Advertiser Disclosure

Investing

How to Invest in Stocks in 4 Steps

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

 

hundred-dollar bills in a jar

If you have extra cash lying around, you could put it into a savings account and reserve it for a rainy day — or you could use it to earn even more money. That’s where investing comes in.

Saving money is a good habit, and you should set aside cash in an easily accessible account in case of an emergency. But investing the money you don’t immediately need will help you earn more money in the long run.

You can invest in almost anything, including property (think houses and condos), mutual funds and stocks. But if you’re just learning how to invest, let’s keep things simple to begin — here’s how to invest in stocks.

How to invest in stocks for beginners

“It all starts with budgeting,” said Justin Sullivan, a certified financial planner (CFP) and an investment market manager at PNC Wealth Management. “Before you invest, you need to make sure your everyday living expenses are secure and you have a safety net.”

Make sure you have a few months of expenses saved up before you begin, said Sullivan. Since investing always carries some risk, you don’t want to invest anything you’ll need for necessary living expenses.

After you’ve done that, you can start investing in the stock market. Here are a some steps to consider as you begin.

1. Decide how much to invest

“There is no minimum to begin investing,” said Sullivan. “The most important part is to start and to be consistent.”

How much you invest depends on how much money you have set aside. With some companies, there’s no minimum investment required to begin investing. A few dollars can get you started.

But your starting amount won’t be all you ever invest. Make it a habit to regularly contribute money to your investments. Many experts recommend putting 10% to 15% of your income into your investment portfolio. If you’re not able to contribute that much right away, start with a smaller amount and gradually increase it as you earn more money or pay off debt. That way, you’re always building your wealth.

2. Choose how to invest in the stock market

There are a few ways you can start investing in stocks — namely, robo-advisors and online brokerages. Which you choose comes down to personal preference.

Robo-advisors

Robo-advisors are a great way to invest a little money using a hands-off approach. They tend to have low fees and can help you get started with a little cash.

They are best for investors who prefer automated help. When you sign up, the robo-advisor uses a questionnaire to get an idea of your risk tolerance and then recommends your investment path, executes that plan and manages it for you.

David Edwards, president of Heron Wealth, recommended robo-advisors for “younger investors with simple lives.”

“[But] extreme do-it-yourselfers also seem happy with robos,” said Edwards. “Most people turn to human advisors when their lives get complex, just as most people turn to human accountants when their lives get complex.”

Robo-advisors vary when it comes to their fees and minimum investments — there isn’t a benchmark or standard everyone follows. Many come with paid upgrades, such as talking to a CFP or another investment professional.

The downside of robo-advisors is that you may not be able to talk to a real person about your very real money. Not having a face-to-face meeting or even a phone call might make you uncomfortable.

You could try a hybrid approach. Take advantage of an account that mostly manages itself but gives you the option of talking to a financial professional.

Online brokerages

The main difference between online brokerages and robo-advisors is that robo-advisors manage your money for you. With online brokerages, you can handpick the stocks, bonds and mutual funds you want to invest in.

Online brokerages are great if you’re interested in managing your own investments. If you’re the type of person who needs to see where every dollar goes or you like monitoring the stock market, this type of account will work for you.

Many online brokerages have low or no minimum amount requirements. This is great if you don’t have a lot of money and want to monitor your investments closely. If you feel confident that you can make responsible choices on which stocks, bonds and mutual funds to buy, then an online brokerage is a good option for you.

The downside is that online brokerages tend to charge more in fees. If there’s a transaction fee every time you sell or buy, you’ll think twice about making moves. When you’re evaluating online brokerages, see how much the company charges on top of transactions. Flat-fee options are a good idea, as percentages of purchases can get pricey.

3. Decide what to invest in

A wise approach to investing is to diversify. Don’t put all your cash into one company, even if you think that company is going to do great.

“Most people who are investing novices have limited resources,” said Sullivan. “It’s best to look into mutual funds and exchange-traded funds (ETFs) that will instantly give you diversification instead of choosing one to two stocks. You don’t want to put all your proverbial eggs in one basket.”

It can be hard to decide which companies to invest in and how many shares of each to buy. There are many kinds of companies: technology, health care, financial and so on. Sullivan suggested patience and growth stocks.

“Companies that would be labeled as growth stocks, like those in the information technology sector, would be something that’s considered appropriate for someone who is just starting out,” said Sullivan. “As long as their risk tolerance is high enough to go through ups and downs.”

4. Monitor your account

You’re doing it! You’ve saved up enough money, you’ve found the right investments and you’re starting to watch the stock market. But don’t get ahead of yourself. It’s easy to get caught up in the highs and lows of buying and selling, but try to remember that you’re in it for the long haul.

