October 8, 2022

Is Ally Invest Good For Beginners

Read more about Ally Invest
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Ally Invest is a popular fee-free online brokerage. Is it good for beginners? Read on.

With Ally Invest, you can start trading with no fees, commissions, or account minimums. Their customer support is also highly regarded.

Does this make Ally Invest good for beginners? Or is one of their competitors a better option for you?

Here's what you need to know.

What is Ally Invest?

Ally Invest, formerly known as TradeKing, was purchased by Ally Financial in 2016.

Ally Financial is one of the world's largest banks and car finance companies. It also has a long history. First named the General Motors Acceptance Corporation, it was founded in 1919 and then renamed in 2010.

Ally has many services and can be a one-stop financial platform for many investors. They built their reputation by offering savings accounts with higher interest rates and fewer fees.

Ally Invest also has low fees, but how does it work exactly?

Let's cover that next.

Is Ally Invest good for beginners?
Ally Invest has no fees and account minimums, making it easy to start. But they are known for their top-notch customer service and support. It's available 24/7 and highly regarded, unlike many fee-free investment apps, which save money by not having much customer support (e.g., Robinhood).

How Does Ally Invest Work?

To start with Ally Invest, choose how you want to invest.

Self-Directed Trading: You choose your own investments. There's no account minimum and no fees for trading stocks and ETFs.

Robo Portfolios: An algorithm chooses your investments based on your preferences. The fees are low for this service, and you'll learn about them further down.

Wealth Management: You work with a financial advisor. The advisory fee is 0.75% to 0.85%, and you need a minimum of $100,000 in assets.[1]

For beginners who want to pick their own investments, the Self-Direct Trading option is the best fit. Since you can start with no fees or account minimums, you can open an account in a few minutes.

The Robo Portfolio would be better for those who want to invest more passively. You can avoid fees with this option, but there is a trade-off that may not work for some investors.

Is Ally Invest safe?
Ally Invest is one of the biggest names in finance for a reason: You can trust them. They serve over 10 million customers with their financial services. Ally Invest is insured with the SIPC, which covers customer claims up to $500,000. Ally also has additional coverage, covering up to $900,000 in cash.

Ally Invest Features

Ally Invest has many features which are great for beginners. Especially their range of account types, platforms and tools, and low fees.

Here are the pros and cons of opening an account with Ally Invest:

Pros:

  • No commissions on stocks or ETFs
  • No account minimums
  • 24/7 customer support by phone or live chat
  • Plenty of investment options
  • No-fee automated investing
  • Ally Banking customers have seamless transfers
  • Free educational resources

Cons:

  • No fractional shares
  • Robo portfolios require you to hold cash
  • Not as many mutual fund options as some competitors
  • Can't trade futures

Let's look at these features in more detail.

Types of Accounts

When you sign up for Ally Invest, you'll be prompted to decide how you want to invest: Self-Directed Trading or a Robo Portfolio. You can also invest in many account types.[2]

With the Self-Directed Trading account, you can select from these types of accounts:

  • Individual taxable
  • Joint
  • Custodial
  • IRAs (Traditional, Roth, Rollover)
  • Coverdell

With the Robo Portfolio, you can select from these types of accounts:

  • Individual taxable
  • Joint
  • Custodial
  • IRAs (Traditional, Roth, Rollover)

Ally Invest Fees To Look Out For

Ally Financial has been known for having some of the lowest banking fees. And when Ally Invest launched, it also had low fees. Then, Ally Invest followed the industry trend to eliminate fees on stocks and ETF trades.[3]

  • Stocks: $0 commission
  • ETFs: $0 commission
  • Options: $0 commission + $0.50 per contract
  • Bonds: $1 per bond ($10 minimum)
  • Mutual Funds: $9.95 to buy and sell no-load mutual funds
  • CDs: $24.95 per transaction
  • Penny Stocks (below $2): $4.95 base + $0.01 per share per order
  • IRA annual fee: $0
  • IRA transfer fee: $50

The fees for the Robo Portfolio are:

  • Cash-Enhanced: 0% advisory fee. But they set aside 30% of your portfolio to hold in cash.
  • Market-Focused: 0.3% annual advisory fee. They set aside 2% of your portfolio in cash.

The cash you're required to hold sits in Ally savings account so it can earn interest. But you can't make any withdrawals from this account.

Ally makes their money by using the cash you're required to hold. It's why their fees are pretty low.

Want a completely free robo-advisor?
Consider looking at M1 Finance. With M1, you can invest in expert-selected portfolios which rebalance themselves based on your allocations. The great news is they're completely free, and you don't need to hold any cash.

Ally Invest Platform and Tools

Ally Invest makes it easy to sign up and get started trading. Once you've accessed the dashboard, also called Ally Live, you can see several tools and charts.

  • Customizable Dashboard: You can add the charts, watchlists, and data you need and eliminate the rest.

  • Streaming Charts: You have 6 charts with 90 chart studies and drawing tools.

  • Snapshots: Get news blurbs on the market and companies you follow.

  • Watchlists: You can create custom watchlists with securities you'd like to follow.

  • Profit/loss calculator: Quickly see profit and loss potential before an options trade.

