trading portfolios to help you dip your toe into investing. With a wealth of educational tools, you can study stocks and use their portfolios to see how you're doing with a “practice” account.
ETrade has a $500 account minimum on their brokerage accounts band while trades of options are free, there is a $0.65 per contract fee at ETrade ($0.50 at Ally Invest).
Pros & Cons
Like any service, there are things we like and things we don't.
- Ally Invest offers both self-directed brokerage and managed portfolios, like a robo-advisor.
- Low minimum ($100) on Managed Portfolios
- Commission-free trades on stocks, options, ETF, and options ($0.50 per contract)
- No account minimums, no maintenance fees
- Very generous brokerage transfer bonus ($50 – $3,500)
- Incoming ACAT fee reimbursement up to $150
- Managed Portfolios is free but requires a 30% cash position or you can pay 0.30% per year
- Mutual funds cost $9.95 per trade
- No detailed Level 2 market level data
Ally Invest is a great all-around brokerage account because of its $0 minimum and commission-free trades on stocks, options, and ETFs. I've been using them for years and have never had any issues. With no minimum, association with a great bank in Ally Bank, it's a good place for any investor looking to start investing.
I first fell in love with them because they offered inexpensive trades but now that so many brokerages are offering free trades, I've stayed for the ease and simplicity of the platform.
Ally Invest is best for beginner to intermediate investors who are comfortable managing a self-directed investment account. The low minimums and free trades make it very accessible to someone who doesn't have a lot to invest but the tools and features of the account still support someone who needs more.
If you just want mutual funds, skip Ally Invest – go with the company offering the funds directly. If that's Vanguard, open a Vanguard account. If it's Fidelity, open a Fidelity account.
If you want a hands-off managed fund like a robo-advisor, Ally Invest offers a pretty good product but compare it with the leading robo-advisors currently available.
It's not ideal for advanced investors, day traders, technical traders, or someone who needs a lot of market data (Level 2) to make decisions. If that describes you, there are other brokerages that will give you that level of detail into the market.
New Account Promotion – up to $3,500
Ally Invest has a deposit-related promotion for new accounts – the more you deposit or transfer, the greater the bonus. What makes this promotion so good is that it applies to any type of account – not just your traditional taxable brokerage account. You can open a Traditional or Roth IRA too.
Here is the Ally Invest bonus structure:
|Deposit or Transfer|
|$10,000 – $24,999||$100|
|$25,000 – $99,999||$250|
|$100,000 – $249,999||$300|
|$250,000 – $499,999||$600|
|$500,000 – $999,999||$1,200|
|$1,000,000 – $1,999,999||$2,000|
|$2,000,000 or more||$3,000|
They will also reimburse you the ACAT fees another brokerage may charge you for moving your assets to Ally. They will reimburse up to $150 in charges when you transfer at least $2,500. This is separate from the cash bonus they will give you based on the amount of the transfer.
The cash bonus is credited to the account as interest so if you are opening an IRA, it is not considered a contribution.