With the rise of online investing platforms, investors now have more choices than ever when it comes to opening a brokerage account. Three of the most popular platforms for beginner investors are Robinhood, Ally Invest and Vanguard. Each platform has its own strengths and weaknesses regarding trading fees, account minimums and investment offerings. This article analyzes the key differences between Robinhood, Ally Invest and Vanguard to help investors determine the best online broker based on their needs.
Robinhood’s zero commission trades appeal to new investors but offerings limited
Robinhood shook up the online brokerage industry by being one of the first to offer zero dollar trades. This has tremendous appeal to new and small investors who want to trade stocks and ETFs without worrying about trading fees eating into returns. However, Robinhood offers a more limited selection of investments than traditional brokers. For example, options trading is available but more advanced products like futures or forex are not. The account also does not offer access to bonds, CDs or mutual funds other than ETFs.
Ally Invest provides more investing tools for intermediate investors
For investors who have a bit more capital and investing experience, Ally Invest offers a more well-rounded platform. Like Robinhood, Ally Invest offers $0 stock and ETF trades along with no account minimums. But Ally also provides access to mutual funds, bonds and options for more advanced portfolio building. Margin trading is also available for added leverage. The platform also stands out for its range of handy tools like screeners, profit loss calculators and real-time news feeds.
Vanguard leading low cost index funds and mutual funds
Vanguard has become synonymous with low cost index fund investing. For buy and hold investors looking to build a portfolio around index funds, Vanguard offers unmatched selection and rock bottom fees. They also offer extensive selections of mutual funds covering stocks, bonds and more. But frequent stock traders may be disappointed by $7 trades and lack of screeners or advanced charting found at full service brokers.
In summary, Robinhood’s zero fees model appeals to new investors but more advanced traders may prefer Ally Invest or Vanguard for their wider range of investment offerings. No matter which platform is chosen, dollar cost averaging into index funds is a solid long term investment strategy.