Ally Invest vs. TD Ameritrade: Brokers for IRAs

This article was updated on Feb. 12, 2018 and originally published Feb. 24, 2017.

Individual retirement accounts can be a great way to save, but deciding where to open an IRA can be a headache. It isn't a decision to be made lightly, as the range of features offered by brokers varies significantly cater to different types of investors. Here's how two popular brokers, Ally Invest (formerly TradeKing) and TD Ameritrade, compare for Roth or Traditional IRAs.

Commission prices

Depending on how frequently you trade, what you pay per trade may be among the most important considerations when you decide where to open an account. The table below compares the standard commissions at each broker by type of investment.

Data source: Company websites.

However, true commission prices aren't always as clear as they may appear. Where Ally Invest offers the lower standard fee in every column, TD Ameritrade offers more opportunities for its account holders to make investments without paying any commission at all, thanks to its commission-free ETFs and no-transaction-fee mutual funds.

Plus, some depositors will qualify for special offers that include cash bonuses and commission-free trades, an effective discount on each trade.

Mutual funds, ETFs, and commission-free choices

Fund investors should pay close attention to the differences between what brokerages are selling, as this is one area where they can be vastly different. TD Ameritrade offers one of the industry's largest selections of no-load, no-transaction-fee mutual funds and commission-free ETFs. Ally Invest doesn't have any fee-free funds, but it does charge significantly lower commissions on all of its mutual funds and ETFs.

Data source: Company websites.

Depending on which funds you prefer, either broker may be the better choice. If your favorite funds are on TD Ameritrade's lists of commission-free ETFs and no-load, no-transaction-fee funds, it has the clear advantage on price for fund investors. That said, Ally Invest's standard fee to buy and sell mutual funds and ETFs is lower than TD Ameritrade's.

Minimum deposit requirement for IRAs

Luckily, not having much money to invest won't stop you from opening an account. Ally Invest and TD Ameritrade are true no-minimum brokers, meaning you can open an IRA with as much (or little) as you'd like. This can be a big advantage to people who are just getting started and plan to build up their balance over time. 

Image source: Getty Images.

International stocks and ADRs

If the ability to invest in foreign stocks is important to you, you'll want to be aware of some limitations of these brokers. Neither TD Ameritrade nor Ally Invest currently route orders to international exchanges. That said, both enable investors to trade American depositary receipts (ADRs) that trade on U.S exchanges or over-the-counter.

If you'd like to trade stocks on international exchanges (stocks on the London Stock Exchange, for example) you'll have to choose from a minority of discount brokers that offer this capability.

Mobile app reviews

Both of these brokerages allow you to check your account and make trades from a smartphone or tablet from anywhere in the world. Here's how each broker's users and customers rated their mobile trading apps, as of Feb. 12, 2018.

Data source: Relevant app stores.

Ally Invest vs. TD Ameritrade for an IRA

Depending on how you invest, you can find a lot to like about either Ally Invest or TD Ameritrade. On one hand, Ally Invest has generally lower standard commissions for stocks, ETFs, options, and mutual funds. That said, TD Ameritrade may be more attractive to investors who can capitalize on its commission-free fund list to lower their average trading costs. 

To be clear, The Motley Fool does not endorse any particular brokerage, but we can help you find one that's a good fit for you. Visit Fool.com's IRA Center to compare several brokers all on one page, and see if you qualify for any special offers for opening a new account.