  • Probability calculator: Estimates the probability of hitting your target using implied volatility.

  • Market data: See the latest market stats, prices, quotes, dividend info, peer performance comparisons, and more.

As a beginner, you'll have plenty of tools. But it shouldn't be completely overwhelming. On the other hand, Ally Invest has more tools than some beginner-friendly apps like Robinhood.

If you want to spend more time living and less on your investments, Ally Invest's Robo Portfolio could be best for you.

Ally Invest's Robo Portfolio

Robo-advisors use algorithms to manage your money automatically, and they've become quite popular.

If you don't want to choose investments actively, Ally Invest's Robo Portfolio will build a portfolio based on your preferences.

You'd select your Goal:

  • Retirement
  • Major Purchase
  • Generate Income
  • Building Wealth

You'd choose your Time Horizon: When do you want to withdraw your money?

  • 5 years or less
  • 6-10 years
  • 11-15 years
  • 16-20 years
  • 21 years or more

Add in your Liquid Assets (the money you could invest now) and your Initial Investment ($100 minimum).

Choose your Risk Tolerance from Very Low to Very High. Ally estimates the potential returns and losses for each level. For example, Very Low had a 17% return in its best year and 4% for its worst year. In comparison. Very High had a 33% return in its best year and a 38% loss in its worst year.

Choose a Portfolio Type:[4]

  • Core: A mix of stocks and bonds
  • Tax Optimized: A mix of tax-exempt municipal bonds
  • Socially Responsible: Invest in companies with a strong environmental record
  • Income: High dividend yields with conservative risk profile

Then Ally Invest will recommend a portfolio for you. You can see your average annual return with Best Year and Worst Year numbers. You can open up the portfolio at this point or make changes.

To open your Robo Portfolio or a Self-Directed Trading Account, it just takes a few minutes.

How To Create An Account on Ally Invest

Ally Invest lets you open an account from a desktop or mobile app. You can get signed up and fund your account in a few minutes.

To start:

  1. Choose your account type: Individual, joint, custodial, or a retirement account
  2. Fill in your personal details: Address, social security number
  3. Add in your employer details: Where do you work?
  4. Add in your financial details: How much do you earn? How much is your net worth?
  5. Agree to the required legal contracts
  6. Then submit your application

You should get approval almost instantly.

Then you can fund your account from your bank and start setting up your dashboard. But you may want to consider Ally Invest's competition before signing up.

Ally Invest vs Competitors

Ally Invest offers a good way to start investing with no commissions and account minimums. But so do most other online brokerage platforms.

Depending on your goals and preferences, is there a better option?

Let's dive in and see.

Ally Invest vs TD Ameritrade

TD Ameritrade is one of the most popular investment platforms and is similar to Ally Invest.

Both offer fee-free commissions, no account minimums, and plenty of investment options such as stocks, ETFs, options, and mutual funds. You can invest in IRAs as well.

You may decide TD Ameritrade is better for you since it offers a few more analytical tools, such as a heatmap. Plus, you can get a demo account to trade with virtual money.

Ally Invest vs Fidelity

Fidelity is another top investment platform with many of Ally Invest's services. Plus, a few more.

Both services have vast educational resources to help beginners learn about trading. Still, Fidelity's is larger, and you can easily sort it by your experience level to find all of the beginner content.

Both let you invest in stocks, ETFs, options, mutual funds, and more. But you may prefer Fidelity if you are looking for more mutual fund options.

Both have a robo-advisor and live human advisors, but Fidelity offers you more options. You could work exclusively with a financial advisor or get a blend of help from their automated robo-advisor and a financial coach.

Fidelity also offers fractional shares, while Ally Invest does not.

The downside to Fidelity is that it can be overwhelming for beginners. If you want to just open an account and start trading without fees, then Ally Invest might be a simpler process.

Bottom Line

Ally Invest is a beginner-friendly investment platform that lets you start trading without commissions or account minimums.

The Self-Directed Trading or Robo Portfolio will likely offer a good experience if you value customer support. If you prefer a truly free robo-portfolio or want fractional shares, you may want to look elsewhere, though.

For most beginners, Ally Invest will have plenty to offer and is an online brokerage you can grow with for years or even decades.

References

  1. ^ Ally. Wealth Management, Retrieved 8/24/22
  2. ^ Ally. Opening an Account: What type of accounts are available?, Retrieved 8/24/22
  3. ^ Ally. Commissions and Fees, Retrieved 8/24/22
  4. ^ Ally. Robo Portfolios, Retrieved 8/24/22
Ally Invest Coupon Codes

Commission-Free Stock Trades

With no minimum account balance and no minimum trade activity

eToro

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For a limited time, you can get $10 when you deposit $100 in your eToro account. Here's how:
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You'll automatically receive $10 directly to your account balance. eToro USA LLC; Virtual currencies are highly volatile. Your capital is at risk.
Expires 12/31/2022

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Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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How to Get the Best Deal at Ally Invest

Ally Invest offers some of the lowest fees among online brokerages. It has a wide product variety, a great trading platform, and great research tools. Before you go with Ally, though, find out how Ally Invest works to find out if it's the best ...

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