Ally Invest is the self-directed brokerage arm of Ally Financial, and you may have an account from previous TradeKing and/or Zecco mergers. Ally Invest just removed their $9.95 mutual fund transaction fee, including for money market funds:
At Ally, we’re all about doing the right thing for our customers. That’s why we’re excited to share that as of February 9, 2023, we’ve eliminated our $9.95 mutual fund transaction fee.
You can access more than 17,000 mutual funds when you log in to your Ally Invest Self-Directed Trading account. Please note, other fees may still apply.
First of all, the default cash sweep for Ally Invest pays zero interest. In addition, this change may be of interest to customers who also use Ally Bank, given that their online savings account only pays 3.40% APY (as of 2/15/23). Meanwhile, here are the 7-day SEC yields (as of 2/14/23) of top money market funds:
- Vanguard Cash Reserves Federal Money Market Fund Admiral Shares (VMRXX) – 4.51% ($3,000 min)
- Vanguard Federal Money Market Fund (VMFXX) – 4.50% ($3,000 min)
- Vanguard Municipal Money Market Fund (VMSXX) – 3.43% ($3,000 min)
- Gabelli U.S. Treasury Money Market Fund (GABXX) – 4.43% ($10,000 min)
- Fidelity Government Money Market Fund (SPAXX) – 4.19% ($100 min*)
* The Fidelity fund does not have a minimum itself, but Ally has a $100 minimum order size for online mutual fund orders.
I have gone into my Ally Invest account and manually tested all of the money market mutual funds listed above, and it let me put in the order at the minimum amounts shown. Ally Invest also does not charge a short-term redemption fee. I was able to make an instant transfer of funds from my Ally Bank deposit accounts to my Ally Invest brokerage account. Therefore, if you have an Ally Bank account and don’t want to look too far elsewhere, you may consider this option to increase the yield on your cash holdings.
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Great info!! For tax purposes, is the interest earned in a money market Vanguard fund treated the same as the interest earned in a traditional bank?
Yes, dividends earned on money market mutual funds are taxed similar to bank interest. They are all taxable for Federal income purposes. Some mutual funds invest in US Government obligations and a part or all of the dividend income is exempt from state income tax. California and New York state income tax laws are different from the other states and they have a percentage requirement of the dividend income that has to be met in order to reduce the amount dividend income to be taxed. if you invest in the municipal money market fund, that is exempt from Federal taxes and could also be exempt from state taxes.
Can the assets in Vanguard money funds be used as source for bill pay?
You have mentioned “here are the 7-day SEC yields (as of 2/14/23) of top money market funds” so to understand the yield will keep on changing? Ally Saving account is giving 3.40% and all the money market, i have to check often if it is going below 4.51%?
How did you link your ally savings account to fund your ally invest account?
I would never recommend Ally banking to anyone. My husband totaled his truck in October. State Farm paid first.Gap insurance paid the balance. Ally is saying he still owes them money. This is a bunch of crock. We do not owe Ally anything.
Does buying any of the mutual funds mentioned through Ally Invest involve Ally’s clearing company APEX Clearing? If so, I would avoid. Had a HORRIBLE experience with Ally invest a couple of years ago due to a flat out error by Apex clearing on a simple purchase of 100 shares. They processed it twice, so bought 200 shares. I didn’t have enough available cash for that so they liquidated shares of my other holdings to raise the money to fund their error. Called them and waited 2 hours on hold before able to speak to anyone. They could not solve it. Took 2 more months and several other calls(each with the same 2 hour hold time) to finally get them to understand their error and correct it by restoring shares of my holdings that were partially liquidated. A real nightmare.
APEX Clearing is the “middleman” in processing trading requests for Ally Invest. In the customer agreement, it states the following:
I agree to hold harmless Apex from and against any Losses arising in connection with the delivery or receipt of any such communication(s), provided Apex has acted in accordance with the above. The foregoing shall be effective as to My Account until written notice to the contrary is received from Me by Apex or Ally Invest.
Sounds like a disclaimer to prevent getting sued.
Note that you can also place trades for Money Market mutual funds from Fidelity, Vanguard, and Gabelli at E*Trade brokerage.