“Don’t chase returns,” said Sullivan. “New investors shouldn’t become overly sensationalized by the thought of market timing. Most investors are rewarded for holding investments long term and not getting seduced by the idea of a quick purchase or sale.”

To stay on top of your investments, Sullivan suggested doing a quarterly review. Companies report earnings on a quarterly basis, giving you a chance to see how they’re performing and decide whether they’re still worthy of your dollar.

It’s also important to continue adding money to your account when you get the chance. Regular contributions help grow your investment account, as they do for emergency and savings accounts. A little bit goes a long way.

“Set up regular deposits into your investment account, maybe once every paycheck or once every quarter.” said Sullivan.

If you have a robo-advisor but want to talk to someone, consider finding a CFP or registered investment advisor (RIA). These professionals can help you make the most of your investments.

“Hiring an investment professional can help in so many different ways,” said Sullivan. “Not just because of the experience and thoughts they bring to the table but also the psychological aspect of it. It’s important to have someone to bounce ideas off of instead of going at it alone.”

When you’re ready for stock market investing

As you move from general savings to the possibility of investing in stocks, make sure you’re looking for a robo-advisor or online brokerage that best represents you. Just like you would research buying a new car or home, you should devote as much time as you need to learning how to invest in stocks.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dori Zinn
Dori Zinn |

Dori Zinn is a writer at MagnifyMoney. You can email Dori here

Advertiser Disclosure

Investing

Ally Invest Review 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

If you’re looking for an online discount broker with no minimum investment requirement, Ally Invest may be perfect for you. Ally Invest is an ideal choice not just because you don’t need a fortune to open an account, but also because commission fees for trades are well below many competitors — especially for active traders who can earn discounts.

While Ally Invest is missing some common tools for investment research and their mobile app isn’t as feature-rich as some competitors, their full-featured online platform makes up for what the mobile app lacks. And, there’s a wide range of account options with Ally Invest, so you’re covered whether you want a taxable account, a retirement account, or an account for your kids.

Ally Invest
Visit AllySecuredon Ally Invest’s secure site
The Bottom Line: Ally Invest is an affordable discount broker with a wide range of investments to choose from.

  • Commissions are just $4.95 or $3.95 if you’re an active trader.
  • There’s no minimum deposit required for a self-directed trading account, and no minimum account balance requirement.
  • Ally Invest offers tons of investment options, including stocks, bonds, mutual funds, options, futures and forex.

Who should consider Ally Invest

If you’re looking for an affordable investment account, Ally Invest should be at the top of your list. You’ll have many choices for different types of accounts with Ally Invest, including traditional and Roth IRA, IRAs for the self-employed, taxable investment accounts, 529 Plan, and more. And, you won’t have to make a minimum deposit to open your account — it’s free.

Once you’ve got your account open, Ally Invest makes trading affordable for most investments. Commissions for stock trades are among the lowest of any online discount broker, and Ally Invest offers more than 100 commission-free ETFs. If you’re looking to buy Mutual funds though, you’ll pay a transaction fee, whereas some competitors offer ample fee-free options.

Ally Invest’s online trading platform is easy to use, and their research tools are good. While you won’t find earnings transcripts, SEC filings, earnings press releases or audio calls, you can still dig into technical data using free screeners and other tools powered by Recognia.

If you don’t want to manage all the investments on your own, you can opt for a managed account. This is Ally’s robo-advisor option — but you’ll need a minimum of $2,500 if you’d prefer this hands-off approach rather than a self-directed trading account.

Ally Invest fees and features

Current promotions

New Ally Invest accounts accounts receive 90 days of commission-free trades, up to $500 in value, regardless of deposit amount. Cash bonuses are available for new accounts starting at $50 for if you deposit or transfer at least $10,000.

Stock trading fees
  • $4.95 per trade
  • $3.95 per trade (30+ trades per quarter or daily balance of $100,000 or more)
Amount minimum to open account
  • $0
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures / commodities
  • Forex
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $50 full account transfer fee
  • $50 partial account transfer fee
  • $0 inactivity fee
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • 529 Plan
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Coverdell Education Savings Account(ESA)
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • SEP IRA
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
Ease of use
Mobile appiOS, Android , Windows phone
Customer supportPhone, 24/7 live support, Chat, Email

Strengths of Ally Invest

Ally Invest has plenty of strengths to help it stand out from the competition, including the following:

