Ally Brokerage Service Review

Ally (ALLY) Invest is a top discount brokerage that offers one of the best and most competitive pricing structures, starting at $0 per trade. Its mutual fund transaction fee is also one of the lowest. Ally Investors is a top brokerage option for both traders and investors given that it has active traders and investors with huge accounts, lower fees stock, option, ETFs, and even management fees. It is a considerable choice for investors who are price-driven when it comes to selecting a brokerage firm to invest with.

Fees

Ally Invest is considered a top choice for many investors when it comes to the aspect of fees, however, there are certain fees that you may want to know about before opening an investment account with them.

• Paper statement: Ally Invest a $4 fee for paper statements, though, there is an option for electronic statements at no cost. Like many other brokerage firms, they advise customers to opt for electronic statements instead.

• Debit card fees: Ally charges a $35 annual fee if you’d like to continue using your card in the following year, plus a $1 fee per ATM withdrawal. This mostly concerns those that would like to have their debit card linked to their accounts.

• Penny stock fee: Low-priced stocks of $2 and less attracts a commission of $0.01 per share ($4.95 minimum), the commission must not exceed 5% of the trade value.

Commissions

Ally Invest is mostly a commission-free brokerage, offering customers the lowest commissions on stocks and mutual funds compared to a few others in the industry.

• Stocks and ETFs - $0

• Stock options - $0.50 per contract

• Mutual funds - $9.95

Margin rates

Margin accounts are an essential part of brokerage firms. With a margin account, you can borrow against the value of your investments depending on how much your broker allows. Many investors use margin loans for different purposes such as using them to leverage the investors’ portfolios (i.e. they invest with borrowed money). By doing so they will be able to increase the profits of their investments and have the value increase as well at a higher rate than the cost of the borrowed money. Some other investors simply use margin as a way of reinvesting the proceeds from selling stock.

At Ally Invest, margin interests are charged on a sliding case, where the interest rate increases as you borrow less, and vice-versa.

Trading platform and tools

Ally Invest doesn’t have a sophisticated trading platform that can aid active traders to trade frequently or carry out the necessary research on an investment. For beginners, the trading platform is easy to navigate through and use. While for expert traders, the platform places some limitations on them. However, the trading platform creates a balance where all kinds of investors can conveniently us it. It has a web-based trading platform that fits well on small and large screens. It also has a mobile app available on both Android and iPhone.

Advantages of Ally Invest

• No minimums: Ally Invest is a top choice for beginners as it has no fixed account opening minimum. With as low as $5 or less, you can open an account with the intention of adding to your account eventually.

• Zero Commissions: Ally invest is a relatively commission-free brokerage firm that offers $0 trades. Although, stocks priced below $2 a share are charged commissions of $4.95 or more, with an additional $0.01 per share.

• Fund Transaction fees: Ally’s funds are relatively free given that they charge lower fund fees compared to other brokerage firms. It still remains a top choice for fund investors, with a low commission of $9.95 to buy a mutual fund through the brokerage.

• Margin Rates: The margin rates at Ally Invest are considerable enough, as it offers rates lower than other top brokerage firms in the industry like TD Ameritrade and E*TRADE. But slightly higher than the leading low-cost brokerage firms, Interactive Brokers. Nevertheless, Ally Invest is still a top choice for investors who are looking for reasonable margin rates compared to some other brokerage firms that require a margin balance of at least $500,000.

• Promotions: This brokerage firm offers bonuses in the form of cash. These cash bonuses range from $50 - $3,500 with a minimum qualifying deposit of $10,000.

Disadvantages of Ally Invest

• Debit Card: Customers are charged a $35 annual fee to validate their debit card access and a $1 fee charged on each transaction. Compared to other competitors in the industry, these services come free.

• Commissions on low-priced stocks: Although, Ally has succeeded in making its online stock trades commissions free, literally dropping the price to $0. The firm still charges commissions on low-priced stocks of $2 and below. While this may seem like a strategy to offset the commission-free online trades, it could be quite expensive for customers who seek to buy large blocks of sub-$2 stocks.

• NTF Mutual Funds: Ally’s mutual fund commissions is practically the lowest in the industry. However, some of its top competitors offer customers a lot of options of no transaction-fee (NTF) funds that completely take out commissions. This makes Ally a non-NTF mutual fund brokerage firm.

• Trading Tools:  Ally Invest doesn’t quite offer customers with sophisticated trading tools. Given that it is most suitable for beginners, expert investors and traders who like to make frequent trades and do a lot of research would find Ally’s trading tools quite limiting. Although Ally Invest is great for long-term investors, it may not be so great for day traders.