When looking for a brokerage to house your money, you’ve likely come across big names: Vanguard, TD Ameritrade and Ally Invest. Each of these three brokerages offers unique and useful benefits that may appeal to different investing and trader goals and needs.
Before choosing a brokerage, it’s important to understand what to look for when it comes to pricing, investment choices and trading tools, as well as keeping in mind how you plan to use your account. Passive investing, active stock trading and advanced trading in options and other instruments all look very different. Once you have that figured out, you can choose between these popular brokerages.
Vanguard is best known for its popular family of mutual funds and exchange-traded funds (ETFs). This firm is known as the pioneer in low-cost index fund investing. The company holds $5.2 trillion in assets and ranks as the second largest asset manager in the world. Vanguard ETFs have an average 0.07% expense ratio. Vanguard mutual funds charge an average 0.10%.
If you have a Vanguard account, you can buy and sell its mutual funds and ETFs with no trade commissions. If you have accounts elsewhere and buy Vanguard funds there, you’ll probably have to pay for those transactions. Vanguard also allows you to buy stocks and other assets, but its pricing and offerings for non-Vanguard assets are underwhelming.
About Ally Invest
Ally Invest is the brokerage arm of Ally Financial, the company behind Ally Bank. Ally Invest is a low-cost brokerage with $4.95 trades. It offers rates that tie for the lowest among popular discount brokerages and offers further discounts for the most active traders.
Ally Invest offers access to a wide range of assets with good pricing across the board, including for margin accounts. It has a list of no-commission ETFs, retirement accounts and basic research tools. Ally’s good for people who’re looking to keep costs low but want to handle most things themselves. For investors who want a little more handholding, managed portfolios (like you’ll find with robo advisor) are available with a 0.30% annual fee.
About TD Ameritrade
TD Ameritrade is the jack-of-all-trades on this list. It isn’t the cheapest, but it offers excellent trading tools and platforms geared toward advanced and expert traders. If you’re interested in active trading, TD Ameritrade’s thinkorswim desktop platform is one of the best in the industry.
However, TD Ameritrade is a full-service brokerage that offers anything most traders and investors might want. That includes access to a huge range of investable assets, advisory services, managed portfolios, and excellent education and research materials.
How Are They the Same?
All three stock brokerages offer many features. First, let’s take a look at how they’re similar.
|Minimum Investment||None of the three requires a minimum investment.|
|Investment Account Types||All three offer taxable, joint, Roth IRA, Traditional IRA, Rollover IRA, SEP IRA, custodial, trust, 529 college plan, annuity, money market and certificate of deposit (CD) accounts.|
|Investment Types||All three services allow you to invest in stocks, penny stocks, ETFs, options, mutual funds, bonds and FOREX.|
How Are They Different?
Here are some of the main differences between the three sites.
|Investments Offered||Ally Invest and TD Ameritrade let customers invest in futures. Vanguard doesn’t.|
|Fees||Vanguard charges $7/trade for the first 25 trades per calendar year. After that, the cost is $20/trade. Ally Invest charges $4.95/trade. And TD Ameritrade charges $6.95/trade.|
|Customer Service||Ally Invest and TD Ameritrade offer 24/7 phone and live chat customer service. Vanguard’s support is available by phone Monday–Friday, 8 a.m.–10 p.m., Eastern Time.|
Of these three companies, Vanguard is the only one to offer its own mutual funds and ETFs. It’s also by far the biggest of the three when you look at total assets under management, although a portion of that includes fund balances managed through other brokerages. That also means you can get access to Vanguard funds with an account at most other brokerages.
Because of its suite of products, its strongest offering is for people looking to manage long-term investment accounts such as traditional IRAs, Roth IRAs or other retirement accounts. Some Vanguard funds are fine for nearer-term needs, but its strength is as an all-in-one offering for long-term investors looking to keep recurring fund management fees low.
Ally Invest is a low-cost and nimble brokerage with the lowest stock and option trading costs — among other commissions and fees — of the three brokers we are looking at today. It has a decent active trading platform and makes both active trading and passive investing affordable and accessible.
It doesn’t have the biggest list of no-fee ETFs and has no commission-free mutual funds, but it does have everything you need to keep all of your banking and investments under one login with easy access. If you have at least a little experience with investing and don’t mind a do-it-yourself approach, it offers pricing and features that make it a winner for a wide range of needs.
