In the past, when you wanted to make an investment, you had to go to a broker, pay a hefty fee, and hope that they made a good recommendation for your portfolio.
Now, the power is entirely in your hands, with a multitude of online platforms out there that make investing simple and inexpensive. No matter what level of expertise you have, you can find a platform that will educate you and help you make trades in a matter of minutes.
When trying to figure out my own investing plans, I researched two companies: Ally Invest and TD Ameritrade. I found that both offer excellent options for beginners to advanced traders.
What are Ally Invest and TD Ameritrade?
Ally Invest is a full-service online investment broker with options for self-directed or “robo-advised” robo portfolios. The no-fee trading commission model has helped Ally market itself as a discount broker for cost-conscious traders.
TD Ameritrade has much more name recognition; it’s one of the largest and oldest online brokers in the United States. And TD caters to every kind of investor, with wide-ranging investment options and a dizzying volume of education and research materials. Novices can start small and expand their asset classes as they learn the ropes.
Overall, TD Ameritrade has far more choices and resources for investors at all levels. Ally is simpler to use and has better pricing on some features, But TD Ameritrade is a tough competitor to beat.
Ally Invest vs. TD Ameritrade summary
| Ally Invest | TD Ameritrade | |
|---|---|---|
| Account fees | No fees: self-directed or managed accounts, ETFs, some mutual funds, inactivity
$50: full outgoing transfer |
No fees: self-directed or managed accounts, some ETFs, some mutual funds, inactivity, partial transfer $25: broker assisted trades for stocks/some ETFs $75: full transfer |
| Minimum investment | No minimum: self-directed account $100: managed account |
No minimum: self-directed account $500: managed account |
| Investment choices | Stocks, Bonds, ETFs , Mutual funds, Options , Margin accounts, Forex (foreign exchange), Retirement accounts, Futures |
Stocks, Bonds, ETFs, Mutual funds, Futures, Forex (foreign exchange), Foreign ADRs (American depositary receipts), Bitcoin, Cryptocurrency (soon), OTC/Penny, Stocks ($6.95/transaction), IPOs (for some accounts) |
| Account types | Taxable, Joint, IRA (Traditional, Roth, Rollover, SEP, SIMPLE), Trusts, Partnerships, Limited Partnerships, Money Market, CDs, Checking, Savings | Taxable, Joint, IRA (Traditional, Roth, Rollover, SEP, SIMPLE), Trusts, Partnerships, Limited, Partnerships, Money Market, CDs, 529, Solo 401(k), Custodial, Annuities |
| Mutual fund trades | $9.95 each | No fee for funds in No Transaction Fee program; other funds $49.99 each |
| Number of no-fee ETFs (exchange traded funds) | 115 | 300 |
| Where to access | iOS, Android, Desktop/Web based | iOS, Android, Desktop/Web based, Apple Watch |
| Customer service | 24/7 live chat, email, phone | 24/7 live chat, email, phone, Facebook/Twitter messaging, Apple Business Chat, Amazon Alexa, Local in-person branches |
About Ally Invest
The basics
Ally investors can open a taxable account, which combines multiple investments, or a retirement account. They can also choose between a self-directed or robo portfolio; there’s a $100 minimum for the robo portfolio only.
Depending on your investment goals, you might pick:
- A core portfolio: a basic mix of diverse investments.
- A tax optimized portfolio: focuses on tax-exempt income.
- A socially responsible portfolio: invests in companies doing social good.
In October 2019, Ally joined most online brokers in making almost all trades commission-free. Accounts are SIPC insured for $500,000 ($250,000 for cash claims), with extra coverage available up to $37.5 million.
Additionally, Ally offers interest checking and high-yield savings accounts, which aren’t available through TD Ameritrade.
For beginners
New investors are usually advised to start by saving for retirement, and Ally has you covered with multiple IRAs and the option of 401(k) rollovers.
If you need a hand picking investments, Ally’s robo portfolios are tailored to your financial goals and risk comfort level. The Cash Enhanced Robo Portfolio sets aside 30% of your investments in cash as an automatic safety net.
For advanced investors
Once you know your way around the stock market, you can get into bonds and options trading with Ally. Bonds are competitively priced at $1 each, with a $10 minimum.
