Don’t be fooled by Ally Invest’s overnight entry into the discount brokerage field. This seemingly new low-cost provider is merely TradeKing by another name. Ally Financial Inc. acquired TradeKing in June 2016, and the public-facing merger of their integrated businesses launched in May.
And, like TradeKing, Ally Invest has all the features that make it a worthy rival of its more mainstream — and higher-priced — brokerage competition, including forex trading and automated portfolio management.
- Commissions: $4.95
- Account minimum: $0
- Discounts available based on trade volume
Ally Invest is best for:
- Active traders
- Options traders
- Forex traders
|Overall||Winner of NerdWallet's award for best low-cost broker.|
|Stock trading costs||$4.95; volume discount available|
|Account fees (annual, transfer, closing, inactivity)||$0 inactivity/account fees; $50 full outgoing transfer fee and $50 IRA closing fee.|
|Trading platform||Browser-based platform with free screening tools, customizable charting, research and real-time data.|
|Research and data||Free|
|Tradable securities||• Stocks
• Mutual funds
Where Ally Invest shines
Commissions: Only a few online brokers can compete with Ally’s low commission of $4.95 on the trading of stocks and exchange-traded funds. (OptionsHouse is one of them.) Active investors qualify for the firm’s discount ($3.95 per equity trade) by making 30 or more trades per quarter or having a balance of $100,000 or more. Ally’s options trading contracts are similarly low at $4.95 plus 65 cents per contract (or $3.95 plus $0.50 per contract for active traders) with only one base charge per spread. And instead of charging forex traders commissions, transaction costs are based on spread markups, and accounts that have at least one trade within the past 90 days get access to free data.
Mutual fund investors will be disappointed there are no transaction-fee-free funds available. However, Ally’s $9.95 commission for no-load mutual funds is far from onerous when compared with the $20 to $50 (and more) charged by other discount brokers. Even Ally’s $20 fee (plus regular commission) for broker-assisted trades and its low margin rates are hard to beat.
Account minimum: Ally’s $0 account balance minimum means there’s no roadblock to getting started.
Trading platform: Ally’s browser-based platform offers quick trading capabilities, real-time streaming quotes and data, a customizable dashboard, and access to all of the broker’s tools. Customers who frequently trade from various computers — home and work, for example — will appreciate this web-based platform, which doesn’t require any downloads. Ally Invest has also advanced the ability for customers to trade via mobile devices with the company’s apps, or to use a smartphone to access the web-based platform.
Investing research and tools: Ally offers a suite of investing tools that exceed expectations for a deep-discount broker. Its options trading tools are particularly strong and include an options pricing calculator to compare current bid/ask prices to forecast theoretical values, and a strategy scanner that identifies and executes option strategies based on criteria you choose.
Technical traders can dive into a suite of free tools powered by Recognia. Other free tools include a profit-and-loss calculator, a probability calculator (that uses implied volatility to determine your likelihood of hitting your targets) and the Maxit Tax Manager, which identifies tax implications of trading decisions (e.g., as short- and long-term gains and losses, wash sales) for planning purposes and generates on-demand 1099 forms.
Side note about data: Standard quotes are free to all customers, but free, real-time streaming data is available only to investors who trade more than 10 times per month.
Where Ally Invest falls short
Commission-free ETFs: In short, Ally has no commission-free ETFs, making the company a poor option for investors who want to gradually build up their position in ETFs because even the low $4.95 commission can add up and pare investment returns.
Mutual funds: The company offers more than 12,000 mutual funds, but unfortunately none of them are free of transaction fees. Ally’s commission for no-load funds is $9.95 (one of the lowest among brokerage firms), but investors would be better off using one of the other deep-discount online brokers — such as E-Trade, Merrill Edge or Interactive Brokers — which offer thousands of funds with no transaction fees. (See our roundup of the best brokers for mutual fund investors of all types.)
No physical branches: Plenty of brokers have an online-only presence, but it’s worth pointing this out here for beginner investors who may feel more comfortable knowing they could visit a branch office for hands-on help. That said, Ally offers online and phone customer support 24-7.
Ally Invest vs. similar brokers
How Ally Invest stacks up
Ally is one of our top low-cost options. Its robust trading platform and lineup of free research, data and analysis tools put it at the level of some of its better-known competitors in the active trading space, at a lower price.
The bottom line
Cost-conscious active traders may be surprised by how much they can get for so little at Ally Invest. Rock-bottom commissions, top-notch research and trading tools and an intuitive platform make this deep-discount provider a worthy contender among much pricier, high-minimum brokers. Ally’s overall score took a hit because of its lack of trading-fee-free mutual funds and ETFs — shortcomings that didn’t matter much to the majority of of active investors that used Ally’s predecessor TradeKing. But it’s certainly a point to consider for those whose portfolios lean heavily toward fund investing.
Dayana Yochim is a staff writer at NerdWallet, a personal finance website. Email: email@example.com. Twitter: @dayanayochim.
Updated May 11, 2017.