Deciding you want to invest is the easy part. When it comes time to actually do it, you’ll find that it can be intimidating. There are so many options when it comes to investing, it’s easy to get lost. Mutual funds, stocks, REITs, options, bonds…the list is never-ending. Then you need to think about all the fees you pay to invest your hard-earned money.
This was my biggest problem when I decided I needed to branch out and invest in things other spare change apps.
I decided that since I’m not an expert, I’d look into a robo-advisor. That way I’d automatically be diversified, and I won’t have to do any work besides funding the account. But many robo-advisors come with hefty fees – much higher than if I were a self-directed investor.
Then Ally Invest announced that both their self-directed trading and their managed portfolios have ZERO commission or annual fees. That TOTALLY made my decision for me.
So, below is my review of Ally Invest!
What is Ally Invest?
Ally Invest is an investing platform that supports stocks, ETFs, mutual funds, bonds, and options (don’t worry, I’ll talk in-depth about each of these momentarily).
They offer both self-directed trading (aka, you do all the work yourself) and managed portfolio (Ally does the work for you).
My experience using Ally Invest
When I signed up for Ally Invest Managed Portfolios, the whole process took about 10 minutes. It was an easy application, but not entirely pain-free. I had a lot of questions – but luckily Ally was able to answer all of them!
Every time I didn’t understand what information they were looking for, there’d typically be a button right there that had a helpful explanation.
The only real annoyance – which I’ve already mentioned – was when I had to verify my identity by sending a copy of my ID and a bank statement.
A particular feature I liked with the managed account was the ability to choose from a variety of portfolios. They were all laid out in front of me, and I could click on each to learn more.
As I shared, I ultimately decided on the Core portfolio. When I clicked to learn more, I was pleasantly surprised when I saw that I could see the returns over the last eight years.
This was helpful in making my decision because the socially responsible portfolio didn’t have returns that were as good.
The fact that Ally offers free managed portfolios was one of the biggest draws for me. I wasn’t at all bothered by the minimum investment requirement – as it is still much lower than other investment platforms.
Ease of use
When I got to the Ally Invest homepage, each account type was set up so I could see the major features and decide which was best for me.
From there, setting up an account took a matter of minutes, and Ally walked me through each step of the process.
I’m new to the world of robo-advisors, so this was especially helpful.
As far as the application process, it was pretty simple.
Managed portfolio application
When you hit the “Managed Portfolio” button on the Ally Invest homepage, you’ll be dropped down to the questionnaire above.
First, you’ll tell Ally why you want to start investing. You can choose from the following options:
- Build wealth.
- Save for a major purchase.
- Generate income from your investments.
I decided to choose “build wealth.”
Deciding how much you want to invest
Next, Ally asks what is your “goal” amount you’d like to make on your investments. I was uncertain how important this question was, so I hit the “not sure?” button.
Ally then told me that it’s perfectly fine if this number is an estimate or even the dream amount you’d like to earn. I went with $100,000 – admittedly, an ambitious goal.
Deciding your investment preferences
Next, to help build your portfolio even further, Ally asks about your investment preferences. You start by answering how long you want to invest for – anywhere between 5 – 21+ years.
Next, you’ll be asked to answer what level of risk you can take on. You have the following options:
- Very low
- Very high
Up next is sharing more about your financial picture – aka what assets you have and how much you want to start investing with.
Choosing a taxable account or a retirement account
Next Ally asks you to choose which type of investment account you want open: a taxable account or a retirement account.
Just a quick reminder: taxable accounts include individual and joint accounts made up of different investments. Retirement accounts through Ally Invest typically involve rolling over 401(k)s.
Since this is a retirement account, you’re limited to how much you can invest each year.
Alternatively, if you go with a taxable account, you won’t be limited to how much you can invest.
Decisions, decisions. Pick one or the other and then move on to the next step.
Choosing your portfolio
Finally, you can choose which portfolio works best for you! The options are:
- Core – This is a good choice for beginners because it comes with a mix of stocks, bonds, and other investments to keep you easily diversified.
- Tax optimized – This account is built similarly to the Core portfolio, the only difference is it focuses on tax-exempt investment income by including more municipal bonds.
- Socially responsible – This is for the investor that only wants to invest in companies that are working towards sustainable solutions.
After much deliberation and pause a bunch of different days, I decided to keep things simple and go with the Core portfolio.
Once I got to this point, I naively thought that I would be done!
Opening your actual account with Ally
But alas, once you decide on the portfolio you’d like, you have to make and fund an actual account with Ally.
The good news: this process took about five minutes in total, and consisted of me linking a bank account to fund my portfolio!
Self-direct trading application
Since I didn’t go the self-direct trading route, I can’t comment in-depth on the application process. But, when I went to the sign-up page, it led me to the same page I got to after deciding on a portfolio.
When you’re a self-directed trader, Ally doesn’t need to walk you through the type of investments you’re looking for – presumably, you already know that.
So instead, you’ll be led straight to the open an account page.
Ally Invest pricing
For self-directed trading, you’ll have the following fees if you decide to invest through Ally:
|Mutual funds||$0 for load mutual funds|
|Bonds||$1.00 per bond|
|Options||$0 commission +50¢ per contract fee|
For managed portfolios, all you’ll need is $100 to invest. Other than that, there are no fees associated with the account! That’s exactly why I decided to try it out.
