I Tried Ally Invest Robo Portfolios: My Full Review
Review
Updated
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Ally Invest Robo Portfolios is a great robo-advisor option for beginner investors. Conservative portfolios are completely free -- you get all the perks of a robo-advisor at no cost. Or if you'd prefer, Ally Invest Robo Portfolios can invest your money in a more aggressive portfolio and manage it for a reasonable fee.
Ally Invest Robo Portfolios could be a good fit for you if:
Ally Invest Robo Portfolios
With competitive pricing, low minimums, and features such as automatic rebalancing, Ally Invest Robo Portfolios is a great choice for anyone without a lot of cash to spend.
$0 per trade, management fee 0.30%, expense ratio 0.05%-0.20%
$100
We believe in comparing options before committing. Ally Invest Robo Portfolios might be right for you -- or it might not. Here are two robo-advisors we recommend highly for you to compare side by side with Ally Invest Robo Portfolios when deciding which robo-advisor is right for you:
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Rating image, 4.0 out of 5 stars.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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Rating
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
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M1 disclaimers:
M1 is not a robo-advisor and only offers self-directed brokerage services. https://m1.com/legal/disclosures/social-terms/
At Motley Fool Money, brokerages are rated on a scale of one to five stars. We primarily focus on fees, available assets, and account types; however, we also take into account features like research, education, tax-loss harvesting, and highly rated mobile apps. Our highest-rated brokerages generally include low fees, a diverse range of assets and account types, and useful platform features.
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I recently opened a traditional IRA with Ally Invest Robo Portfolios. I've never had a retirement account before, and in general, my experience with investing is extremely limited. Here's how it's been going with Ally Invest Robo Portfolios so far.
I was already a banking customer with Ally, and it was easy to open an Ally Invest account. And since Ally offers a robo-advisory service, I don't have to worry about the aspect of investing that most concerns me -- finding investments.
When I opened the account (with $1,000 -- $100 is the minimum to do so), I chose Ally's Market Focused portfolio option, to ensure more of my money is invested rather than held in cash. I selected Retirement as my goal, indicated that I was comfortable with a High risk level (I had five options ranging from Very Low to Very High), and opted for Ally's Core portfolio type, which comes with the best diversification.
After this, I didn't have to do anything to find or choose investments. The portfolio was created for me, focuses on growth, and invests in U.S. and international ETFs and bonds (with 2% of my money held in cash, earning the same high APY I get from my Ally Savings account).
Here again, Ally Invest Robo Portfolios is saving me a ton of stress and confusion. All I need to do is regularly send money to the account to be invested. To achieve this, I've set up weekly automatic contributions to be sent from my checking account at another bank to Ally Invest.
Then Ally's robo-advisor does the work of deciding where to put my money, and I receive an emailed trade confirmation. I even get emails when I receive dividend payments in my account. It couldn't be easier.
It's also super easy to monitor how my portfolio is doing with Ally Invest, which poses a little bit of a problem. I'm committed to long-term investing, since this is my retirement account, and I'm almost 20 years away from being able to withdraw money without being charged a penalty. As long as my weekly contributions leave my checking account and land in my Ally Invest account, I shouldn't be peeking at my portfolio's specific numbers very often.
I'm quite new to investing, and seeing big swings in my portfolio's value won't be great for my peace of mind. But I also have bank accounts with Ally, and all are on the same home screen on both the website and the app. This means checking out my Ally Invest account is as easy as checking my savings account balance.
I rearranged the order of the accounts displayed on the Ally website when I log in, but couldn't do the same in the mobile app -- and my Ally Invest account is right at the top. Not ideal for me.
Ally Invest Robo Portfolios could be worth a try if:
If you want to pick your own investments, Ally Invest Robo Portfolios won't be right for you -- look for an active investing account. But if you're like me -- a little intimidated by investing and perhaps coming to it for the first time as a middle-aged adult, you'll probably like Ally Invest. I certainly do.
Ally Invest Robo Portfolios offer two account options: cash-enhanced and market-focused.
Its cash-enhanced account has no management fee and is a good fit for conservative investors. It keeps 30% of your portfolio in an account similar to a high-yield savings account (though not FDIC-insured or liquid like a savings account). That account earns the same APY as the Ally Savings account, as of this writing.
The other 70% is invested in a portfolio of exchange-traded funds (ETFs). The underlying investment funds in your portfolio have small fees (known as expense ratios), but that's it.
