Inaya Mclaughlin
Ally Invest offers a robo-advisor service that manages your portfolio for you. There are two types of accounts: cash-enhanced and market-focused. The cash-enhanced account has a minimum investment of $100 and no management fee, but 30% of your portfolio is kept in cash. The market-focused account has a minimum investment of $100 and a 0.30% annual advisory fee, with only about 2% of your money held as cash. The time it takes for trades to be made in these managed portfolios depends on the type of account and the market conditions.
| Characteristics | Values |
|---|---|
| Initial investment | $100 |
| Annual advisory fee | 0.30% |
| Cash allocation | 2% |
| Annual interest rate | 4.00% |
| Account management fee | 0% for cash-enhanced portfolio; 0.30% for market-focused portfolio |
| Investment expense ratios | Average of 0.07% |
| IRA closing fee | $25 |
| Transfer out fee | $50 |
| Portfolio types | Core, Income, Tax-optimized, Socially Responsible |
| Customer support | 24/7 by phone, chat and email; portfolio specialists available Mon-Fri, 8am-5:30pm ET |
What You'll Learn
Cash-enhanced portfolios
The cash-enhanced portfolio option is well-suited for investors who want to protect their savings and prefer a more conservative approach. It's important to note that while the cash balance earns interest, it is not invested or FDIC-insured. Additionally, this portfolio type may be more appropriate for investors closer to retirement, as a 30% cash allocation is typically higher for those at the start of their investment journey.
With a cash-enhanced portfolio, there are no advisory fees, annual charges, or rebalancing fees. You can get started with a minimum investment of $100, making it an accessible option for those looking to begin their investment journey.
Ally Invest Robo Portfolios' cash-enhanced portfolio provides a simple and straightforward approach to investing, making it a good choice for novice investors. It offers a well-diversified portfolio, expertly built to include a blend of diversified exchange-traded funds (ETFs). This portfolio type also provides the benefit of free management, allowing you to have your assets managed without any additional fees.
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Market-focused portfolios
A market-focused portfolio is a good option for investors who want most of their money to be actively invested in the market. This type of portfolio is designed for those who want to maintain a high level of investment in the market while minimising the amount of cash held.
With a market-focused portfolio, Ally Invest will invest about 98% of your money in the market. This means that only a small percentage, approximately 2%, of your money will be held as cash. This cash balance can earn interest, currently at an annual rate of 4%.
The market-focused portfolio has an annual advisory fee of 0.30%, which is charged monthly. This fee is incorporated into your account and covers the cost of managing your portfolio and making trades on your behalf.
Ally Invest's market-focused portfolio is designed for investors who want a high level of investment in the market and are comfortable with a more aggressive approach. It is important to note that while this type of portfolio can offer the potential for higher returns, it also carries a higher level of risk compared to more conservative investment strategies.
If you choose a market-focused portfolio with Ally Invest, they will work with you to understand your investment goals, risk tolerance, and time horizon. Based on this information, they will construct a portfolio of exchange-traded funds (ETFs) that align with your objectives.
One of the key benefits of the market-focused portfolio is the level of diversification it offers. Your money will be invested across a wide range of domestic and international assets, helping to spread risk and potentially enhance long-term returns.
Additionally, Ally Invest will actively monitor and rebalance your portfolio as needed to ensure it remains aligned with your goals. This service is provided at no extra charge, allowing you to benefit from hands-off investing with ongoing professional management.
Overall, the market-focused portfolio offered by Ally Invest is suitable for investors who want a high level of market exposure, are comfortable with a higher risk, and prefer a more hands-off approach to investing.
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Tax-loss harvesting
For example, if you buy 100 shares of ABC stock and 100 shares of XYZ stock at $10 each, and the ABC stock doubles in value while the XYZ stock experiences a price drop and its value is cut in half, you can sell the XYZ stock and experience a capital loss. This capital loss offsets your capital gain from the ABC stock, reducing your tax bill.
Ally Invest does not offer tax-loss harvesting, which could be an issue for investors with taxable brokerage accounts. However, Ally Invest customers with non-retirement accounts can opt into a tax-optimised portfolio, which uses municipal bond ETFs to help reduce taxes.
