Is Ally Invest Good and Safe for Beginners?

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). 

Research Overview

Feature Ally Invest J.P. Morgan Self-Directed

Research – Stocks

Yes Yes

Research – ETFs

Yes Yes

Research – Mutual Funds

Yes Yes

Research – Pink Sheets / OTCBB

Yes No

Research – Bonds

No No

Screener – Stocks

No Yes

Screener – ETFs

Yes Yes

Screener – Mutual Funds

No Yes

Screener – Options

No No

Screener – Bonds

Yes Yes

Misc – Portfolio Allocation

No Yes

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What Are Ally Invest’s Drawbacks?

No Fractional Shares

Perhaps the biggest drawback to Ally Invest is the absence of fractional shares trading. That’s a process by which you can purchase slivers of whole share prices, rather than paying for a whole stock.

The lack of fractional shares means a person with $100 to invest would be limited to just two shares of a $50 stock. If the investor wants to buy one stock at $50 and another at $75, she would have to add an additional $25 to her account to make it happen.

If fractional shares were available, she would be able to spread her $100 investment across 20 different stocks, by purchasing a 1/10th interest in each company, if the average price per share was $50.

This inability means a small investor will be better served by opening an account with a broker offering fractional shares.

Limited Self-Employed Retirement Account Options

If you’re self-employed and looking for retirement plan options, Ally Invest offers only a traditional or Roth IRA account. But if you’d like one of the more generous self-employed plans, like a SIMPLE IRA or SEP IRA, Ally Invest does not offer these options for the self-employed.

Ally Invest also doesn’t offer a solo 401(k), though they’re hardly the only broker in the field not offering this plan.

If you’re looking for a broker with options for self-employed individuals and small business owners, check out our review of E*TRADE.

No Free Mutual Fund Trading

While many brokers of hundreds or thousands of no-transaction-fee (NTF) mutual funds, Ally Invest doesn’t offer any. Instead, it charges $9.95 per trade on its entire menu of no load mutual funds. It should be noted though that Ally has one of the widest selections of mutual funds you’ll find at more than 12,000.

So if you’re looking to make a one-and-done mutual fund purchase that you’ll hold onto for the long haul, Ally Invest could be worth considering. But it’s a bad choice if you’re wanting to dollar-cost average into a specific fund (or funds) on a repeated basis.

Range of Offerings

Ally Invest provides trading in US-listed equities, ETFs, options, mutual funds, and fixed income products including US Treasuries, CDs, and corporate, municipal, and agency bonds. Ally Invest also provides foreign exchange trading in 52 currency pairs via a dedicated platform, but they do not offer futures, cryptocurrencies, fractional share trading, or international securities listed outside US-based exchanges. Investors using Ally Invest can trade the following:

  • Stocks long and short (including extended hours trading)
  • OTCBB
  • ETFs
  • Listed Options
  • Mutual Funds (~18,000/~7,000 with loads)
  • Fixed Income: US Treasury Securities (490), corporates (7,099), municipals (48,631), U.S. agencies (670), certificates of deposit (2,704)
  • Foreign Exchange (52 currency pairs; via Ally Invest Forex application)
  • Ally Bank Accounts (interest-bearing, but the investor needs to proactively transfer funds to and from investment account)

Customer Service

  • Phone line available 24/7 
  • Average hold time of 30 seconds
  • Live chat available
  • Assistance can be provided via social media
  • Only U.S. residents can open accounts.

Is It Worth It?

Overall, Ally Invest is very user-friendly. The ease of use, along with low costs, make Ally Invest attractive to investors. One of its biggest drawbacks is that it doesn’t currently support fractional shares. It also doesn’t offer tax-loss harvesting or access to human wealth managers. But other than those few minor disadvantages, Ally Invest offers a full brokerage package at market-leading prices. 

If you’re thinking about Ally Invest, sign up here and take advantage of the current promotions.

