2 top index funds online brokers in 2019. Best brokerage companies for investing in index funds.

Rating:  Ally Invest rating

Best Brokers For Index Funds: Costs

Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
Ally Invest $4.95 $9.95 $4.95 + $0.65 per contract $0 $0
Firstrade $0 $0 $0 + $0 per contract $0 $0

Best Brokers For Index Funds: Services

Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
Ally Invest
Firstrade

Buying Index Funds on Firstrade and Ally Invest

If you recently opened a brokerage account with Firstrade or Ally Invest and are looking to buy index funds, this article will provide all you need to know. We’ll go over how to sort through these funds on both brokers and how to buy them.

What Are Index Funds?

An index fund is a type of passive mutual fund whose investment strategy is to try to track the performance of some market index, such as the Russell 3000, as closely and efficiently as possible by holding mostly the same securities. They are similar to many passive ETFs that also track various indices, but differ primarily in that ETFs are available to trade real-time, throughout the trading day just like the individual securities they hold. Index funds are mutual funds, and therefore you can only buy and sell these at the end of the day once the market has closed and the fund’s NAV is calculated.

Index Funds on Ally Invest

Ally Invest offers several thousand mutual funds on its platform, many of which are passive index funds. One example we found on their platform is the Vanguard Russell 3000 Index (VRTTX). As the name implies, this popular index fund seeks to replicate the total return of the Russell 3000 index and does so with a relatively low management fee of 0.08%. Placing a purchase order for shares in this fund is similar to placing a stock or ETF trade.


Ally Invest Buy Index Fund


However, you will notice in the below screenshot of the trade ticket that you can either specify an exact dollar amount that you want to purchase (since you can buy fractional shares) or the number of shares, whichever you prefer. There are also two boxes at the bottom where you can have Ally automatically reinvest any cash dividends and distributions the fund pays at no extra charge. Your order will be filled at the end of the day at whatever the NAV is. For mutual funds with no load fee, like this one, Ally charges a flat $9.95 commission for each buy and sell.

Ally Invest Promotion

Up to $3,500 cash bonus + commission free trades for new accounts.

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Index Funds on Firstrade

Firstrade offers an impressive selection of more than 9,000 mutual funds. You can filter through these on their screening tool; however we were somewhat surprised that there wasn’t any option to narrow down the mutual funds to those that are passive index tracking funds. You can still make this distinction pretty easily from the fund’s name and also by reading its investment objective. Now we’ll walk through an example of how to purchase an index fund on Firstrade’s platform.


Firstrade Buy Index Fund


The Vanguard FTSE All-World ex-US Index Fund (VFWAX) is another popular index fund managed by Vanguard, which aims to mirror the performance of the FTSE All World ex-US index, a benchmark with exposure to most of the world’s developed and emerging economies, excluding the U.S. It boasts an attractive 0.11% management fee and no load. Firstrade also doesn’t charge any commissions on mutual fund trades (unless you sell it within 90 days).

To purchase shares, simply fill out the order entry ticket below with the mutual fund’s symbol and the dollar amount you would like to invest in the fund. Similar to Ally’s order ticket, you will also indicate whether or not you would like Firstrade to automatically reinvest your dividends and capital gains distributions back in the fund. As long as your order is submitted before 4:00PM it will be processed at the end of the same day.

Firstrade Promotion

$0 commissions + up to $200 in transfer fee rebates.

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Best Index Funds Brokers Summary

Index funds are a great way to build out your portfolio’s core exposures, and they are easy to trade on both Ally Invest and Firstrade. Although they lack some of the flexibility of ETFs (since you cannot trade them intraday) the expenses on index funds are generally lower.


Firstrade


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Index Funds Brokers reviewed by TopRatedFirms.com. Rating: 5