Is Ally Invest Good? An Overview and the Pros/Cons

FT Contributor  | 

One of the newer options for online investing is Ally Invest, which grew out of Ally Bank, one of the first online-only banks.

Because there is a growing list of brokerages and trading platforms, it pays to look at services like Ally Invest, weigh the pros and cons, learn about the available features and fees, and make an informed decision about the usefulness of this service for your investing needs.

Ally Invest Services and Features

First of all, it is vital to note that Ally Invest is part of Ally Financial. It operates under the regulation for brokerages laid out by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA). All investors should be sure to choose a regulated broker.

Here are some more specific features that Ally Invest offers:

  • Ally Invest has a $0 account minimum and 0% fees for stocks and ETFs. Options are $0.50 per contract. With no account minimum and no trading fees, Ally Invest is ideal for new investors who want to gain experience without having to deposit a lot of money or deal with fees.
  • Ally offers stocks, ETFs, options, mutual funds, and bonds. The ETFs are commission-free. Ally also has forex trading, although they have recently stopped offering futures trading, and the forex service utilizes a different platform. Even so, Ally gives investors the chance to try various investment options in one place.
  • As you would expect for the company that started one of the first online-only banks, you access trading platforms via the website or mobile apps. One thing to note is that Ally has a web-based platform that does not require any downloads. You can trade from different devices and computers without any setup time.
  • Ally Invest offers a full suite of trading and research tools and educational information. Such assistance is not always available on fee-free platforms. The tools include calculators that can help you get values for complex calculations. For example, you can use calculators with pre-set equations to figure out volatility, possible profits and losses, and probabilities based on historical data. Ally also offers professional-level charts and indicators.
  • Ally offers self-directed accounts, but they also have a managed-trading option, which you can access for a deposit of at least $100. This managed account does not have any advisory fees, and it relies on AI to choose accounts set up by investment advisors. Ally manages risk by keeping a portion of your deposit in an interest-bearing cash account.
  • Ally Invest offers informational articles that can guide novice traders in the basics of investing in stocks, ETFs, options, and other investments. These articles mostly focus on beginner information, so experienced investors may not find them useful.
  • Advanced traders, however, can access Ally’s application programming interface (API), which allows users to write automated trading programs for use on the platform.

Who Is Ally Invest for?

Despite being a discount brokerage, Ally Invest offers a full range of tools for traders of different skills and knowledge levels. Managed accounts are available, but the majority of the most attractive features are for self-directed traders.

Because of the lack of commissions and fees on most trades, Ally will appeal to both new traders who do not want to spend a lot and active traders who want to increase their profit margins as much as possible by avoiding fees.

You may find cheaper options for mutual funds (which cost $9.95) and penny stocks (a $4.95 fee to trade stocks that cost less than $2 per share). The price for options is $0.50 per contract with no commission on trades, so Ally is attractive for options traders. This site could be the right place for those who are new to options because of all the beginner-focused educational information.

The combination of low-fees, beginner-friendly tutorials, and multiple options for investment vehicles makes Ally a top choice for younger investors who are new to the markets and want to invest and learn how to manage their money.

Forex traders have their own platform on Ally as well. This site could be useful for those who trade forex but also want to participate in other markets.

Finally, Ally offers full access to its API, which will appeal to algorithmic traders who want to write applications or programs that they can use on the platform.

Pros and Cons of Ally Invest

Ally Invest has advantages that can make it an ideal platform for some investors. For others, however, the cons may outweigh the pros.

Pros

  • No fees: Ally does not charge fees for stocks or ETFs, and options trades are a very competitive $0.50 per contract. This pricing will appeal to new traders who don’t want to spend a lot and active traders who want to increase profit margins as much as possible.
  • Great apps and browser-based trading platform: Investors can easily access the trading platform without any downloads. You can also customize what you see when you log in to the platform.
  • Educational information for beginners: Ally is a beginner-friendly platform because it offers a lot of information to people unfamiliar with investing.
  • Synchronize with other Ally Financial accounts: You can quickly move money between Ally Financial accounts and your investment account. Some investment-only brokerages do not have such easy access to other banking services.
  • Ally offers professional-level charts, calculators, and other tools that will appeal to traders of all levels. These tools are attractive to beginners because they take some of the legwork out of analysis.

Cons

  • Ally charges fees for mutual funds and penny stocks: There are also fees for options trading and bonds, but they are competitive with other discount brokers.
  • Ally recently ended its futures trading offerings: This decision puts it at a slight disadvantage compared to services like Etrade. However, futures are for advanced traders, so not having access to them will not affect Ally’s attractiveness for new traders.
  • The educational information is mainly for new investors: Those who already know the basics will need to continue their education with outside sources.
  • Ally does not have any physical locations, so you cannot get face-to-face support. You can, however, reach customer service during regular business hours on the phone and 24 hours per day via chat.

Is Ally Invest Right for You?

Ally Invest is right for you if you are a new investor who wants a low-cost option for entering the stock market. If you are an experienced investor who is looking for an inexpensive option, Ally could also be an attractive choice because of its lack of fees and access to forex and bonds as well as stocks and ETFs.

Unfortunately, those who want access to mutual funds and futures will be better off looking elsewhere. Intermediate investors who wish to develop their skills further may also want to look elsewhere because of Ally’s lack of advanced educational material.

For all those millennials who are staying out of the stock market because of cost or lack of knowledge, however, Ally Invest is one of the best options out there because it directly addresses these issues with its lack of fees and account minimums.


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