If you want to know about other brokers, check out our Online Broker Comparison Tool.

Ally Invest pricing

For self-directed trading, you’ll have the following fees if you decide to invest through Ally:

Stocks$0 commission
ETFs$0 commission
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. 

Investment Types on Ally Invest

In short, there’s just about everything. Stock, ETFs, mutual funds, bonds, and options are all on display here. Through Ally Invest, traders can gain access to 500 commission-free ETFs, as well as a substantial selection of mutual funds. You won’t find any international equity or options on Ally Invest, but you can trade forex using a separate Ally platform. Fixed income products are also in abundance at Ally.

The offer of mutual funds is also large as there are over 8.000 to choose from, but all of them have transaction fees. Ally Invest’s has some of the lowest commissions for no-load funds at $9.95, but other popular discount brokerage services might be a better choice as they offer thousands of mutual funds with $0 transaction fees.

🤓 Interested in seeing how Ally Invest fares against competitors? Take a look at our our Ally Invest vs TD Ameritrade review.

Ally Invest Features

Minimum Investment$0
Stock/ETF Trades$0
Options Trades$0.50/contract
Mutual Funds$9.95
Investment TypesStocks, OTC/Penny Stocks, ETFs, Mutual Funds, Bonds, Options, Forex, Cryptocurrencies, Futures
Accounts Types
  • Taxable
  • Joint
  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • SEP IRA
  • SIMPLE IRA
  • 401(k)
  • Solo 401(k)
  • Trusts
  • Limited Partnerships
  • Partnerships
  • Coverdell
  • 529
  • Custodial
  • Non-Profit
  • Annuities
  • Checking
  • Savings
  • Money Market
  • CDs
Broker Assisted Trade$20 + regular commission
Virtual Trades
Customer ServicePhone and live chat, 24/7 + email

Self-Directed Trading Accounts

Ally Invest supports taxable brokerage accounts as well as individual retirement accounts with no minimum. You can trade practically everything – stocks, bonds, mutual funds, ETFs, options, and even forex. The only asset not on that list is cryptocurrencies but I don’t invest in cryptocurrencies – and here’s why.

Best of all, with the exception of mutual funds, all those trades are commission-free. Options have a $0.50 per contract fee but no base commission is charged.

The platform is pretty sophisticated and offers everything you could need from your basic brokerage account. There are real-time quotes, research, a customizable dashboard, and it is all accessible online. You don’t get Level 2 market data though.

Here’s a shot of the top of the default dashboard (they call it Ally Invest Live, click to expand):

You can customize it but the default shows you a lot of data very quickly, with threads you can pull for additional research. The best way to use this is as a snapshot into your account to see how your portfolio is performing.

The Dashboard is very well designed and intuitive to use. When you click on a stock in your Holdings, all the other panels update to that stock – the Chart automatically updates to show you the trailing three months, Options Chains updates to show you all the call and put contracts (the option chains), etc. You don’t have to enter it manually each time into each panel. When you enter a ticker into the search box within any panel, it updates every other panel too. That’s smart.

For customization, you can change what’s shown within each panel. You can also move the panels around but you can’t add or remove panels – though I’m not sure if there is a panel that I’d add that isn’t already here.

Within the Option Chains panel, you can dive into the chain of a stock and build an options strategy using their workbench (here I am buying out of the money calls on AAPL):Ally Invest has good options forecasting and prici

Ally Invest has good options forecasting and pricing tools because TradeKing catered to options traders (more volume meant more commissions, a smart business strategy!). As a result, Ally Invest now has great options trading tools.

If you don’t want to use Ally Invest Live, the legacy platform still exists and makes it easy to build more positions.

