Ally Robo Advisor: A Comprehensive Guide

Ally Robo Advisor is a popular online investment platform that offers a range of features to help you manage your finances. It's a low-cost, user-friendly option that's perfect for beginners.

With Ally Robo Advisor, you can start investing with as little as $100. This makes it an accessible option for those who are new to investing or don't have a lot of money to spare.

Ally Robo Advisor offers a range of investment portfolios, each with a unique mix of stocks, bonds, and other assets. These portfolios are designed to be diversified, which means they spread your investments across different asset classes to minimize risk.

By investing with Ally Robo Advisor, you can potentially earn higher returns over time, especially if you're willing to take on a bit more risk.

In this article, we'll be diving into the world of Ally Robo-Advisor, a low-cost investment solution that's perfect for beginners or those who want to simplify their investment strategy.

Ally Robo-Advisor offers a range of investment portfolios to choose from, each with a different asset allocation that's designed to balance risk and potential returns.

We'll explore how to get started with Ally Robo-Advisor, including how to link your bank account and set up your investment goals.

Using a robo advisor can be a game-changer for investors, especially those who are new to investing. You don't have to be a stock or investing expert to use a robo advisor, as the platform uses your input to create a balanced investment portfolio.

One of the main benefits of using a robo advisor is that it eliminates the headache of trying to create a diversified portfolio on your own. This is because the platform uses algorithms to recommend a diversified portfolio based on your input.

A robo advisor typically asks you to take a quick survey about your investment goals, timeline, risk tolerance, and how much money you want to invest. With Ally Invest Robo Portfolios, you'll choose between a core, income, tax optimized, or socially responsible portfolio.

Here are some key features of Ally Invest Robo Portfolios:

Additionally, Ally Invest Robo Portfolios are built using a mix of low-cost ETFs and include socially responsible and tax-optimized options. This means that you can choose a portfolio that aligns with your values and financial goals.

However, it's worth noting that Ally Invest Robo Portfolios have a 0.30% annual advisory fee for "market-focused" accounts, and there is no tax-loss harvesting.

To open an Ally Invest Robo Portfolios account, you'll need a minimum of $100. The account setup process is straightforward and can be completed online, with options for individual, joint, custodial, traditional IRA, Roth IRA, and rollover IRA accounts.

You can take the questionnaire before creating an account to see the portfolio suggestions Ally Invest will give. The questionnaire asks you to decide if you want a cash-enhanced or market-focused account, update your timeline, liquid assets, and initial investment, and select your risk tolerance.

The fees associated with Ally Invest Robo Portfolios are transparent, with a 0% advisory fee for the cash-enhanced portfolio and a 0.30% annual advisory fee for the market-focused portfolio. The fees are incorporated into your account, and you can choose between a cash-enhanced portfolio that keeps 30% of your money in cash or a market-focused portfolio that keeps 2% in cash.

Here are the management fees for Ally Invest Robo Portfolios:

In comparison, Betterment charges 0.25% annually, while Ally Invest Robo Portfolios offers a cash-enhanced portfolio with no advisory fee, giving it a slight advantage.

The account overview is a great place to start when understanding the Ally Invest Robo Portfolios platform. The account minimum is a relatively low $100, making it accessible to new investors.

You can choose from four primary goals when setting up your account: retirement, major purchase, income generation, and wealth building. These goals are the foundation of the robo-advisor's investment strategy.

The available assets for investment are limited to ETFs and mutual funds only. This might be a drawback for investors looking to diversify their portfolio with other asset classes.

Customization options are limited, with only four pre-set portfolios to choose from. However, each portfolio has a high-cash and a low-cash option, which can provide some flexibility.

If you want to see how your portfolio will perform before funding it, you can view the suggested portfolio options. This can be a helpful feature for investors who want to get a sense of the platform's investment strategy.

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Customer service is available Monday through Friday, 8 a.m. to 5:30 p.m. ET, with 24/7 phone and online chat support for clients. This level of support can be reassuring for investors who have questions or concerns.

Here are the key features of the Ally Invest Robo Portfolios account:

Overall, the Ally Invest Robo Portfolios account offers a straightforward and accessible investment experience, with a range of features and support options to help investors achieve their financial goals.

Ally Invest Robo Portfolios has a cash-enhanced portfolio with no advisory fee, giving it a slight advantage over Betterment which charges 0.25%.

The market-focused portfolio, on the other hand, charges an annual 0.30% advisory fee. This fee is incorporated into your account, but the portfolio only keeps 2% of your portfolio in cash.

Management fees for the market-focused portfolio are also prorated, so you'll pay $1.25/month for a $5,000 account, $6.25/month for a $25,000 account, and $25/month for a $100,000 account.

