Ally Invest Review 2021: Pros, Cons and How It Compares

Ally Invest appeals to both the beginning investor and the experienced stock trader with $0 trading costs on eligible U.S. securities, a $0 account minimum, a huge selection of no transaction-fee mutual funds and low-cost options trading.

But Ally doesn’t merely compete with the major online brokers on costs: It also offers bells and whistles like forex trading, an automated portfolio management option and a suite of free tools for technical investors.

Ally Invest is best for:

• Active traders.

• Options traders.

• Forex traders.

• Commission-free trades on eligible U.S. securities.

Ally Invest at a glance

Where Ally Invest shines

Free and low-cost trading: Ally Invest has commission-free trades for eligible U.S. stocks, options and exchange-traded funds (ETFs), and very low contract fees on options trades, at $0.50 per contract. The number of no-transaction mutual funds on offer is impressive, too, at over 11,200.

Cash management: Uninvested cash in an Ally Invest brokerage account earns no interest, but Ally invest offers instant money movement between Ally savings and brokerage accounts, letting investors take advantage of interest rates several times higher than the typical default sweep interest rates of most brokerages. This does, however, require opening an Ally savings account separately.

Trading platform: Ally Invest’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 also allows its customers to trade via mobile devices with Ally Mobile or Ally Forex, the brokerage's app dedicated to forex trading.

Investing research and tools: Ally Invest 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, as well as a strategy scanner that identifies and executes option strategies based on criteria you choose. (Just getting into options trading? Here's our guide.)

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., short- and long-term gains and losses or wash sales) and generates on-demand 1099 forms.

Side note about data: Standard quotes are free to all customers via Ally Invest LIVE, while real-time streaming data from Quotestream is available upon request for investors who trade more than 10 times per month.

Mutual fund selection: Ally Invest not only made substantial improvements to its selection of mutual funds this year, but it also dropped its transaction fees on them. Now, Ally Invest has about 11,200 no-transaction-fee mutual funds on offer. However, there is still a minimum of $100 on more than 8,000 of these funds.

Where Ally Invest falls short

Tradable securities: Though there is a strong selection of tradable securities on offer, two fairly common securities are missing from that list: futures and fractional shares. Expert traders can still enjoy advanced trading in options, forex and penny stocks, but for futures, they’ll have to turn elsewhere, such as TradeStation or Interactive Brokers. And for investors wanting to get started with small amounts (or dollar-cost average into investing), Robinhood, Schwab and Fidelity all offer fractional shares.

The bottom line

Ally Invest has competitive pricing, helpful trading tools and an easy-to-use trading platform. With no account minimum and thousands of no-transaction-fee mutual funds on offer, it's easy for beginners to get started, while active investors will appreciate Ally's commission-free trades on eligible U.S. securities. Advanced investors looking to trade futures, however, may find a better home at another broker.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.