  • Low commissions: You pay just a $4.95 commission with Ally Invest, which is one of the lowest commissions charged by discount brokers and well below the $6.95 charged by competitors including E-Trade and TD Ameritrade. Plus, if you make more than 30 trades per quarter or have a daily balance of $100,000 or more, your commission is even lower — it drops to just $3.95.
  • No minimum deposit required: While competitors such as E-Trade require a $500 minimum deposit to open an account, Ally doesn’t have any minimum initial deposit requirement. You can also earn a cash bonus for opening an Ally Invest account if you deposit or transfer just $10,000, compared with a $25,000 minimum to earn a cash bonus with E-Trade or $20,000 with Merrill Edge.
  • Powerful tools and intuitive trading platform: Ally Invest’s online site offers you powerful tools to screen investments. Its trading platform is intuitive and provides the features necessary to be an informed investor. This includes a dashboard you can customize to your preferred view, as well as real-time streaming quotes and up-to-date data.
  • Responsive online and phone customer service: You can contact Ally Invest via phone 24/7. There’s also an online chat feature, where you can get answers within seconds from helpful customer service agents. Email support is available as well.

Drawbacks of Ally Invest

Ally Invest also has some downsides to consider:

  • Mutual fund transaction fees: Ally Invest charges a $9.95 transaction fee per trade for no-load Mutual funds. But many competitors offer options without any transaction fees, including E-Trade, which offers more than 4,400 fee-free funds.
  • A mobile app with minimal features: While you can do the basics with Ally Invest’s mobile app, it offers far fewer features and investment tools than competitor apps such as TD Ameritrade Mobile.
  • No physical branches: Ally Invest is an online-only company. There are no physical branches, unlike for competitors such as Merrill Edge, or E-Trade which has more than 30 branches spread across the country.

Is Ally Invest safe?

Ally Invest is a trusted online brokerage with more than $4.7 billion in assets under management. It’s a member of the FDIC and SIPC, so you can rest assured that the cash in your accounts is safe. And since the company has passed its FINRA broker check, you can count on the fact it’s in full compliance with regulations.

Since Ally Invest is online-only, it’s important to review Ally’s data protection policies. The good news is Ally promises that they use “multiple levels of security” to keep your info safe. This includes 128-bit SSL encryption for any exchange of data from your browser and Ally’s servers if your personal information is being transmitted. The downside, however, is that Ally’s privacy policy does permit Ally to share your information with third-parties. While this is a common policy, it’s still disappointing.

Of course, once you invest your money, there’s always a risk of losses. Research what you’re investing in carefully and diversify your portfolio to minimize risks you’re taking.

Bottom line

Thanks to the fact it has no minimum deposit requirement, Ally Invest is a great choice if you’re looking to get started investing and you don’t have a ton of money. Affordable commissions and commission-free ETFs also give you a diverse offering of low-cost or no-cost investment options. But if you’d prefer to buy Mutual funds without paying transaction fees or want a physical branch to visit, alternatives such as E-Trade or Merrill Edge may be a better choice to meet your needs.

Open an Ally Invest accountSecured
on Ally Invest’s secure website

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Christy Rakoczy
Christy Rakoczy |

Christy Rakoczy is a writer at MagnifyMoney. You can email Christy here

Advertiser Disclosure

Investing

Ally Invest Managed Portfolios Review 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Ally Invest Managed Portfolios is a robo-advisor option from a trusted online-only financial institution.

It can make managing your money simple: Just answer a few basic questions about your goals and risk tolerance and your funds are invested for you. However, while fees are competitive, they aren’t the lowest among other robo-advisors’ offerings.

If you don’t mind the lack of bonus for opening the account, and you want to take a hands-off approach to building wealth, Ally Invest may be a good option.

Ally Invest Managed Portfolios
Visit AllySecuredon Ally Invest Managed Portfolios’s secure site
The Bottom Line: Ally Invest Managed Portfolios is a decent robo-advisor that’s competitive with other managed portfolios online. But its lack of tax-loss harvesting, and fees that slightly exceed competitors may prompt you to look elsewhere if you’re not already an Ally customer.

  • The minimum deposit to invest in Ally Invest Managed Portfolios is $100
  • 0.00% management fee, no matter how high your account balance
  • Customer service is available 24/7, but there are no local branches to visit

Who should consider Ally Invest Managed Portfolios?

If you’re looking for a robo-advisor that allows you to build a diversified portfolio without a lot of advanced knowledge about investing, Ally Invest Managed Portfolios has you covered.

You’ll answer a few questions about your age; timeline for investing and risk tolerance; and whether you’re investing for retirement, wealth-building or a big purchase. Then, Ally Invest comes back with a recommended portfolio you can accept or tweak.

