Although it’s mostly known as a student loan refinancing or a personal loan company, SoFi is now branching into the world of no-cost brokerages with SoFi Invest.
No longer do you have to worry about your earnings being eaten up by trading fees (though you may need to pay expense ratios).
Sure, it’s pretty cheap to trade with SoFi Invest, but is it worth it?
Let’s take a closer look at the brokerage company and whether it’s a good fit for your investing needs.
Minimum Investment: $1 for Active Investing, $100 for Automated Investing (or $20 monthly deposits)
Stock Trades: Free
Promotion: $25 in Free Stock Bits
What is SoFi Invest?
Formerly known as SoFi Wealth, SoFi Invest is part of SoFi, founded in 2009 to provide student loan refinancing.
SoFi Invest also part of the Securities Investor Protection Corporation (SIPC) which provides up to $500,000 of protection in securities and up to $250,000 in cash.
SoFi Invest is considered safe because it is regulated by the top-tier financial authorities and provides a maximum of $500,000 investor protection including a $250,000 limit for cash as part of the SIPC protection scheme.
The automated investing or robo-advisor functions typically in line with other robo-advisors. Users answer a series of personal financial questions to determine risk profile.
The algorithms crunch the data to recommend a personalized portfolio best aligned with the goals and preferences.
Users can select the settings for auto-investing schedules and let the robo-broker handle the transactions including rebalancing.
How SoFi Invest Works
There are two branches of SoFi Invest: Active Investing and Automated Investing.
SoFi’s Active Investing sector allows you to buy and sell shares of U.S. stocks with no commission fees.
Currently you can only execute on a market order type — there aren’t other options such as limit time limit and stop-loss.
You can also purchase fractional shares of ETFs and certain stocks which the company calls StockBits.
How Stock Bits Work
How StockBits works is that you tell SoFi how much money you want to invest in a certain asset instead of the number of shares.
Then SoFi Invest will then execute on your request and deliver the fractional shares that will be able to meet the dollar amount you indicated.
SoFi Automated Investing
With SoFi’s Automated Investing, their robo-advisor works much in the same way as other competitors.
All you need to do to start is to answer a bunch of questions related to your financials so it can determine your risk profiles.
SoFi Invest’s algorithms will then take your information to recommend personalized portfolio options that are best in line with your goals and risk tolerance.
It doesn’t have to be totally hands-off once you set your preferences — it is a hybrid robo-investing service in that there are human financial advisors ready to help you with questions related to your investment plan.
Think of it as a combination between a full-service wealth management products and completely automated investing tools.
You can also feel safe knowing that SoFi’s financial professions are fiduciary, meaning they’re required by law to act in your best interest.
Features and Benefits
You can access your SoFI Invest account via your desktop or your mobile device through their app (available on both Android and iOS).
Once you log in, you can access basic charts, stock quotes and news for Active Investing, and an overview of your portfolio with Automated Investing.
Since SoFi also offers other financial products, other products and services you have (such as their personal loans) will also show up there.
The platform itself is pretty intuitive and user-friendly, meaning it’s simple to navigate to find what you’re looking for.
SoFi offers a community of investors that share ideas to help each other make better decisions.
You can do so through their online community forums. The company also has online resources in the form of articles that offer topics ranging from investing, budgeting to managing your financial goals.
If you’re looking for more advanced tools like research and technical analysis, you’re out of luck.
As mentioned above, Active Investing customers can either purchase individual U.S. stocks, ETFs or partial shares through StockBits. Your portfolio is pretty much a DIY effort.
With Automated Investing, you have a few options to choose from and SoFi will allocate your funds in ETFs (there are up to 20 asset classes to choose from) based on a number of factors.
Your choices include:
Aggressive - Best for those who are comfortable with a lot of risk and have more time in the market to recover from market swings.
Moderately aggressive - Consider picking this choice if you don’t need the funds within 10 years or more. That’s because your assets will be put into higher risk funds so that you can potentially see higher returns.
Moderate - Your assets will carry more risk but balanced enough that you won’t see wild swings. This portfolio is probably for those who have financial goals they want to reach in 10 years or so.
Moderately conservative - Assets will be fairly low-risk but will have more growth built in, best for those with financial goals they want to achieve with five years.
Conservative - These are ETFs that have lower risk. This is typically for investors who want to take out distributions within a few years.
With the Automated Investing accounts, SoFi’s robo-advisor will rebalance your portfolio automatically each quarter, depending on if your asset allocations are aligned with your goals.
