Ally Invest vs. Robinhood: Which Broker Is Right for You?

Ally Invest and Robinhood are relatively new online brokers, and both could be solid choices for many investors. We'll take a closer look at both, focusing on the key differences and the features each offers to see if Ally Invest or Robinhood might be the better option for you.

When it comes to pricing, both Ally Invest and Robinhood are on the lower end of the spectrum, and there are some areas where they are identical. Neither charges commissions for online and mobile stock and ETF trades, and neither has a monthly account maintenance fee.

That said, there are also some big differences. Robinhood is one of the only brokers where investors will get $0 commissions on all option trades. Ally Invest doesn't charge a base commission, but there is a $0.50 fee per options contract. Ally Invest is still quite reasonable -- many rivals charge more per contract.

Mutual funds and crypto: Robinhood doesn't yet offer mutual fund investing, while Ally Invest has an excellent selection of mutual funds, and its standard mutual fund commission is one of the lowest. Conversely, Ally Invest doesn't allow customers to trade cryptocurrencies, while Robinhood is one of the only brokers that allows users to trade several cryptocurrencies with no fees.

Ally Invest and Robinhood both offer stocks, ETFs, and options, but that's where the similarities end. Robinhood offers fractional share investing, a big perk especially for newer investors, and also offers cryptocurrency trading. Ally Invest is a far more full-featured broker than Robinhood, which is primarily designed to buy and sell stock.

Ally Invest offers over 12,000 mutual funds for one of the lowest commission rates we've seen. Investors can buy and sell bonds, which can be a portfolio staple for income-seeking investors.

Ally Invest has a banking division, so it also offers high-yield CDs as part of an investment strategy. The bank currently offers CDs with terms from three months to five years.

Robinhood has upped its game. It has gone from only offering taxable brokerage accounts to offering traditional and Roth IRAs, a spending account, subscription-free margin accounts, and a credit card. IRAs are especially impressive; Robinhood matches user deposits by 1% (it matches Robinhood Gold members by 3%). Even so, it offers fewer account types than Ally Invest.

Ally Invest offers pretty much every type of account you could want. You can open a standard taxable brokerage account jointly with another owner (like a spouse). You can open a retirement account, including traditional, Roth, and SEP IRAs. And you can open a custodial account like an UGMA or UTMA for a child. Ally Invest also offers a highly rated robo-advisory service for customers who want to put some or all of their investing on autopilot.

It's also worth noting that Ally is a bank in addition to a brokerage (prior to 2010, it was known as GMAC Bank, the financial arm of General Motors). So you can also open a checking account, savings account, or CD. Ally also offers a variety of lending products, including mortgages, auto loans, and personal loans. In short, Ally Invest could be a good choice for people who like to keep all of their financial accounts in one place.

Both have highly rated apps that are easy to use, though Ally Invest's recent Google reviews are poor.

Ally Invest holds ratings of 4.7 and 2.5 out of 5 stars on the App Store and Google Play store respectively. Ally Invest reviews often call out the all-in-one nature of the app and praise the live chat and customer service features. Recent Google Play reviews mention a poor refreshed design and log-in experience.

Robinhood's ratings are 4.2 and 4.1. Robinhood's ratings were higher prior to the "meme stock" craze of early 2021, when it suspended trading in certain volatile stocks, disappointing many customers. Robinhood's app offers one of the most seamless ways to trade stocks and cryptocurrencies and manage an investment portfolio. But the in-app ads can get annoying.

Both of these are excellent brokerage options, but are targeted to different types of investors.

Ally Invest is a full-featured brokerage and bank, and offers investment products and accounts designed to meet the needs of all investors. For example, if you want to buy bonds or mutual funds, Ally Invest could be a good choice for you (these investments aren't available through Robinhood).

On the other hand, if you want an easy-to-use platform that keeps expenses at a minimum, Robinhood could be worth considering. Plus, 1% to 3% IRA matching is something unique to Robinhood.