Want to write a straddle? Here’s the screen you use to enter it:Fee Structure

Fee Structure

The fee structure on the self-direct account is pretty much as low as you can get:

  • $0 commission-free trades on stocks, options, and ETFs. Options have a $0.50 per contract fee.
  • $9.95 per trade on no-load mutual funds, fees to trade funds with a sales load will vary
  • $0 account minimum
  • No inactivity fee
  • $50 ACAT fee

Personally, if you want to trade mutual funds, the best way to do that is to open an account with the company that offers the funds. For example, if you want a Vanguard fund, open a Vanguard account because you can buy and sell shares for free. And if you want a Vanguard ETF, you can buy and sell those for free on Ally Invest or Vanguard.

Top feature you’ll love

Mobile app

Unlike many brokers, Ally Invest doesn’t have a dedicated app for its brokerage activities. Instead, the Ally Mobile app provides functionality for all of the company’s accounts and activities. For example, you can see all your accounts in one spot – checking, savings, CDs, credit cards and brokerage accounts. That’s a great feature for customers who already have an Ally account and want to keep their financial life consolidated within there.

This all-in-one app fits that bill well and is simple to navigate and use. You’ll be able to deposit checks, transfer money between accounts, pay bills, check tax forms, access savings tools, find ATMs and perform a number of other banking activities.

On the app’s investing side, you’ll be able to do even more. You can check your portfolio with streaming quotes and trade stocks as well as multi-leg options. Customers can perform technical analysis with charting tools and access the latest market news. While it doesn’t have all the features of Ally’s trading platform, it performs well when you can’t be at your desk.

If you want to trade currency, Ally also provides a dedicated app for that called Ally Forex. This app allows you to enter multiple order types, access streaming headlines from Reuters and weekly reports, chart market trends, get alerts and generally manage your account. 

Ally Invest Robo Portfolios

With a minimum of $100, you can get a cash-enhanced portfolio with practically no fees – no advisory fees, no annual fees, and no rebalancing fees. They do this because they set 30% of your portfolio into cash, earning a rate of interest comparable to their online savings account. Charles Schwab Intelligent Portfolios operates this way too – no fee but you have to put a set percentage of your allocation into cash. The upside of the cash allocation at Ally is that it’s close to the prevailing rate you’d get with a savings account though you can’t get access it as easily as you would a savings account.

If you want to avoid the cash allocation, you can get a “market-focused” Robo Portfolio but it also comes with a 0.30% annual advisory fee, charged monthly. With market-focused, you still have cash (roughly 2% of your balance) but much much less of it. 0.30% is similar to what other robo-advisors charge – for example, Vanguard’s Personal Advisor Service charges 0.30% on assets up to $5 million.

With Robo Portfolios, you answer some questions about your goals, they’ll build a mix of ETFs that meet your goals, and then you can tweak it as you wish.

Additionally, you can pick from four portfolio options:

  • Core: “Highly diversified across domestic, international, and fixed-income assets. You can choose the amount of risk you are comfortable with, from conservative to aggressive. If you’re more of a hands-off investor, consider this portfolio type.”
  • Income: “This portfolio type offers higher dividend yields while maintaining a more conservative risk profile. Consider this portfolio type if you’re most focused on yield and income.”
  • Tax-Optimized: “If you make after-tax contributions to an investment account, this type of IRA may help maximize your investments. If you’re looking to invest using a diverse mix of tax-advantaged, low-cost Exchange Traded Funds, consider this portfolio type.”
  • Socially Responsible: “Shaped by companies with ethical track records, you’ll only invest in businesses that actively practice sustainability, energy efficiency, or other environmentally friendly initiatives. Consider this portfolio type if eco-friendly practices are important to you.”

Then, their systems (and people) monitor your portfolio and rebalance as needed. It’s similar to the robo-advisory services of other companies (in theory).

Learn more about Ally Invest Robo Portfolios

Usability: How User-Friendly is Ally Invest?

Ally Invest has a very minimalistic interface that’s quite easy to use for even the most technically unsavvy individual. Whether you’re using the mobile app or browser, the signup process for Ally Invest is straightforward.