This is based on what your risk tolerance is — you can change your allocation percentages or risk levels at any time.
Once you have a SoFi account, you have access to a whole host of membership benefits.
One of them is having access to a financial planner who act as fiduciaries — they’ll consider your needs first as they’re tailoring their advice.
Topics you can chat about include:
- Retirement plans
- Purchasing a home
- Planning a family
- Paying down debt
- Building an emergency fund
- Maintaining good spending habits
You can set aside a time to meet with one of SoFi’s advisors. Each session runs for 30 minutes and you can schedule a session online through their scheduling app.
Once you confirm the appointment, all you need to do is to show up at the agreed time.
Other perks include exclusive discounts and offerings. For example, you may be able to get a rate reduction on a new SoFi loan or sign up their partners to receive discounts.
SoFi also has an exclusive live events full of networking opportunities and chances to learn about topics such as advancing your career or simply a get together to celebrate debt payoff.
If you can’t make it to these live events, you can still get career advice through one on one coaching or SoFi's free career tools such as helping you developing an action plan to receive a raise.
Who SoFi Invest is Best For?
Since SoFi Invest offers two different types of investment strategies, it depends on what your goals are as to how it’s best for.
With Active Investing is best for those who are ready to dip their toes into more active trading but aren’t interested in a lot of bells and whistles.
It’s also best for those who want to learn on their own because you won’t find resources such as professional stock recommendations or more complex trading tools like candlestick charts.
Advanced traders may want to steer clear of SoFi Invest for now since you can’t trade options, international stocks, mutual funds or cryptocurrency (though that’s supposedly changing soon).
However, the lack of fees and low account minimums can be attractive to investors who aren’t ready to commit to investing a large amount just yet.
With Automated Investing, newbie investors can benefit, especially if you don’t have a lot of money to invest, considering you can open an account with as little as $1.
As you get more confident or have more funds, you have the option to set up automatic recurring payments.
Plus, if you want to be more hands-off with your investing strategy, then SoFi’s robo-advisors can be the perfect fit.
All you really need to do is to select the type of portfolio right for you and SoFi Invest handles the rest.
Pros & Cons
No fees - What makes SoFi so attractive is that you don’t have to pay any transaction fees for trades or managing your account. You will be subject to expense ratios for ETFs, which currently averages at 0.08%.
Purchase fractional shares - You don’t need to buy a full share of a stock if you don’t have the cash on hand. Instead you can purchase certain stocks at fractional shares for as low as $1.
Automatic rebalancing - With your Automated Investing account, SoFi will rebalance your portfolio automatically each quarter. That way, your portfolio will have the right asset mix based on your settings and keeping you on track for your financial goals.
Membership perks - Once you invest with SoFi, you get access to a whole host of membership perks like access to a career coach, exclusive discounts and free live events.
Lack of tax loss harvesting - You won’t receive any tax strategy except for the fact that SoFi Invest offers ETFs. You won’t be able to automatically harvest losses when you sell them and you won’t receive help from the robo-advisor.
No interest with cash accounts - If you have funds sitting in your cash account for whatever reason, you won’t be earning any interest. Sadly you won’t until it gets invested.
Limited account types - For active Investing, you can’t invest in anything other than U.S. stocks and ETFs so far and only execute on a market order type. Also, not all stocks are available for StockBits. For Automated Investing, not all accounts are available, such as a custodial account.
How to Open an Account
Signing up for SoFi is pretty quick — you might be able to do so in minutes.
All you need to do is to head over to their online application form and answer simple questions such as your name, mailing address and financial information then fund your account.
To start, you’ll be prompted to register for an account by entering your email address and creating a password. Then you’ll need to enter personal details such as:
If you opted for Automated Investing, it’ll suggest an investment strategy based on the above answers and ranges from conservative to aggressive.
You’ll also need to choose if it’s a taxable or retirement account and if it’s individual or joint.
Then you’ll need to fund it.
Should You Open A SoFi Invest Account?
It has a bunch of options as well, from U.S. based stocks to ETFs from major markets.
Their platform is fairly intuitive and you can open an account pretty quickly.
For now, their portfolio options seems limited and their research tools may be too basic for those who are more advanced trading journey.
Still, it’s worth looking into the brokerage and exploring your options — do your due diligence because you can lose money investing, especially if you’re allowing your emotions as a benchmark for buying and selling.