Discount Brokerage Comparison: Fidelity vs. Ally Invest

This article was updated on Feb 12, 2018 and originally published Dec 13, 2016.

Once you've mastered the basics of personal finance by balancing your budget and building up some savings, investing for the future is the next logical step. But to invest, you'll need to open a brokerage account. Two popular choices, Fidelity and Ally Invest (formerly TradeKing), make it possible to invest in thousands of different stocks and funds. Here's how they compare on key criteria. 

Trading costs and commissions

As discount brokerages, Fidelity and Ally Invest are able to offer their customers the ability to buy stocks, options, ETFs, and mutual funds at low prices. Here are the standard commission prices each broker charges for the most common types of trades.

Data source: company websites.

For trades involving stocks, options, and ETFs, Fidelity and Ally Invest offer a similar commission schedule. And while the difference in mutual fund commissions may seem sizable, Fidelity offers a number of commission-free funds that you can buy or sell fee-free, bridging that gap between the two on fund fees.

Image source: Getty Images.

Commission-free ETFs and NTF Funds

If fund investing is your thing, be sure to check out a broker's list of no-transaction-fee (NTF) mutual funds and commission-free ETFs. These are funds that the brokerage firm does not charge a transaction fee to buy or sell.

Data source: company websites.

Fidelity is a clear winner in the availability of commission-free ETFs and NTF mutual funds. But if your favorite funds aren't available in an NTF variety, Ally Invest's lower commissions on mutual funds may be a better deal for you.

Account minimums

Online discount brokers have greatly reduced the barriers to becoming a do-it-yourself investor by allowing you to open an account with a low initial deposit. Fidelity requires an initial deposit of $2,500, whereas Ally Invest has no minimum deposit requirements.

Realistically, investors need to deposit enough money to buy at least one share of a stock, ETF, or mutual fund (and pay the commission!) to make their first investment.

Trading platform

Heat maps and candlestick charts look pretty cool, but we're not ones to get excited about a trading platform. As long-term buy-and-hold investors, The Motley Fool prefers to buy stocks to own them for years. Thus, we don't do much trading, and we don't have a strong view on the "quality" of a trading platform.

Fidelity and Ally Invest make placing trades as simple as typing in a ticker and making a few clicks. Therefore, long-term investors will find that either platform will fit their basic needs just fine. In any case, we tend to think preference for a trading platform ultimately comes down to personal opinion, so we'll let you be the judge here.

International stocks and ADRs

Want to take your portfolio overseas? If so, you might want to pay particularly close attention because there are big differences between these brokers in this category.

Ally Invest's customers can trade American depositary receipts (ADRs) that are listed on American markets, but the company doesn't allow for trading on international exchanges.

On the other hand, Fidelity's clients can trade on markets in 25 countries and buy and sell ADRs listed in the United States. Do take into consideration that placing trades on foreign markets results in a higher-priced commission, which varies based on the exchange.

Research quality and tools

We believe that access to more information is generally advantageous to individual investors. Fidelity supports its clients with access to analyst upgrades and downgrades from over 100 companies, in addition to research on individual stocks from several third-party research services. Ally Invest provides streaming charts, profit and loss calculators, and other tools to find good investments.

In truth, long-term investors can find plenty of helpful research tools and reports at either broker.

Mobile app

Mobile trading apps make it possible to trade from just about anywhere. Here's how each brokers' users and clients rated their mobile capabilities on iOS and Android (as of Feb. 12, 2018).

Data source: relevant app stores.

Which is best for you?

Depending on your needs, either brokerage may be the perfect fit. With Fidelity, you have access to more commission-free funds and foreign markets, but the fee to buy some mutual funds is higher than other brokerage firms. Ally Invest has cut-rate commission prices, but it doesn't allow for trading on international exchanges, and fund investors will pay a transaction fee on every trade because it doesn't offer any commission-free ETFs or mutual funds.

Ultimately, the choice comes down to what you want in a brokerage, and how you plan to trade. To be clear, The Motley Fool doesn't endorse any particular brokerage. Investors should visit Fool.com's Broker Center to compare several leading brokerages on important criteria including commissions, minimum account requirements, and perks for opening an account.