The market-focused portfolio option invests about 98% of your account's value, and it charges a 0.30% annualized advisory fee. This isn't the lowest fee in the industry, but it's certainly competitive with many of the best robo-advisors. This option is better for more aggressive investors who want to give their money the best chance at growth and are willing to pay the accompanying fee. Since I'm using this option to invest for retirement and got a bit of a late start, I'm all about more aggressive growth in exchange for paying a little more.
Ally Invest Robo Portfolios requires a $100 minimum investment to get started. It doesn't stand alone in that low minimum, but it is relatively low for managed portfolios. Some competitors require a $500 minimum investment or more to open an account, while some robo-advisors let you invest with as little as $1 (usually with higher fees).
It's common for robo-advisors to rebalance portfolios over time, but some only do it at certain time intervals, such as annually or quarterly. Ally Invest rebalances portfolios as needed in response to market fluctuations, so your investments are more likely to be optimized for the investment goals your portfolio is designed to achieve. This is reassuring if the idea of your portfolio's value fluctuating is stressful for you.
Many robo-advisors have dedicated customer service hours, and others only provide support through chat or email. Ally Invest has a customer support line that lets you speak with a person 24 hours a day, seven days a week. If you have a question about your account any time, you can reach out and get answers.
Ally's cash-enhanced option keeps 30% of the portfolio in cash, instead of securities, at a higher yield than you're likely to get on cash held with most other brokers. You'll earn a generous APY, too.
Ally offers four made-for-you portfolio options:
You'll select one of these four options when you set up your account, and you can adjust to customize your allocations to get the mix of risk vs. reward that's right for you.
Your Ally Invest Robo Portfolios account will be integrated under the same login and managed through the same website or app if you have one of the following:
TIP
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You can open one of these types of investment accounts with Ally Invest Robo Portfolios:
The platform doesn't support the broader variety of accounts you might find with some competitors (though they're rare with robo-advisors in general), including:
It was kind of a bummer that Ally doesn't offer retirement accounts for self-employed folks, since I am one. I'm hopeful that it might in the future and I'll get to take advantage.
Other robo-advisors offer access to human financial planners, which could give you advice for a variety of situations like retirement strategies, saving for college, and buying a house. Ally Invest Robo Portfolios accounts don't offer this option -- all of the financial advice is automated, so this platform is best for hands-off investors.
Some robo-advisors offer automatic tax-loss harvesting. This is a strategy that can save investors lots of money on capital gains taxes.
Instead, it offers a tax-optimized portfolio, but that's not quite as powerful as a more aggressive tax-loss harvesting strategy, especially if your income puts you in a high tax bracket. Since I'm using Ally Invest Robo Portfolios for a traditional IRA, I'm not really concerned about this.
How Ally Invest Robo Portfolios works: Like most robo-advisors, Ally starts by asking you to fill out a questionnaire. (Note: You can answer the questions and see your investment recommendations without committing to opening an account.)
You'll answer a series of questions about your investment objectives, time horizon, assets, risk tolerance, and more. From there, you get to choose the type of portfolio that best fits your objectives, and Ally will suggest an ideal asset allocation strategy for you.
Note that the default option is the cash-enhanced portfolio, which permanently keeps 30% of your portfolio in cash. It comes with no management fee, but creates a far more conservative investment strategy than some investors need -- especially younger investors with long time horizons to ride out the ups and downs of the stock market.
When I opened my account, I decided against this option. But it's worth considering, especially if you're older than I am or more skittish about investing risks.
Ally stands out for including these services with its robo-advisor:
The two main types of fees you might pay when investing through a robo-advisor are management fees and ETF expense ratios.
Ally offers two options for management fees:
All of your money in an Ally Invest Robo Portfolios account is invested in ETFs. Ally doesn't manage these funds, so they come with third-party fees called expense ratios. Ally doesn't publish the underlying expense ratios of its funds, but annualized fees between 0.05% and 0.20% are typical of the funds most robo-advisors use.
There are two types of support that clients of a robo-advisor could need -- investment advice from a human and help with technical issues. So let's take a look at how Ally Invest Robo Portfolios stacks up.
Ally Invest doesn't offer live financial advice to its robo-advisory clients. All of the financial guidance on the platform is via automated portfolio recommendations.
Account support is an area where Ally Invest shines. Unlike many rivals, which offer phone support only during limited hours (or not at all), Ally Invest has a phone support number that is staffed by real humans 24/7.
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