TD Ameritrade charges a bit more for trades than Ally Invest, but it gives you access to professional-level trading platforms and the opportunity to buy and sell more unique assets than most other brokerages. It offers a great online trading experience perfect for trading pros or people aspiring to get into the higher-speed world of active trading.
The service really gives you everything you might want, including third-party research reports from sources such as Morningstar, Thomson Reuters, Dow Jones and S&P Global. Whatever your background, you can find something to suit your style at TD Ameritrade and resources to learn a lot more. It also gives you physical branch locations to go meet with a human for help.
Neither Vanguard, Ally Invest nor TD Ameritrade requires any minimum investment to get started trading.
It’s a bit pricey to trade with Vanguard. For stocks, the cost per trade is $7 for the first 25 trades per calendar year. After that, the rate hikes up to $20 per trade. Options trades are $7 per trade plus $1 per contract. However, Vanguard shines with mutual fund fees: They’re free. However, keep in mind that there’s a $1,000 minimum for investing in funds at Vanguard.
Ally Invest charges of $4.95 per trade for stocks. But if you’re a frequent trader — defined as 30 or more trades per quarter — you’ll pay only $3.95 per trade. For options trades, add 65 cents per contract (50 cents for frequent traders). The mutual fund trading fee is $9.95 per trade and is one of the lowest in the industry.
TD Ameritrade charges a commission of $6.95 per trade for stocks and ETFs. Options trades are $6.95 plus 75 cents per contract. As with Vanguard, mutual funds are free.
Vanguard offers customer service by phone during the week. The phones are staffed Monday through Friday from 8 a.m. to 10 p.m., Eastern Time. There are no weekend hours.
Ally Invest and TD Ameritrade both offer 24/7 customer service via both phone and live chat.
However, TD Ameritrade also operates hundreds of branch offices across the country.
All three companies come with SIPC coverage protecting investor’s funds from broker failure for up to $500,000 in securities in cash, including up to $250,000 in cash.
Vanguard provides timeout features for its website and unique passwords to create an account. It also asks security questions to verify your login. And Vanguard sends an email and letter for every account transaction. If you don’t recognize an action on your account from these notifications, you can call the help line. Also, Vanguard has an extended validation SSL, granted after an audit by security firm Comodo.
For direct account security, Ally Invest employs both firewalls and secure socket layering (SSL) technology. Sensitive information is encrypted online to safeguard it during transmission. You’ll have a username and password, and access to your account will be blocked after a set number of unsuccessful login attempts.
TD Ameritrade uses the following security measures:
- Advanced firewalls to keep unauthorized parties from accessing your personal information.
- Anomaly detection and intrusion detection technology to determine unusual behavior.
- 128-bit encryption for the transmission of all data between the site and your computer.
- If there is an unauthorized disappearance of cash or securities, TD Ameritrade provides its Asset Protection Guarantee. You’ll be reimbursed for any cash or securities lost through unauthorized activity.
Who Are They Best For?
- Vanguard is best for long-term ETF and mutual fund investors looking to keep expense rations low. Its huge portfolio of fee-free funds makes it a no-brainer for these types of investors. However, keep in mind there’s a minimum of $1,000 required for mutual fund accounts. Stock and option investing is a bit pricey.
- Ally Invest is best for new traders. Costs are low, and there’s a wide range of products offers. If you require more handholding, you can use the robo advisor service for a low additional cost.
- TD Ameritrade is best for advanced and professional-level traders. It offers award-winning trading platforms, but its service is likely too complicated for newbies.
Which Is the Best?
The best brokerage of this trio for the majority of people will be Ally Invest. The combination of low costs and support for the types of products and investments most people want makes this the best choice overall.
However, if all you want to do is keep long-term investments and avoid big fees, Vanguard is perfect for your needs. That is exactly what it is best known for. On the other hand, the most skilled traders may be willing to pay a bit more for the top-tier platforms and active trading tools at TD Ameritrade.
By understanding what you want and need most in a brokerage, you can pick the best one for your unique needs. Vanguard, Ally Invest and TD Ameritrade could all be the right choice.