Remember that Ally Invest is online-only. At the time of writing, there are no physical branches. If you feel unnerved by not being able to walk into a physical branch to handle your affairs, you might prefer a different investment platform.

Their customer service, which is available via phone or email, is pretty top-notch. Overall, Ally Invest’s usability scores an 8 out of 10.

How to sign up for Ally Invest

You can sign up for Ally Invest either through its website or through Ally’s mobile app. When you sign up, you’ll need to provide your social security number, contact information, employment information, and general financial information to get approved for an account.

PRO TIP: When signing up for an Ally Invest account, always make sure you’re on the correct webpage by examining the URL in your browser’s address bar. It should say https://ally.com (that’s two Ls). You should also check for the padlock icon in your browser. Never provide any sensitive information to a webpage that you’re not sure is the official website.

Here’s how you can sign up for an Ally Invest account through the mobile app:

  1. Go to Apple’s App Store, or Google Play to download the Ally Invest app.
  2. Select the type of portfolio you’d like to create. For this one, we selected Investing & Retirement.
  3. Select the kind of accounts you’d be interested in: self-directed accounts or ones that are selected with automated advisors.
  4. Answer the questions that show up to make your investment goals clear.
  5. Provide the necessary information, including your social security number, income information, and other identifying data.
  6. Set up biometrics and multi-factor authentication.

And that’s it! Your account is now set up and ready to be used.

Software usability and options

Once your Ally Invest account has been approved, you’ll need to link your bank and fund the account. We’ve run through a few orders to give you an idea of the interface and ease of trading within the app.

The app is pretty straightforward. We were able to act on a couple of trades within a matter of minutes using their Quick Trade function.

It was relatively easy to set up an account and start trading using Ally Invest.

Risk-assessment

Because Ally Invest uses payment-for-order-flow, it makes more money if you place more orders on the platform. However, Ally hasn’t been known for predatory practices, unlike big names like Robinhood.

Instead, it offers an array of educational tools on its platform, as well as screeners, so you can carefully review your trades before you make one. On the Live platform, you can find the ETF screener. Importantly, options trading and analytical tools are available for graphing profitability. However, screeners, options trading, and other advanced options tools are not available in the mobile app. This means your experience will differ depending on the platform you choose.

However, given the range of educational resources available on the platform, we are confident that investors have adequate resources available before executing a trade.

Pricing and fees

Ally Invest doesn’t charge a fee for its self-directed accounts. However, there are some other fees you should know about:

  • Cost per stock trade: $0
  • OTCBB (and stocks below $2.00): $4.95 + $0.01 per share (maximum commission per order cannot exceed 5% of trade value)
  • Forex: no commission
  • Options: $0.5 per contract + $0.5 fee for low-value options positions
  • Robo-managed accounts: minimum $100 investment. Annual 0.30% management fee for robo-created portfolios.
  • Account closure: no fee
  • Domestic wire transfers: $30 for sending, none for receiving wire transfers
  • Checks: $5 to send a check
  • Maintenance or inactivity fee: none
  • Mutual funds: $9.95 per no-load trade
  • Broker-assisted trades: $20 per trade
  • Full outgoing transfer fee: $50

The rates for margin interest can be found below:

  • Under $25,000 at 7.75%
  • $50,000 at 7.5%
  • $100,000 at 6.75%
  • $250,000 at 5.50%
  • $500,000 at 4.50%
  • $1 million at 4%
  • Over $1 million at 3.25%

Customer service

For an online-only brokerage, we were hoping Ally Invest would have a live chat. Unfortunately, this isn’t the case at the time of writing, neither in the app nor on the website. However, Ally Invest does offer a 24/7 phone number that has proven to be excellent.

We tried inquiring about encryption protocols on the site and app, and a representative was able to give us a solid answer in well under five minutes.