Ally Invest features
Multiple investing methods
When you invest through the self-managed option with Ally, you can choose between a number of investments. If you open a managed portfolio, you have some agency in what you choose to invest in, but the actual companies are chosen by Ally.
Here’s a little bit more about each of Ally’s investing options:
Stocks are one of the most common investments as you surely know. When you own a stock, you own a piece of the company the stock is for. Ally offers thousands of stocks to choose from. So many thousands of stocks, you can truly pick and choose from here to the moon and back!
ETFs are different in that they let you invest in an entire industry, rather than just specific companies. Another way to think of it is that ETFs are made up of securities like stocks and bonds.
Kudos to Ally – as they were VERY helpful when I researched ETFs – they even offer “the anatomy of an ETF.”
You can view the complete list of ETFs Ally offers – so you can deliberate what you want to choose.
Options trading can be tricky to understand, and they are really only used by advanced investors. In very simple terms, an option gives you (the buyer) the power to buy stocks (and other investments) at a fixed price for a fixed amount of time, no matter how the price fluctuates.
Again, options are not for beginner investors. In fact, Ally makes you read an options disclosure so you know the risks.
A bond is essentially a loan to the government or a corporation, which earns you income through interest payments. I was really happy to see that Ally has decent pricing on bonds, at just $1 per bond, with a $10 minimum.
Mutual funds are the perfect investments for less seasoned investors. They hold a variety of investments in one fund, so they diversify your portfolio and lower how much risk you carry as an investor.
Free investing for managed and self-directed accounts
This is obviously one of the BEST features of Ally Invest. They’re one of the few investing platforms that offer no commissions on self-directed trading AND no annual fee for their robo-advisor.
I’m gonna repeat myself again – this is CRAZY.
- Ally offers NO COMMISSIONS on self-directed trading
- Ally offers NO ANNUAL FEE for their robo-advisor
Other than the $100 minimum to invest, I didn’t have to pay anything to start investing.
And that was the kick I needed to explore a robo-advisor!
When you invest through Ally’s managed portfolios, you can choose a cash-enhanced portfolio that sets aside 30% of your portfolio in an interest-earning cash buffer.
This is a good option for those who are severely risk-averse – which many of us – myself included are.
That way, in the event that all your other investments go south, you at least have that 30% buffer that has been growing over time.
Gulp – 30% is safe.
Ally’s low minimum investment for managed portfolios
I wasn’t upset at all that I had to pay $100 to get started investing with Ally.
I’ve used spare change investing apps like Stash, but after a while, the returns just don’t add up to as much as I’d like. Getting real returns on your investment takes time and money.
Plus, big-name companies like Vanguard and Fidelity have minimums in the thousands. Ally’s minimum is minuscule compared to theirs.
Who is Ally Invest best for?
Ally Invest has plenty of options for self-directed traders. And with no fees on many of those options, self-directed traders could keep all of their profits for themselves, rather than paying costly fees like most platforms charge.
While Ally Invest has many options for the self-directed traders, complete beginners will feel at home with Ally, too. Each time I had a question, I found a question mark or a button I could press that would give me the answers I was looking for.
I’ve decided that I really prefer this over an FAQ page. It makes everything a heck of a lot easier and less frustrating all around.
Plus, Ally walks you through the process of choosing an investment portfolio and allows you to update your portfolio at any time.
Who shouldn’t use Ally Invest?
The only people who may not like Ally Invest are really truly advanced investors. Ally’s site can be a little clunky in spots, and they still don’t have as many tools or professional advisors as brokers like Vanguard, Fidelity, and Charles Schwab.
Pros & cons
- No fees — Both the self-directed and managed portfolios offer free trading!
- Managed portfolios have a low minimum investment requirement — The managed portfolio has just a $100 minimum to get started. Compared to its competition, that’s not a lot of money at all.
- All investing experience welcome — Whether you’ve never invested, you invested just a little, or you’re a seasoned investor, Ally’s lack of fees and multiple investing options, make it perfect for any level investor.
- Not every investment option is free to use — There are still some fees associated with certain investments.
- Not for advanced investors — Advanced investors likely won’t find all the features they’re used to.
Ally Invest compared
|Fees||None for managed portfolios or for self-directed stocks, ETFs, and some mutual funds||None||None for stocks, ETFs, and mutual funds|
|Stocks and ETFs||Stocks
|Minimum investment requirement||$100 for managed accounts, none for self-directed||$100||None to open a regular brokerage account; $500 for automated investing|
M1 Finance is a hybrid robo-advisor and traditional brokerage firm. You have more say in choosing your investments than you do with Ally, and M1 still does all the work for you.
Like Ally, M1 is free to invest through and has the same $100 minimum investment requirement. I like the fact that M1 Finance has a methodology using “pies” and “slices” so you can choose a variety of investments and pick exactly how much you want in your portfolio. They also have a super cool app.
E*TRADE operates much like Ally, but one of the major differences is their minimum investment for managed accounts is $500. E*TRADE offers no less than four managed portfolio options – so you really get your pick on this front.
They offer many of the same investments: stocks, bonds, mutual funds, etc. And it takes just minutes to sign-up for an account.
Ally Invest is an easy-to-use platform for beginner investors. They offer fee-free investing for self-directed traders, plus they also have no fees for their managed portfolios.
Overall, I’ve enjoyed my experience with Ally Invest and I plan on continuing to invest through them. And I can say for sure that I’ve mentioned them to many people in my life who seem to also be convinced and have since signed up!