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SoFi Invest Review – Commission-Free Investing and Robo-Advisor Services

By Dave

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SoFi Invest Review

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SoFi Invest Review

  • Commissions and Fees
  • Ease of Use
  • Investment Options
  • Platforms and Software
  • Performance
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Summary

SoFi Invest may be a name that rings your ears. SoFi Invest is an online broker that incorporates robo-advisory features and much more. So, does SoFi Invest sound right for you and your trading/investing? Read more in our n-depth review to find out if SoFi Invest has what you’ve been looking for.

About SoFi Invest

SoFi Invest is an online broker offering zero-commission trading along with robo-advisory features. Active trading and automated investing can appeal to both traders and investors with fractional shares purchases, no fees, and no minimum account balance. SoFi Invest also offers crypto investments, IRA accounts, and IPO investing.

This relative newcomer has come with all guns blazing in terms of ease-of-use, offerings, and low cost. In our SoFi Invest review, we’ll take a closer look at all the investment products and services this brokerage offers.

Sofi Invest

History

SoFi Invest is a branch of SoFi Securities LLC and the automated investing services are provided by SoFi Wealth LLC. SoFi is short for β€œsocial finance.” The company started out in the student, home, and personal loan business in 2011. In 2018, SoFi launched commission-free investment accounts. By 2021, SoFi Wealth had more than $500 million in assets under management.

How SoFi Invest Works

SoFi Invest offers two different services: active investing and automated investing.

SoFi Active Investing

A SoFi Active Investing account offers access to US stocks and ETFs with no trading fees. It also offers trading on more than 30 cryptocurrencies with a 1.25% commission and the ability to invest in select IPOs at IPO prices. SoFi does not offer trading on mutual funds.

You can buy fractional shares of ETFs and select stocks with as little as $5 at a time. Crypto trading requires a minimum trade size of $10. You can set up recurring investments and automatic dividend reinvestment.

SoFi Active Investing accounts are margin accounts, but you cannot short sell stocks. You can open an individual investing account or a traditional, Roth, or SEP IRA.

SoFi Automated Investing

A SoFi Automated Investing account offers the kind of robo-advisor functions you would find at other robo-advisors. Users answer a series of personal financial questions to determine their risk profile. The algorithm crunches the data to recommend a personalized portfolio best aligned with your goals and preferences.

SoFi Invest App

SoFi’s automated investing platform lets you choose how frequently money is invested and can set up recurring deposits from a bank account. Then simply let the robo-broker handle all the transactions, including automatic rebalancing and tax loss harvesting. The robo-advisor will automatically rebalance portfolios once a month when asset allocations exceed or fall below-preselected levels. You can adjust your risk level or re-configure your allocation percentages at any time.

SoFi Invest Target Weightings

SoFi Automated Investing Portfolios

SoFi creates portfolios composed from a selection of over 20 indexes that include U.S. and international stocks, high-yield bonds, real estate, and treasury bonds. Portfolios are constructed using principles of Modern Portfolio Strategy, which emphasizes diversification. Allocations and asset classes are adjusted based on investor risk tolerance and goals.

There are six types of portfolios based on risk tolerance ranging from conservative, moderately conservations, moderate, moderately aggressive, to aggressive. Conservative portfolios have a higher concentration of liquid low-risk instruments like treasury bonds and high-grade corporate bonds. More aggressive portfolio types come with more volatility along with greater potential returns in a rising market. 

SoFi Invest Portfolio Strategy

As with most robo-brokers and robo-advisors, the long-only portfolios tend to track benchmark indices. However, SoFi has boldly posted the hypothetical back-tested returns if their portfolio types versus the benchmark indexes, which is rare. The 10-year hypothetical back-tested return for SoFi Aggressive Portfolio would have outperformed the benchmark by 32%. Of course, hindsight is 20/20. 

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Certified Financial Planners

One of the key ways that SoFi Automated Investing stands out from competitors is that all customers get free, unlimited access to certified financial planners. This can be a huge asset, especially if you want to plan out a few different financial goals like buying home and saving for retirement. Notably, you can set up multiple portfolios to match different goals within the SoFi app, allowing you to put the plan you discuss with a human financial advisor into practice.