Note that you will need to provide some personal data so customer service reps can confirm that they’re speaking with the account holder. We had to provide our full name, the last four digits of our social security number, and some other security questions only account holders would know.

WARNING: Be careful about giving information to customer service

If you’re communicating on the phone, make sure it was you who initiated contact. Make sure to call the designated number on the Ally Invest website or app. This way, you can be sure you’re talking to an official Ally Invest representative. There are countless Help Desk and other social engineering scams out there that seek to pry financial data from victims.

If a customer service representative calls you over the phone, never give them your personal information, even if they claim it’s an urgent matter.

Safety: Is Ally Invest Secure?

If you’re looking for a robust online trading app that takes user security seriously, Ally Invest makes the cut. It gets an 8.5 on 10 from us. Ally Financial, Ally Invest’s parent company has a solid “A” rating from independent cybersecurity reviewer UpGuard — scoring 817 out of 950.

Ally takes important cybersecurity steps needed to protect its online portal and platforms from outside hacks and attacks. It also provides users with the features needed to protect their accounts from unauthorized access.

Ally Invest security features

As an online-only brokerage, Ally Invest offers more than the average platform in regards to security. While this includes advanced security features, you’ll also have access to premium malware, protection, and other services when you sign up as an Ally Bank customer.

Here’s a rundown of what Ally Invest offers you security-wise:

  • Two-factor authentication: Using a code sent to your email, mobile phone, or authentication app, Ally Invest can offer an additional layer of security for logins or extra identity verification. You may also be prompted to answer a security question you set up during registration.
  • Biometric logins: For mobile logins, users can use fingerprint or facial recognition scans.
  • Robust firewalls and Secure Socket Layering (SSL) encryption: SSL encryption creates a secure connection between your browser and Ally Invest’s site or app platform. This means all of the data you transmit (passwords, transactions, and financial data) is secured and unreadable to outsiders. If the website determines your connection is suspicious for any reason (such as flagged unsecured public Wi-Fi connections) it may block access.
  • Automatic logouts: After extended periods of inactivity, Ally Invest automatically logs you out to keep any potential unauthorized users from accessing your account.
  • Failed logins: Ally Invest will automatically block access to your account after a certain number of failed attempts. You’ll have to contact customer support to get back in. This can protect you against brute force attacks and password-guessing software.
  • Antivirus and malware protection: In addition to secured firewalls, Ally Invest uses top-tier antivirus and antimalware protection. If you sign up for Ally Bank, it also provides users Webroot antivirus and malware protection for up to three devices.

Is your money safe with Ally Invest?

As far as cyberattacks and protection from unauthorized users go, your Ally Invest account will be safe. You’ll just need to make sure you use all of Ally Invest’s security features mentioned above. Ally Invest doesn’t have a blanket policy on unauthorized activity in customer accounts and typically handles them on a case-by-case basis.

We’re fans of Ally Bank’s Online & Mobile Security Guarantee. If you notice any fraudulent or unauthorized transactions online or via the app, you won’t be held liable as long as you report it by calling 1-877-247-2559 within 60 days from when the statement was made available.

In the case of Ally Financial or Ally Invest’s bankruptcy, your funds are protected by government-approved organizations and government agencies:

  • Securities Investor Protection Corporation (SIPC): Any major brokerage should be covered by the SIPC. Your securities are protected up to $500,000 or $250,000 in cash. Ally Invest offers an “excess” of SIPC coverage through Lloyd’s of London, as well — up to $150 million after SIPC is exhausted.
  • SEC-regulated: Ally Invest is regulated by the Securities and Exchange Commission (SEC). The SEC is a government agency that enforces United States financial laws, imposes penalties and takes other legal action against perpetrators, and regulates financial markets.
  • FINRA membership: Ally Invest is also a member of the Financial Industry Regulatory Authority (FINRA). FINRA is a government-approved nonprofit that works with the SEC and prevents investor losses, overseas brokers, and identifies fraud and other misconduct.

