With a parent company employing 8,200 people and managing over $175 billion is assets, it is safe to say that Ally Financial is a strong company.
TL;DR – Ally Invest is an online broker with a full brokerage platform, forex trading, portfolio management and low fees. They lack certain features but are comparable to better known brokerages like E*Trade and Schwab.
What is Ally Invest?
To clarify, Ally Invest is a subset of the bigger company Ally Financial. Ally Financial is a bank offering services from banking to home loans, but these details will not be covered in this article.
One of the great things about Ally Invest is their range of offerings. If you are a passive investor they offer managed portfolios, but also give you the option to participate in self-directed trading.
Their price of $4.95 per trade is on par with the rest of the industry. When your account balance passes $100,000 or you do 30+ trades per quarter they reduce your rate to $3.95 per trade.
Who Created Ally Invest?
The company is a subsidiary of Ally Financial, so let’s start with that. In 1919, General Motors created General Motors Acceptance Corporation (GMAC) to provide financing to their customers. William C. Durant, the founder of General Motors was instrumental in founding Ally.
In the recession of 2008, the company experienced financial issues and was ultimately bailed out by the government. They received $17.2 billion in government funding in 2008-2009 and soon after rebranded as Ally Financial.
But what about Ally Invest?
In 2016, Ally acquired an online brokerage platform created by Donato A. Montanero called TradeKing for $275 million. This was then rebranded as Ally Invest. The rest is history.
How Does Ally Invest Work
Creating an account is easy. You can open an account just for trading, or login through your Ally Bank account. Enter some basic information and you will be ready to make your first trade.
Below are some of the features offered in an Ally Invest account:
View eight chart types (including candlestick, bar, mountain, and line). They have 117 chart studies and 36 drawing tools to help you analyze stock performance of stocks, ETFs and indices. All of these tools can be customized to tailor to your needs.
These are lists of securities being monitored for trading and investing opportunities. You have the ability to create your own watchlists and customize them as needed.
Also known as a risk graph, these help investors know the possible profit or loss their investment may experience. This helps you know the potential outcomes of your investment. Learn more about profit loss graphs here.
Similar to the calculator used in Schwab Intelligent Portfolios, the profitability calculator help’s you predict the likelihood that you will hit your investment targets.
Research and Market Data
Ally offers two different stock screeners for users to examine based on technical data points or investment strategy. These charts offer 33 years of history as well as CFRA reports and Lipper scorecards for ETFs and mutual funds.
Get easy access to stock activity, open interest and price changes with option chains. An option chain has two sections: calls and puts. Calls give you the right to purchase up to 100 shares of a stock at a certain price by a specific time. Puts work the same way but for selling.
Ally Invest for Active Traders
If your account balance is over $100,000 or you make 30+ trades per quarter you qualify for their lower pricing ($3.95 per trade plus $0.50 per contract).
If you are an active trader making any ETF trades Ally Invest may not be the right option for you. Only 116 of their ETFs are commission-free. To compare, Fidelity offers over 500 commission-free ETFs.
Penny stock trading is also not the best idea on Ally. They charge an extra $0.01 fee on any stock under $2.00 per share. This is capped at 5% commission per trade value.
Investment Options with Ally Invest
There are a wide range of investment options for Ally Invest users. Here is a breakdown of what they offer.
Stocks & ETFs
Fairly obvious that a brokerage would have stocks and ETFs. They were sneaky about how they broke up these categories. These ETFs are the ones that have fees attached to them. Up until mid 2018, there were no commission free ETFs on the platform.
As previously stated, this feature on Ally Invest is less than a year old. That being said, the ETF types fall into one of three types:
- 6 iShares Core ETFs
- iShares Sector and ESG ETFs
- All are Smart Beta ETFs
They currently offer 116 ETFs on their platform. Here’s a full list of what they offer.
They offer options trading for a competitive price. Another thing to keep in mind is that they do not charge a fee for closing options positions that are 5¢ or below.
Ally offers standardized pricing for both regular and premium members. You can buy bonds for $1 per bond (with a minimum spend of $10). This pricing is industry standard, E-Trade charges the exact same amount.
Ally offers over 12,000 different mutual funds available for $9.95 per trade. Other platforms offer some of their mutual funds free of fees, but currently every mutual fund on the Ally platform has a fee.
Similar to Robinhood, M1 Finance and many other brokerages Ally allows you to trade on margin. This means you are borrowing against yourself to increase your purchasing power. A breakdown of their pricing compared to industry standards is shown above.
4 reasons we love Ally Invest
- No Account Minimum – Since you only need $1 to get started, Ally is a great place for beginner traders who plan to add to their investment and trade more over time.
- Easy to Use Interface – With a web based platform that is built to be mobile friendly, Ally is a great solution for people on the go. You can execute trades from your phone without needing to download an app.
- Low Commissions – Even though they have no fee-free mutual funds, the $9.95 fee for trades is competitive. Other brokers charge $20 and even up to over $40 per trade.
- Low Trade Fees – $4.95 is on par with brokerages like E-Trade and cheaper than TD Ameritrade or Merrill Edge. The $3.95 fee for high frequency traders and those with high account balances is an even better deal. This alone is a huge reason for traders to use Ally.
Where Ally Invest could improve.
- No Separate Investing Platform – A serious will want a dedicated trading platform. Ally lumps their trading application in with their banking platform, and thus it takes more time to log into your account. This can become frustrating after prolonged use.
- No Physical Branches – Companies like Schwab have the upper hand when it comes to customer service. While they do have a live agenct available 24/7, it is not the same as having an office and human being you can speak to.
- Lacking Tools – For most beginning traders, the offerings of Ally Invest are perfect. The more experienced day trader or active trader will want features like multi-contigent orders, direct market routing and stock alerts. Alerts are even offered in products like Robinhood.
- Mutual Funds – For the most part Ally Invest has a pricing structure that matches the rest of the industry. All 8,000 mutual funds available on Ally Invest have fees, and these fees can be avoided on platforms like E-Trade or Interactive Brokers.
Ally Invest Review: The Bottom Line
If you are a relatively new or somewhat experienced trader then Ally Invest may be the right choice for you. With an easy to use interface, standard commission pricing, and no account minimum it is so easy to get started.
For active or day traders who want more detail and features such as direct market routing, a more established platforms like TD Ameritrade may be a better option.