Options trading is where Ally really stands out. Options investors can buy assets at a predetermined price for a fixed amount of time. This type of trading is unusually risky and only recommended for experienced investors. Ally has a low rate of 50¢ per contract fee on options and some options-specific tools including pricing and probability calculators and strategy scanners. The Ally Invest Options Playbook has free online webinars and other info to make you an options expert.
Brave advanced investors who want to get into forex (foreign exchange) and futures trading can use Ally’s customized Forex & Futures platform. You can trade in gold, silver, and other currencies and get real-time alerts. There’s even an Ally app just for forex trading.
Tools for trading
Ally has some basic tools that are free to their investors, including
- Customizable dashboards.
- Profit/loss and probability calculators.
- Maxit Tax Manager, which shows how trades impact your taxes.
- Real-time streaming charts and market data for investors who trade over 10 times a month.
- Stats and metrics on individual companies.
In short, Ally has all the trading features of a typical investment platform without too many extras.
Research and education
The “Do It Right” section on Ally’s web-based platform is full of investment-focused info for all stages of your financial life. You can get in-depth advice on different kinds of investments and follow a live stream that’s updated weekly.
Unlike some other platforms, though, Ally doesn’t have a trading idea generator or demo trading accounts.
Mobile app
Ally Mobile combines Ally’s banking and brokerage services into a single app — this makes life easier if you’re banking and investing with Ally, since everything is in one place.
There are all the standard features of a banking app — transferring money, paying bills, etc. Investors can check and analyze their portfolio, though they should note the app doesn’t stream watch lists in real-time and doesn’t enable after-hours trading. The web-based platform is more comprehensive.
About TD Ameritrade
The basics
Your options at TD Ameritrade include standard taxable accounts (the most common pick), joint accounts, retirement, education savings, businesses/trusts, and managed portfolios. The managed accounts have a higher minimum deposit than Ally requires ($500 for an essential portfolio and a hefty $25,000 for a selective portfolio). In return, you get the guidance of a professional advisor.
Standard individual accounts don’t have a minimum investment. They offer more of a “robo-advisor” style similar to other brokers. As with Ally, most stock and ETF trades are now commission-free.
TD Ameritrade is one of the biggest online brokers in the market that offers a comprehensive trading experience. Whether you are an experienced trader or just starting your investment career, TD Ameritrade will appeal to you because of its easy user interface and advanced investor options.
- Comprehensive trading options for diversification
- Great for new or experienced traders
- Active and reliable mobile trading app
- Does not offer international stock trading
- Different trading platforms for various commodities
For beginners
TD Ameritrade is exceptional for how easily new traders can invest in mutual funds. Out of over 11,000 funds on the platform, most have low investment minimums of $100 or less, and over 4,000 come with no transaction fees. Those aren’t deals you find with many brokers.
Novices will also find plenty of advice from TD Ameritrade’s education tools. The Portfolio Planner is particularly helpful for learning how to balance (and rebalance) assets and save enough for retirement.
For advanced investors
Investment veterans have more room to grow at TD Ameritrade than they might at Ally. The platform offers almost every high-level investment available, from Bitcoin to futures and forex, and it has plans to roll out cryptocurrency trading. Forex trading is available in 24 currencies.
TD Ameritrade is the rare broker that offers a virtual trading account simulator, paperMoney, designed for frequent traders.
Tools for trading
Choose between two trading platforms, each with a mobile app: the web platform at TDAmeritrade.com and the high-level trading tool thinkorswim.
Beginning or infrequent investors should start with the web platform, where they’ll find everything they need and more. The dashboard is customizable, and you can research and screen stocks, bonds, and other assets before you start trading. The GainsKeeper feature tracks gains and losses so you’re set up for tax time.
Advanced traders can venture into thinkorswim — this feature really gives TD Ameritrade a leg up on the competition. It’s on par with the trading tools professionals use. Besides constantly updated news, quotes, analytics, and “heat maps” of the market, thinkorswim offers templates for customizing your own investment charts. You can even place emergency trades through third-party platforms like Apple or Twitter.
Mobile app
Traders on the go can download TD Ameritrade Mobile (for standard web platform users) or TD Ameritrade Mobile Trader (for thinkorswim users). With some exceptions, anything you can do on the web — trade, research, get support, keep an eye on your watchlists — you can do on the mobile app. Mobile Trader streams real-time data and lets you trade directly from charts. Managed portfolio clients can check on their investments via the Portfolios app.