Has Ally had a data breach?

Ally Invest has enjoyed a solid track record in regard to cybersecurity. There have been no data breaches or significant attacks on its systems.

However, its sister company Ally Bank engaged in some poor cybersecurity measures in 2021. Since many Ally Bank users also use Ally Invest, this could be a cause for concern. In a June 2021 letter to customers, Ally Bank disclosed that it experienced a data breach that saw the usernames and passwords of many users exposed to third-party companies that Ally does business with. This wasn’t a cyberattack, but rather a programming error on Ally Bank’s behalf.

The situation is currently under investigation and Ally Bank is the subject of a class-action lawsuit.

Ally Invest: Investor Education

Ally covers just about everything you can think of in its educational content, from stock trading to retirement. The training can show new arrivals how it all works, and introduce them to the investing world even if they have no prior knowledge.

That being said, all content is in written article form. There are no videos and there is no search feature. You can watch Ally Invest’s live webinars multiple times a week, but they are not archived so they can not be viewed at one’s convenience.

You can also hear from Ally’s senior options analyst, Brian Overby at their live events which are held about 15 times a year. The education content itself is very well made, but you can probably find education in a more interesting format in other places.

Ally Invest Research 🔍

Research capabilities are not where Ally Invest especially shines, but they do provide you with the main tools for market research. The research area is tidy and easy to maneuver. When researching stocks, ETFs, and mutual funds, you can get insights quickly and easily thanks to the smartly-designed UI.

Tools and Calculators 🔨

Strategy Workbench is a handy tool for options traders, as it shows your current holdings as well as any potential trade. That way you are able to detect changes in risk you may incur. The Probability Calculator offers some more research capabilities for options. The ability to adjust at-the-money implied volatility is a unique feature here.

Screeners 👨‍💻

Ally has two stock screeners. One has a bundle of technical data points, and the other enables you to perform technical backtesting on your investing strategies. There are also fixed income and mutual fund screeners. Charts can be customized to a great extent.

Ally Invest doesn’t provide ETF or mutual fund screeners. There are also no fixed income research tools. The research system gives users access to the fundamentals, but can not compete with the research capabilities of other big names like Fidelity or Charles Schwab.

Cons: Where Ally Invest could improve

Lack of no-transaction-fee mutual funds

This is a real weak point for Ally, since it doesn’t offer any no-transaction-fee mutual funds, while many other rivals allow you to skip the fee across thousands of mutual funds. Charles Schwab, Interactive Brokers and Fidelity all offer thousands of fee-free funds, so Ally really stands out as lacking here.

That said, Ally’s fee at $9.95 is still reasonable for no-load mutual funds, though it still doesn’t beat fee-free. And it does offer more than 12,000 mutual funds to choose from, so you’ll have a good chance to find what you’re looking for there. 

Account fees

The account fees are somewhat surprising here, since they’re atypical at most brokers today. Ally still charges a $25 fee for terminating an IRA. If you transfer the account, that’s an additional $50. A partial account transfer also runs you $50. 

On any standard account you’ll also run up a $50 fee for a full or partial transfer.

No fractional shares

Ally does a lot of things well from a customer-management standpoint, so it’s too bad that it doesn’t offer clients the ability to trade fractional shares. You won’t be able to buy them directly, but you will be able to reinvest your dividends into fractional shares. 

If fractional shares are critical to you, Robinhood and Fidelity Investments allow you to purchase and reinvest in fractional shares in many thousands of stocks.

Overall

Feature Ally Invest J.P. Morgan Self-Directed
Overall 4 4
Commissions & Fees 4.5 4.5
Offering of Investments 4.5 4
Platforms & Tools 3 2
Mobile Trading Apps 3.5 3.5
Research 3 3.5
Education 3.5 3.5
Ease of Use 4.5 4
Ally Invest Review J.P. Morgan Self-Directed Review
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