You can open a joint, custodial or Individual taxable account with Ally Invest Managed Portfolios, or can opt for a Traditional IRA, Roth IRA or Rollover IRA. Unfortunately, unlike with Ally Invest’s self-directed accounts, there’s no promotion or bonus for transferring funds into a managed portfolio. And, you’ll need quite a bit of money to get started — more than many competitors in the robo-advisor industry require.

Still, if you don’t mind the lack of brick-and-mortar locations and marginally higher fees, Ally Invest is a worthy competitor to consider when looking for help managing your money.

Ally Invest Managed Portfolios fees and features

Amount minimum to open account
  • $100
Management fees
  • 0.00%
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $50 full account transfer fee
  • $50 partial account transfer fee
  • $0 inactivity fee
Current promotions

None currently

Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • 529 Plan
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Coverdell Education Savings Account (ESA)
  • Custodial Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA)
  • SEP IRA
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
Portfolio
  • Ally managed portfolios cover 3 asset classes and 9 major market segments
Automatic rebalancing
Tax loss harvesting
Offers fractional shares
Ease of use
Mobile appiOS, Android, Windows Phone
Customer supportPhone, 24/7 live support, Chat, Email

Strengths of Ally Invest Managed Portfolios

Ally Invest Managed Portfolios has some significant advantages worth considering:

  • Investing in a diversified portfolio is easy. You’ll answer basic questions about your investment goals and Ally Invest will suggest a portfolio with an appropriate mix of U.S. and foreign bonds, international and U.S. stocks, and cash. You can also tweak the suggestions Ally Invest Managed Portfolios makes, so you take on more or less risk based on your comfort level.
  • Ally requires a low minimum deposit of just $100 to open a managed portfolio account. While some of Ally’s competitors (such as Betterment) don’t have a minimum deposit requirement at all, $100 still falls on the very low side of the scale and makes this account extremely accessible to new investors.
  • Ally Invest Managed Portfolios offers automatic portfolio rebalancing. This helps to ensure you remain invested in the right mix of assets if certain investments under- or over-perform.
  • Customer service. Ally Invest offers phone, Email, and chat support. Customer service agents are available 24/7 with little or no wait. Agents will do their best to provide answers, although it may take a little time if your questions are technical since you may need to be transferred to an investment advisor.

Drawbacks of Ally Invest Managed Portfolios

You’ll also want to consider the potential downsides of choosing Ally Invest Managed Portfolios.

  • Ally Invest Managed Portfolios charges fees that are slightly higher than several competitors. You’ll pay .30% for Ally’s robo-advisor service, compared with .25% for Betterment’s digital account or for Wealthfront.
  • Ally Invest Managed Portfolios currently does not offer tax loss harvesting, which involves selling investments at a loss to offset taxable gains (although they do offer tax advantaged portfolios which add municipal bonds to Ally’s core portfolios). Competitors such as Betterment do offer this feature. However, Ally representatives indicate tax loss harvesting is expected to be rolled out in 2019 and investors with managed portfolios will be able to transition their accounts into a portfolio with tax loss harvesting.
  • No physical branches. If you’d prefer to go into a branch for local customer support, you’ll need to look elsewhere, such as E-Trade, which has more than 30 branches across the country.
  • Mobile apps aren’t very advanced. While Ally Invest allows you to use mobile apps on iPhone and Android phones to access basic account information, the offered apps aren’t as feature-rich as competitors such as Betterment.

Is Ally Invest Managed Portfolios safe?

Whenever you invest your money, there’s a risk you may lose some or all of it. This is no different with Ally Invest Managed Portfolios. The assets your robo-advisor invests you in could decline in value and your portfolio could lose money.

But Ally Invest is as safe as any trusted online brokerage, and there’s little risk of losing assets if the investment firm goes bankrupt. Ally Invest is in compliance with regulatory requirements according to FINRA’s Broker Check tool. Ally Invest is also a member of the FDIC and SIPC, both of which ensure cash in bank and brokerage accounts respectively.

Final thoughts

Ally Invest Managed Portfolios is a viable choice for investors looking for an easy, hands-off way to invest — especially with its low $100 minimum deposit requirement. Ally also promises to offer a broad range of socially-responsible portfolios, which should interest investors who want to consider more than just financial returns. But the lack of a promotional offer, higher management fees, and the fact tax loss harvesting isn’t currently offered makes Ally a less-than-ideal option for investors looking for the most affordable way to build a diversified portfolio. If you want a lower-cost option that does offer tax-loss harvesting, consider robo-advisors such as Betterment or Wealthfront.

Open an Ally Invest Managed Portfolios accountSecured
on Ally Invest Managed Portfolios’s secure website

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Christy Rakoczy
Christy Rakoczy |

Christy Rakoczy is a writer at MagnifyMoney. You can email Christy here