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There are no termination fees for closing your account, but you may incur a $50 ACAT transfer out fee for all Ally accounts.

Here's a breakdown of the management fees for the market-focused portfolio:

Lower management fees are a good thing, as they can significantly impact the long-term performance of your account.

Ally Robo Advisor has robust security measures in place to safeguard your account and personal information.

Ally offers anti-virus and anti-malware protection, firewalls, Transport Layer Security (TLS) encryption, and 2-Step authentication to prevent unauthorized access.

Automatic logout and account monitoring are also implemented to detect and prevent suspicious activity.

Ally Invest Robo Portfolios is a member of the Securities Investor Protection Corporation (SIPC), which covers customer claims up to $500,000, including a maximum of $250,000 for cash claims.

This SIPC protection covers your money in the event that Ally Invest Robo Portfolios fails institutionally, but it does not protect against investment losses from market fluctuations.

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Ally Invest Robo Portfolios has additional coverage of up to $37.5 million, including up to $900,000 in cash with an aggregate cap of $150 million.

However, this protection does not cover forex trading, which is only available to self-directed investors through Ally Invest Forex LLC.

Here are the security measures implemented by Ally Robo Advisor:

You can choose between four portfolio options with Ally Robo Portfolios: Core, Income, Tax-optimized, and Socially responsible.

Ally's Core portfolio style contains traditional domestic, international, and fixed-income assets, allowing you to choose a conservative to more aggressive risk tolerance.

The Income portfolio type offers higher dividend yields, appealing to those with a more conservative approach to investing.

Tax-optimized portfolios use a collection of tax-advantaged and low-cost ETFs to help minimize after-tax contributions to your investment accounts.

Socially responsible portfolios mimic the Core portfolio style but with a significant emphasis on companies that rank highly regarding environmental, social, or governance qualities.

Here are the available assets with Ally Robo Advisor:

Ally Robo Advisor does not offer exposure to alternative asset classes like cryptocurrency or private equity.

Ally's robo advisor offers a tax-optimized portfolio that uses tax-advantaged investments like municipal bond ETFs to reduce the tax burden of any gains.

The cash-enhanced portfolio has no advisory fee, but it keeps 30% of your portfolio in cash, which may experience performance drag in the long term.

Ally's Personal Advice service, available for accounts over $100,000, has a tiered management fee starting at 0.85% up to $250,000.

The market-focused portfolio charges a 0.30% annual advisory fee, which is incorporated into your account. This portfolio keeps only 2% of your portfolio in cash.

Here's a comparison of management fees for different account sizes:

Ally doesn't charge a termination fee, but there is a $50 ACAT transfer out fee for all Ally accounts.

Curious to learn more? Check out: Financial Advisor Fee Structure

Invest fees can be a significant consideration when choosing a robo-advisor. Ally Invest Robo Portfolios, for instance, charge a 0.30% annual advisory fee for their market-focused portfolio.

This fee is incorporated into your account, and it's worth noting that some robo-advisors charge upwards of 0.80%. Lower management fees are generally a good thing, as they can have a significant impact on long-term performance.

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There are two types of portfolios offered by Ally Invest: cash-enhanced and market-focused. The cash-enhanced portfolio does not charge any advisory fees, but it does keep 30% of your portfolio in cash, which can experience performance drag in the long term.

The market-focused portfolio, on the other hand, charges a 0.30% annual advisory fee, but it only keeps 2% of your portfolio in cash. This portfolio is likely to be a better option for investors with longer-term time horizons and more risk appetite.

Here's a breakdown of the management fees for different account sizes with Ally Invest:

It's also worth noting that Ally Invest has a tiered management fee for their Personal Advice service, which starts at 0.85% for accounts up to $250,000.

Tax-loss harvesting is a strategy that can help you minimize your tax liability. It involves selling securities that have declined in value to offset gains from other investments, reducing your taxable capital gains.

Some robo-advisors offer tax-loss harvesting, but it's not a standard feature of all robo-advisors. Ally Invest Robo Portfolios, for example, lacks tax-loss harvesting, but it does offer a tax-optimized portfolio using tax-advantaged investments like municipal bond ETFs.

With tax-loss harvesting, you can potentially reduce your tax liability. For instance, an algorithm can automatically detect opportunities to sell positions at a loss and harvest that loss, as opposed to just looking once a quarter or once a year for these types of opportunities.

However, tax-loss harvesting is not available on all Ally Invest Robo Portfolios. If you want to avoid the annual advisory fee, you must agree to permanently set aside 30% of your balance in an interest-earning account.

Here's a comparison of Ally Invest's fees:

If you're looking for a robo-advisor that offers tax-loss harvesting, consider other options. Some robo-advisors have automated algorithms that can detect opportunities to harvest tax losses, giving them an advantage over traditional human advisors.