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- On Tuesday, Ally Invest announced a new investing product: a “cash-enhanced” automated portfolio designed specifically to give investors peace of mind. The portfolio keeps 30% of your funds out of the market and in a buffer that earns high-yield interest.
- Ally has incorporated an optional “cash buffer” into its robo offering, where 30% of an investor’s cash is allocated to earn interest like a high-yield savings account. The portfolio is managed without advisory fees, and investors can start with $100.
- Ally Invest also announced a 90-day free trial period for self-directed portfolios, giving investors a chance to try the product before committing, and the addition of 500 commission-free ETFs.
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On Tuesday, Ally Bank announced a series of changes and additions to its investment options.
If you’re familiar with high yield savings accounts, you probably already know Ally Bank and its well-loved high yield savings account. Given that popularity, Ally decided to incorporate the security of high-yielding cash into its new “cash enhanced” portfolios.
Ally conducted a survey of over 2,000 Americans in August and found 75% of respondents said investing as a whole made them nervous, while 80% said having a percentage of their money in cash alongside investments made them feel more secure. From these findings, Ally created a robo-managed portfolio that allocates 30% of funds into a buffer that earns high-yield interest, while the rest is invested into ETFs. These new portfolios will have no advisory fees, although investors who don’t want the cash element can use Ally’s existing managed portfolio options for a .3% advisory fee.
Given the fact that many investors in Ally’s survey said they wanted to invest but also wanted to have the comfort of cash, Ally Invest president Lule Demmissie said Ally decided to create an investing option that combines the two. “The thing that we designed is something that we think is a hybrid opportunity that allows investors to feel comforted,” Demmissie told Business Insider.
She says these portfolio options were built to give investors peace of mind. “A lot of people keep money on the side, some because they’re being opportunistic about when to enter the marketplace, but some because they’re nervous that the market will wipe away their principal. You see people shopping for high-interest savings vehicles for that reason,” Demmissie said.
Ally has also slashed the minimum deposit requirement on its robo-managed products from $2,500 to $100, implemented a 90-day free trial period for its self-directed investing products, and incorporated more than 500 commission-free ETFs into its investment portfolios to give investors more affordable options.
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Editor’s note: This post has been updated to clarify that Ally’s new investing product does not include a high-yield savings account, but rather stores investors’ cash in a buffer account that earns high-yield interest.