Account Requirements

Sofi is currently available for U.S. customers over 18 years of age. While there is no minimum balance requirement, new investors can receive bonus cash (a random amount up to $1,000) when you deposit at least $10.

SoFi offers traditional, Roth, and SEP IRA accounts for both Active Investing and Automated Investing account types.

SoFi Invest Pricing and Fees

SoFi has no fees or commissions for stock and ETF trades for any account. There are also no inactivity fees or platform fees. In fact, SoFi doesn’t charge any management fees for its Automated Investing accounts. Consults with human investment advisors are also free.

Crypto trading incurs a 1.25% commission. Trading on margin requires paying interest of 5.25% APY.

Overall, SoFi’s pricing is pretty impressive and highly competitive when compared to other similar services.

Indirect Fees 

As with most robo-advisors that invest in exchange-traded-funds (ETFs), there are indirect fees to consider. SoFi’s automated investing selects from a pool of index ETFs with minimum expense ratios from 0.04%. So, it’s important to pay attention to the individual ETFs fine print to determine what the fees are.

SoFi Invest Platform 

The SoFi Invest platform is available on the web and through mobile apps for iOS and Android devices. Users have access to stock quotes, news, and basic charting tools, although these are mainly intended for SoFi Active Investing customers.

The SoFi platform also integrates the company’s other services, such as personal loans, mortgages, student-loan refinancing, insurance, and budgeting tools. SoFi is aiming to create a financial “super app” that serves as a one-stop-shop for all things finance.

How Does SoFi Compare to Other Brokers?

When SoFi Invest launched, it was primarily taking on Robinhood and its no-fee commission-free trading. Today, though, most brokerages offer commission-free stock and ETF trading. So where does SoFi fit in?

SoFi Active Investing accounts stand out primarily by offering margin trading and crypto trading. More and more brokers are offering crypto trading, but SoFi has been consistently ahead of the curve in its token offerings.

SoFi Automated Investing stands out for the fact that it doesn’t charge any management fees. That makes it cheaper than popular robo-advisors like Betterment and Wealthfront that charge 0.25% or more. Another huge benefit is that SoFi offers access to certified financial planners at no charge.

More broadly, SoFi’s progress towards building a financial super-app is a differentiator for this brokerage. Investors can get discounted interest rates on SoFi personal loans and home mortgages, which can be a big deal for investors who are looking to buy a home in the near future. In addition, the SoFi app offers access to financial advisors, budgeting tools, and more.

Trustworthiness

SoFi Invest has SIPC insurance for brokerage accounts as well as FDIC insurance on their savings and checking accounts linked to SoFi Money.

Who is SoFi Invest Best Suited For?

SoFi caters to Millennials and young investors looking start their journey into the world of growing an investment portfolio. The company caters to investors who want to go their own way with Active Investing accounts and to investors who want a set-and-forget portfolio with Automated Investing accounts. SoFi has been more forward-looking than some of its competitors in its embrace of crypto trading and its willingness to offer access to financial advisors at no charge.

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Where SoFi is more limited is in its advanced trading and investing tools. The platform doesn’t provide much in the way of technical analysis or charting tools, and traders cannot short sell stocks. So, more experienced investors may find a SoFi Invest account to be linmiting.

Pros

  • No fees or commissions for trading or automated portfolio management
  • Supports fractional investing, IPO investing, and crypto trading
  • Unlimited fee-free access to certified financial planners
  • Part of a financial super-app that includes loans and budgeting tools

Cons

  • SoFi has many subsidiaries, which could cause confusion for users
  • No advanced trading tools for more experienced investors
  • Does not offer trading on mutual funds
Day Trade Review

Dave

Dave has been a part-time day trader and swing trader since 2011 when he first became obsessed with the markets. He focuses primarily on technical setups and will hold positions anywhere from a few minutes to a few days. Over his trading career, Dave has tried numerous day trading products, brokers, services, and courses. He continues to test and review new day trading services to this day.

2 thoughts on “SoFi Invest Review – Commission-Free Investing and Robo-Advisor Services”

  1. Is there a fee to transfer stock to another investor? So if I want to move an equity from say Vanguard to Sofi invest, or “gift” stock to someone else, is there a fee?

    Reply

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