Online Brokers for Investors: TD Ameritrade vs. Ally Invest

This article was updated on Feb. 12, 2018 and originally published Dec. 8, 2016.

Once you have a handle on your personal finances and have sufficient savings, you may be ready to start making investments in stocks and funds. But to get started, you'll need to open a brokerage account to process your orders. Let's compare how two popular brokerages, TD Ameritrade and Ally Invest (formerly TradeKing), stack up from the perspective of a long-term investor.

Trading costs and commissions

Picking a broker isn't just about getting the least expensive trade. In the past 20 years or so, trading costs have plummeted, making the differences between brokers less important than in the past. Here's how TD Ameritrade and Ally Invest's standard brokerage commissions and fees compare for stocks, options, ETFs, and mutual funds.

Source: Company websites.

Standard rates may actually overstate the true trading cost. Note that many brokers offer volume discounts, in addition to bonuses and free trades just for opening an IRA brokerage account. In addition, some brokers have commission-free trades in select ETFs and mutual funds.

Commission-free ETFs and NTF Funds

Brokerages now give investors investors commission-free trades in select ETFs and mutual funds. The following table compares commission-free ETFs and no-transaction-fee fund lists at both brokers.

Source: Company websites.

Investors who plan to use more ETFs and mutual funds as part of their portfolio may prefer to open an account with a broker that offers their favorite funds in a no-transaction-fee format. Investors who prefer individual stocks, though, will probably find this irrelevant to their decision.

Account minimums

You don't need to be a millionaire to be an investor. TD Ameritrade and Ally Invest allow investors to open no-minimum accounts, meaning you can get started with as little as $1. Practically speaking, you'll need a little more than $1 to actually make an investment. The essential minimum, then, is enough to buy one share of a stock, ETF, or meet the initial minimum investment requirement of a mutual fund. 

Trading platforms aren't as important for people who consider themselves investors, rather than traders. Image source: Getty Images.

Trading platform

Here at The Motley Fool, we have a preference for buy-and-hold investment strategies. We like to spend our time finding great businesses to hold for years rather than monitoring our brokerage accounts from minute to minute. Therefore, we don't care too much about what a trading platform looks like, how it feels, or how pretty its charts are. We're easy to please -- if we can easily buy or sell an investment when we want to, we'll consider the trading platform good enough.

In truth, TD Ameritrade and Ally Invest offer trading platforms that suit long-term investors just fine. It's really all personal preference, as both will allow you to buy or sell a stock, ETF, or mutual fund when you need to. That's what really matters, right?

International stocks and ADRs

If you want to do some investing around the world, you may be limited to foreign large-cap stocks. Neither TD Ameritrade nor Ally Invest allow investors to trade directly on international stock exchanges. That said, you can buy and sell American depositary receipts (ADRs), which track the performance of foreign-listed companies but trade on American markets.

Research quality and tools

It's generally good to be able to get a second opinion about any investment, and both brokers will allow you to do just that. TD Ameritrade customers have access to research from third parties such as S&P Capital IQ, Morningstar, and Thomson Reuters, in addition to proprietary tools only available to TD Ameritrade clients. Similarly, Ally Invest has streaming quotes and countless screeners to help you sort the market for good trading and investment opportunities. 

Mobile apps

You can trade on the go with TD Ameritrade and Ally Invest. Here's how users and clients of these two brokers rated their mobile capabilities on iOS and Android, as of Feb. 12, 2018.

Source: relevant app stores.

Making the best choice for you

Long-term investors can find plenty to be happy about with low commissions, ample research, and no minimum account sizes offered by TD Ameritrade and Ally Invest. The Motley Fool does not endorse any particular broker, but we do want you to make an informed decision about what broker best suits your individual needs. See Fool.com's Broker Center to quickly compare discount brokers on one page by commissions, minimum account sizes, and current special offers.