Research and education
The sheer volume of TD Ameritrade’s investment research can be daunting, so it helps to know what you’re looking for ahead of time. If you feel clueless, start by figuring out your investment goals or analyzing the pros and cons of different accounts.
You can branch out and take full-on investment courses (virtual, naturally) or listen to TD Ameritrade’s podcast, stream the news from multiple sources, join the online myTrade community, and more. Even the most advanced traders will learn something new.
Ally Invest vs. TD Ameritrade — Investment performance
Ally Invest
Ally gives five choices for a robo portfolio, ranging from conservative (super low-risk) to aggressive (super high-risk).
A typical conservative portfolio with Ally holds about 81% of assets in bonds and cash, and 19% in stocks. That’s an exceptionally low-risk ratio — you’ll hold onto your cash but your portfolio won’t grow much. The aggressive Ally portfolio is designed for growth; almost all its assets (about 93%) will be in stocks, which are more volatile but potentially more rewarding.
Asset allocations in other portfolios fall somewhere in between these extremes. Higher-risk accounts are stock-heavy, while lower-risk accounts lean towards cash and bonds. Retirement accounts are generally lower risk than taxable ones.
It’s easy to see Ally’s investment performance stats, which I could tailor to account type — taxable or retirement — and risk level.
FYI: Annualized returns are estimated annual returns over a typical year (or years) for an account.
| Core Conservative | Core Moderate Growth | Core Aggressive | Tax-Optimized Low Risk | Tax-Optimized Conservative | Tax-Optimized Moderate Growth | Tax-Optimized Aggressive | |
|---|---|---|---|---|---|---|---|
| Annual returns 2014 | 4.91% | 4.49% | 4.08% | 4.74% | 5.79% | 4.94% | 4.14% |
| Annual returns 2018 | 0.03% | 3.17% | 5.97% | 0.27% | 0.09% | 1.50% | 5.96% |
| Annualized return [eight years 2011-8] | 3.14% | 4.38% | 5.36% | 3.10% | 3.42% | 3.11% | 5.38% |
| Cumulative return [eight years 2011-8] | 28.02% | 40.90% | 51.90% | 27.65% | 30.91% | 42.52% | 52.12% |
TD Ameritrade
TD Ameritrade has much more performance data available to potential investors. You can see the stats for two typical portfolios — a basic core portfolio and a socially aware portfolio — and five risk levels ranging from super-conservative to super-aggressive.
If you want to see how a personalized portfolio might perform, TD has several examples of those stats too. This feature is incredibly helpful if you’re customizing your portfolio at all.
Bar graphs and charts show performance and asset allocation on each page. TD Ameritrade is the best for information transparency. They emphasize the data is a reference guide, not an exact indication of your returns.
| Essential Core Conservative | Essential Core Moderate | Essential Core Aggressive |
Tax Aware Conservative | Tax Aware Moderate | Tax Aware Aggressive | Income & Growth [high risk] | |
|---|---|---|---|---|---|---|---|
| Quarterly returns, Q4 2019 | 2.30% | 4.54% | 7.80% | 1.98% | 4.18% | 6.45% | 3.10% |
| Annualized return, one year | 11.01% | 16.21% | 23.67% | 8.51% | 13.95% | 19.88% | 13.84% |
| Annualized return, three years | 5.08% | 7.54% | 10.90% | N/A | N/A | N/A | N/A |
| Cumulative return | 4.35% [four years] | 7.01% [four years] |
10.71% [four years] | 4.01% [two years] | 5.04% [two years] | 6.09% [two years] | 5.47% [two years] |
Ally Invest vs. TD Ameritrade — Investment performance conclusion
Each broker calculates their stats a little differently, but I could see some patterns.
Low-risk investors
Ally investments are on track to get a pretty high return of 28.02% over eight years, more than double TD Ameritrade’s four-year cumulative return on a similar account.
Medium-risk investors
TD Ameritrade’s moderate portfolios do a little better than Ally’s, with an impressive 13.95% annualized return over one year for a tax-aware portfolio.
