07 Dec

Ally Invest (Formerly TradeKing) Review – Legit Online Stock Broker?

ally invest

Most people want to get their money to work for them by investing it in the right places. Nowadays, investors are turning to online stock brokers to get their investments in order. There are a ton of options out there, with one advertising nearly every time you turn on the television. Choosing the right broker is hard, though, because each one has their benefits and drawbacks.

Ally Invest (formerly TradeKing) one of the options you may not hear about too often. They don’t spend the same amount of money on their marketing budget as other popular brokers such as E-Trade, but that doesn’t mean they’re any less effective. Ahead, we’ll take a look at the specifics of Ally Invest and let you know if it’s worth choosing as your online broker.

What is Ally Invest?

Ally Financial owns by Ally Invest, who got their start in the early 1900’s as part of General Motors. Over the years, they separated from the automotive company and branched into banking and corporate finance. They are still one of the leading auto bank lenders in the country.

In 2016, Ally Financial acquired TradeKing and rebranded them as Ally Invest. They kept most of what worked from TradeKing, with a few tweaks here and there. The broker markets itself as a discount firm, rather than one of the big-hitters. For an online broker, that isn’t too bad. Their commission is small, and they don’t require an account minimum. Ally works for those who are regular investors as well as those who just want to dabble.

How Ally Invest Works

Ally Invest has one of the lowest barriers to entry in any online stock broker because of their no account minimum. If you’re a bigger fish, though, you are rewarded with lower commission. Over 30 trades or an average daily balance of $100,000 or more will give you the “special rate,” so it’s cheap to be a fair-weather investor and even more inexpensive to be a regular player. Setting up an account is easy, just choose which kind you want and fill out your information.

Ally Invest provides all of the accounts, investment options, and research tools that other online stock brokers have. You can trade in stocks, exchange-traded funds, bonds, options, mutual funds, and more. For accounts, there are all the options you’d expect: IRA’s, taxable, joint, checking, savings, etc. These accounts and investing options will be about the same, no matter where you look. You will, however, have to pay attention to the commission and fees, as this is where Ally typically pulls ahead.

The trading platform Ally Invest uses is web-based which many people who trade on multiple platforms prefer. Serious investors often use desktop programs, but trading on multiple computers would mean you’d have to download the program multiple times. With Ally Invest, you can trade from anywhere if you have access to a WiFi signal.

Their research is decent, especially for a discount broker. The tools, though, is Ally has an edge on the competition. Their options pricing calculator is virtually unmatched in the industry, with the ability to compare current prices with projected future value, making sure you’re getting the most out of your investing dollar. Other free tools include a tax manager, probability calculator, and profit-and-loss calculator.

Commissions and Fees

Only a few competitors can compete with the commissions Ally Invest has. They have one of the lowest commission structures in the industry at $4.95, and give you the option of an even lower commission if you have a regular balance of $100,000 or make more than 30 transactions a quarter. If you meet these requirements, you’ll only be paying $3,95 in commission, and 50¢per option contract (as opposed to 65¢).

Unfortunately, unlike similar options, there aren’t any commission-free ETFs. A lot of other online brokers offer multiple commission-free ETF options, but Ally’s low commission structure may make up for this shortcoming. There aren’t any transaction-fee-free funds either, but the $9.95 commission on these funds is much less than the charges most other online discount brokers have.

Steps to Get Started

  1. Go to Ally.com and set up an account
  • Follow the steps on the website to enter your information and create an investing account.
  • Have your information on hand to make setup as easy as possible.
  1. Decide which account is best for you
  • While signing up, a short questionnaire will help you determine which account is best for your managed portfolio
  • Choose from several account options, including traditional, Roth, SEP, simple IRAs, Coverdell, and more
  1. Fund your account
  • Decide if you’re going to accept the $4.95 commission structure, or invest a larger sum to qualify for the $3.95 commission.
  1. Transfer an existing account from another broker if you have one
  • To transfer an existing account, you’ll need to submit an asset transfer request form to Ally Invest.
  • You will also need to send a recent statement from your previous account.
  1. Start trading
  • Log into your desired account and select “Quick Trade.”
  • From there you’ll be able to start trading.

Pros and Cons of Ally Invest

Pros:

  • Low Commissions
  • No Account Minimums
  • Web-Based Trading Platform
  • In-Depth Investment Tools and Calculators

Cons:

  • No Commission-Free ETFs
  • Transaction Fees on Mutual Funds
  • No Brick and Mortar Locations

Public Perception

The general opinion of Ally Invest is a good one. Users seem to appreciate the cheap commissions and low barrier of entry. The tools have received a lot of positive feedback, and their research is nothing about which to complain. The only place where consumers are down on Ally is the fact that there are no physical locations. It’s an online-only broker, which is fine for some, but others like to know they can go to a physical location rather than only rely on phone or online conversations to resolve their problems.

Competition

There are other, cheap, online brokers that you should consider before making your decision. Charles Schwab offers the best competition regarding commission. Theirs is $4.95, but don’t offer any discount for active traders. There are over 200 commission-free ETFs with Schwab as well. If you’re someone who wants the security of going to a physical location, you ought to look at Charles Schwab. They have several locations, and chances are there’s one close to you.

E-Trade is another attractive option in the online broker realm. Chances are you’ve seen one of their commercials on television. Their commission is higher at $6.95, and they require a minimum balance of $500. There are 30 local branches, but that’s far from a guarantee that there will be one close by. There are, however, over 100 commission-free ETFs if that’s important to you.

Should You Get Ally Invest?

Ally Invest is a quality company with a cheap commission structure when compared to the rest of the field. They may not be as recognizable as other brokers, but that doesn’t mean they’re any less effective. Their research is helpful, and their tools are some of the best.

The biggest selling point, though, is Ally’s low commissions. Whether you’re an active investor or someone who wants to do a little bit of trading, you’ll be paying a lot less in commission than with other brokers. Overall, Ally Invest is a good choice for your investing future.