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Socially responsible investing
Ally Invest offers socially responsible investing (SRI) options for those who want to invest in companies that are committed to long-term sustainability, financial returns, and positive change in the world. With Ally's Self-Directed Trading platform, you can choose from a variety of SRI options, including ESG (Environmental, Social, and Governance) ETFs, Thematic funds, and Impact funds.
For those who prefer the Robo Portfolio route, Ally offers a choice that focuses on companies with strong environmental and social credentials. This option is ideal for those who want a more hands-off approach to investing while still supporting businesses that are environmentally and socially conscious.
The Robo Portfolio option has a low minimum investment requirement of just $100, making it accessible to a wide range of investors. With this option, you can invest in ETFs that focus on companies with strong environmental, social, and governance practices.
Ally's SRI options are similar to their core portfolio, but with a greater emphasis on companies that have strong environmental, social, and governance qualities as noted by benchmark providers. This means that if investing in companies that are deemed socially impactful is important to you, this portfolio type can help you achieve your financial goals while also supporting positive change in the world.
In addition to the social and environmental benefits, Ally's SRI portfolios can also provide tax advantages. If held in cash-enhanced portfolios, SRI portfolios are free, and they may also be eligible for tax-optimized investments in taxable accounts.
Ally's SRI options provide a way for investors to align their investments with their values, supporting businesses that are committed to making a positive impact while also seeking financial returns. With a low minimum investment and a range of SRI options, Ally makes it easy for investors to get started on their SRI journey.
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Rebalancing
Ally Invest Robo Portfolios offers a fee-free rebalancing service. The platform reviews your portfolio daily and rebalances it as needed, without any additional charges. This service is available on all accounts.
Ally Invest Robo Portfolios offers two options for cash management in your robo portfolio: cash-enhanced or market-focused. The cash-enhanced portfolio option is suitable for investors seeking an extra layer of security in a fluctuating market. Approximately 30% of your portfolio is set aside as a cash buffer, which earns an annual interest rate of 4%. If money is withdrawn, the portfolio is automatically rebalanced to maintain this cash allocation.
On the other hand, the market-focused portfolio is designed for investors who want most of their money invested in the market. This option carries a 0.30% annual advisory fee and holds almost all your money in the market, with only about 2% kept as cash. Similar to the cash-enhanced portfolio, investors can earn an annual interest rate on their cash balance, and automatic rebalancing occurs to maintain the market-to-cash ratio if funds are withdrawn.
Ally Invest Robo Portfolios provides four portfolio options for investors to choose from: Core, Income, Tax-Optimized, and Socially Responsible. The Core portfolio offers a traditional mix of domestic, international, and fixed-income assets, allowing investors to choose their risk tolerance level. The Income portfolio is geared towards those with a conservative approach, offering higher dividend yields. The Tax-Optimized portfolio uses tax-advantaged ETFs to minimise after-tax contributions to investment accounts. Finally, the Socially Responsible portfolio is similar to the Core portfolio but places a greater emphasis on companies with strong environmental, social, and governance practices.
Ally Invest Robo Portfolios offers a straightforward process for new and existing customers to open an account. After deciding between a cash-enhanced or market-focused account, investors select their financial goal and provide information about their timeline, liquid assets, and initial investment. The platform then suggests a portfolio based on the investor's risk tolerance and preferred portfolio type.
Overall, the rebalancing features of Ally Invest Robo Portfolios provide investors with a hands-off approach to managing their portfolios. With daily reviews, automatic adjustments, and a choice of portfolio options, investors can rest assured that their portfolios remain aligned with their financial goals.
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Frequently asked questions
You can start investing with Ally for as little as $100.
You can open a Self-Directed brokerage cash account, a Self-Directed brokerage margin account, a Robo Portfolio, or a Personal Advice account.
The Robo Portfolio has a $100 initial minimum deposit. The Cash-Enhanced Managed Portfolio has no advisory fee but requires that you keep 30% of your portfolio in cash. The Market-Focused Managed Portfolio has a 0.30% annual advisory fee and only about 2% of your money is held as cash.
The Robo Portfolio is great for those who are new to investing, low on time, or seeking a helping hand. It is highly diversified across domestic, international, and fixed-income assets, and you can choose the amount of risk you are comfortable with.