High-risk investors
Ally boasts great returns for the long-term investor (52.12% over eight years for the highest-risk portfolio). But TD Ameritrade returns seem poised to catch up since their high-risk accounts have much bigger annualized returns than Ally — good news for short-term and long-term investors alike.
Ally Invest and TD Ameritrade pros
Ally Invest
- Stellar customer service – Ally users give high marks to the 24/7 online chat and phone lines; you’ll get routed to a representative quickly. Ally doesn’t have brick-and-mortar branches, but in our increasingly digital world, they don’t need them to help customers.
- All-in-one banking and investing – If you’re an Ally investor, you can open an Ally Bank account and transfer cash easily from one source to the other. Users can even make loan payments from their investment accounts if they need to. And Ally Bank has plenty of great features on its own, including an enviable 1.90% APY on the savings account and several CD (certificates of deposit) options.
- Easy, seamless platform – For trading novices who don’t want a lot of bells and whistles, Ally’s web browser and mobile apps focus on the essentials. The browser’s InvestLIVE platform can be customized based on the stats you want to see first.
- Cheap options trades – If you take the risk of trading options, you’ll only pay 50¢ per trade — one of the lowest fees in the industry.
TD Ameritrade
- Strong mobile apps – Both apps TD Ameritrade offers — Mobile for casual investors and Mobile Trader for advanced, active investors — come with watchlists, stock quotes, charts, and everything a trader needs on the go. You get unlimited streaming real-time data on the apps and the browser so you’re always up to date.
- Great education resources – If I have a question about how to invest, I’m pretty sure the TD Ameritrade site will have an answer. Between articles, videos, webinars, and other live programming, a curious investor could spend all day learning.
- Multi-tech integration – Account holders can pull quotes from Apple Business Chat, get help from a Facebook Messenger chatbot, and integrate TD Ameritrade with Android Auto, among other perks.
Ally Invest and TD Ameritrade cons
Ally Invest
- Fees for mutual funds – Ally’s transaction fees for mutual fund investors aren’t super high at $9.95 per trade. But many other brokers have fee-free mutual fund offerings.
- Limited asset classes – Pick between equities, options, mutual funds, and fixed income. This may be enough for some traders but not for others.
- Sneaky commissions – Most Ally trades are commission-free, but some aren’t. Penny stocks and low priced securities — anything under $2 per share — come with a $4.95 cost per trade.
TD Ameritrade cons
- Multiple platforms can be confusing – While thinkorswim has capabilities for advanced investors, the TD Ameritrade website has more research and info on basic trading. You’ll have to toggle between the two platforms if you want both their features.
- Expensive broker-assisted trades – TD Ameritrade charges $44.99 for each broker-assisted trade; their fee is one of the industry’s highest.
- Information overload – I was overwhelmed by all the news and education available for free, and while the resources are well organized, their volume might bewilder a new investor — especially someone who isn’t sure which account type to choose.
- High minimum for managed accounts – TD Ameritrade has a $500 minimum for managed accounts, much higher than Ally’s $100 minimum.
Why choose Ally Invest?
Traders who have (or want) an Ally Bank account will get the most from Ally Invest. The two features are integrated seamlessly for maximum convenience.
Ally Invest is also good for active casual traders. Most trades have low or no commissions, keeping costs to a minimum.
And new traders will find it easy to get started with Ally’s simple, straightforward offerings.
Why choose TD Ameritrade?
This brokerage has something for everyone. New investors can learn and branch out into different asset classes over time. Experienced investors can trade like the professionals on thinkorswim. If you’re a serious trader with long-term goals, TD Ameritrade will serve you well.
Summary
Both brokers have their pluses and minuses, and both offer commission-free trades. Industry leader TD Ameritrade is the better choice for most investors since it has just about every feature you’ll need.
Ally Invest is ideal for Ally Bank clients, and it’s a solid choice for small-time investors who don’t need an expansive platform or those who want good pricing on options trades.
Ally Invest is for you if…
- You’re brand new to investing and want to start with a retirement account.
- You’re ready for high-level forex and options trading.
- You already bank with Ally.
- You want a managed account with a low minimum.
TD Ameritrade is for you if…
- You want ongoing education, advice, and news about investing.
- You’re an ambitious investor who’s comfortable with risk.
- You’re starting out and plan to explore more asset classes as you learn.
- You plan to invest in mutual funds.