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Ally Invest vs Wealthfront (2020): Which is Best For You?

Ryan Carey
September 2, 2020

Ally Invest and Wealthfront both offer high-yield savings and investment accounts. With no minimum deposits, monthly service fees, they are easy to get started with. Their high-interest savings accounts also offer competitive interest rates.

When it comes to long-term investments like your retirement or family members’ education, it’s hard to make the right brokerage choice. And when it comes to investment opportunities, these two platforms couldn’t be any more different. 

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Ally vs. Wealthfront: Who Comes Out On Top?

Let’s start with the hugely different benefits offered by these two platforms.

Ally Invest

ally invest logo

1. Several Investment Opportunities

Ally offers a large range of investments. Their investment opportunities include:

  • Stocks
  • Options
  • Fixed-income instruments
  • Mutual funds
  • Closed-end funds
  • ETFs
  • Forex

2. Beginner Friendly

In part because of this large array of investments, Ally offers a lot of educational material. They have many articles and even videos on various financial topics. These resources serve as a good introduction to investing for new or inexperienced investors.

If you don’t want to perform the research involved in investing, Ally offers automated investments as well.

3. Low-Cost

Ally Invest doesn’t have a minimum deposit policy. They also don’t charge any per-trade fees for qualifying US securities. They levy a $0.50 options contract fee, which is on par with the brokerage industry. But their overall lack of fees makes them an even better option for beginners.

Wealthfront

wealthfront logo

1. Robo-only Investment Service

Wealthfront’s offer to investors is far different from Ally’s. The most important factor to remember is that Wealthfront is a robo-advisor service. Apart from their high-interest savings account, they only offer automated investing and trading.

The simplicity of Wealthfront’s offer means you won’t find much information from them. In contrast to Ally Invest, Wealthfront doesn’t offer much in the way of educational material. But because their robo-advisor is doing all the work for you, you don’t really need much extra support.

2. Small Range Of Investments

Before we get into the benefits Wealthfront offers (which are plentiful), the second comparison we must point out is that Wealthfront only offers automated ETF trading. They don’t trade any other asset class, and they offer no human management services. In fact, they don’t even buy fractional ETF shares. That means they most likely won’t be able to use your entire account balance to invest. This may slow down their process of creating a profit for you. But it doesn’t mean they won’t net you a great return.

3. Excellent Management Service

Wealthfront offers you a great product if you’re trying to find a hands-off investment opportunity. The company’s management offers the expertise needed to create an exceptional investment opportunity.

While Wealthfront offers a hands-off investment opportunity, you do exert control over their automated services. Before you invest, you will be prompted to fill out a questionnaire to determine your risk tolerance. The robo-advisor will use this information to execute trades in up to 11 ETF asset classes. From this point, your hands are off the wheel and the robo-advisor takes over.

There is no minimum deposit required to get started with Wealthfront. But the company offers more to investors that deposit more. If you have a taxable account holding more than $100,000, you will be offered their proprietary mutual fund called the Wealthfront Risk Parity Fund.

4. Tax Efficiency

The other service Wealthfront excels at is tax efficiency. This is a part of what makes their service more profitable in the end.

Wealthfront offers daily tax-loss harvesting for all taxable accounts. Even new clients can benefit from their Tax-Minimized Brokerage Account Transfer service. This service transfers applicable investments into your Wealthfront portfolio. It then holds onto them until their capital gains become long-term. Long-term capital gains are taxed far more leniently.

For clients who have balances of over $100,000, Wealthfront offers even more tax efficiency. They offer stock level tax-loss harvesting.

5. Goal Setting

While Ally offers more support overall, Wealthfront provides some financial planning support. You don’t even need to open a Wealthfront account to use these resources. 

The Wealthfront Path tool enables you to build a savings plan for goals like retirement, education, and buying a house. You can also link other accounts like a coinbase account to the Path tool.

Ally Invest Managed Portfolios: Are They Worth It?

At this point, you may be wondering what Wealthfront has to offer that Ally Invest can’t. After all, they both offer robo-advisors. But Ally also offers much more, right?

Ally Robo Advisor

Ally Invest Managed Portfolios is Ally’s answer to the growing robo-advisor industry. The account requires a $100 minimum deposit, which is still low for a managed investment account

To start with the edge Ally Invest Managed Portfolios offer over Wealthfront, there are investment selections. The automated account offers free management for clients in the Cash-enhanced Management Program. The catch is that 30% of your portfolio will be kept in cash.

Like Wealthfront’s program, your managed portfolio will consist entirely of ETFs. You will also be presented with a questionnaire to determine your risk tolerance.

Lack Of Tax Benefits

On top of having higher fees than Wealthfront’s for their automated service, Ally also lacks tax harvesting. Tax harvesting services come standard with a Wealthfront account. It’s also a tool that comes standard with most robo-advisor services.

Wealthfront IRA Review

A significant factor that makes these accounts popular is retirement planning. IRAs are the best accounts to open when you’re trying to invest in your retirement. And Wealthfront offers robo-advised IRAs to those who are looking for a hands-off retirement option.

Fortunately, Wealthfront can tailor your portfolio to your retirement goals. Based on your input, they will automatically adjust your asset allocation to remain ideal for your goals.

Starting is easy. You just need to set up a Wealthfront IRA or Roth IRA account. They offer the same kinds of services as they do for their other investment accounts. And you end up paying the same flat 0.25% fee. While these services are valuable, it is better to choose an investment service that is more tailored to retirement savings.

Regal Assets IRA

For retirement purposes, Regal Assets offers an IRA backed by both precious metals and cryptocurrencies. The company primarily focuses on hard assets like gold and silver. But they’ve recently been working to diversify retirement account portfolios. 

The Regal Assets offer is unique and emphasizes security and transparency. For the security you’re looking for in a retirement savings account, we recommend you opt for precious metal investments and tread cautiously if you’re considering cryptocurrency investments.

 

About the author 

Ryan Carey

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