For a while, SoFi was mostly synonymous with student loan refinancing and other personal loan options. While SoFi Money accounts are still a thing and you can still head to SoFi if you want to refinance or take out personal loans, the online personal finance business now offers investment portfolios to SoFi members, too.
So, compared to the other investment options on the market, how does SoFi Invest stack up? After all, is it even wise to invest with a company primarily known as a lender with favorable loan terms and loan rates? Keep reading to learn more about the pros and cons of SoFi Invest and whether or not it might be a good fit for you beyond your other needs.
SoFi Invest is an online brokerage offering a few different benefits to existing SoFi members as well as those who bank with another financial institution. SoFi Invest actually offers a few different investment services and products, including IPO investing, retirement account or IRA investing, active investing, and automated investing (also known as using a robo-advisor). SoFi Invest also gives investors the opportunity to get their hands dirty investing in a few different types of securities, including cryptocurrencies like Bitcoin, fractional shares of larger companies, and ETFs (exchange-traded funds).
With so many options, SoFi Invest is actually a pretty good brokerage to get started with if you’re not sure in which direction you may want to head as an investor. SoFi Invest is a relative newcomer to the world of online brokerages, but that also means it has had time to survey the playing field and ensure its services are chock full of the low rates and origination fees consumers have come to expect from an online brokerage, not to mention some of the hottest investment securities of the current moment like cryptocurrencies and IPOs.
How does SoFi Invest work?
Signing up for SoFi Invest is a relatively straightforward process, thanks to an easy-to-follow online form. If you already have a bank account, credit card, have refinanced your student loan, or have taken advantage of a personal loan or debt consolidation from SoFi, you’ll be able to bypass this registration process by logging in to your existing account.
After you’ve input your information, you’ll get to choose what sort of commission-free investment portfolio you’re looking at opening. Your three options are an Active Investing portfolio, an Automated Investing portfolio, and an Active Investing portfolio specifically for IRAs.
Creating an active investing portfolio
If you want to manage your own investment decisions, an active investing portfolio is the way to go. You’ll start by adding your permanent address and may need to add a secondary address if your permanent address is different than your mailing address.
You’ll then be asked to add your phone number and enter whether you’re currently employed, self-employed, or unemployed, and need to input your employer’s information.
Afterward, you’ll need to add your citizenship status, whether you’re a U.S. citizen, non-permanent resident, or a current green cardholder.
Finally, you’ll need to confirm your identity by entering your date of birth and your social security number. High-level SSL encryption is used to transmit your SSN, and your credit report won’t be impacted by applying for a SoFi account. In fact, your credit history and credit score have nothing to do with your eligibility to open up an investment account with SoFi, so it doesn’t matter if your FICO score shows you as having poor credit or excellent credit!
Creating an automated investing portfolio
When you create an automated investment portfolio, you’ll first need to answer whether or not you’re opening a brand new investment account or are rolling over funds from an existing 401k or IRA from a different brokerage or employer.
Next, you’ll be asked about your savings goals, whether that’s retirement, general investing, or something like a house or wedding. You’ll also select how soon you’re interested in achieving your goal from four options: more than 10 years from now, between 5 and 10 years, between 3 and 5 years, and less than three years from now. Finally, you’ll need to select between two statements provided as a way to help gauge your appetite for short-term or long-term risk. You’ll also provide your date of birth.
Regardless of how you start to fill out the form, you’ll be tasked with providing some information about how much you currently have saved for your future goals and what you’re able to save towards that goal each month.
From there, SoFi Invest will analyze the data you’ve shared—including your current income—and come up with a recommendation about how aggressively you should invest in order to achieve your goals. You’ll also be able to see a hypothetical chart of how your portfolio might perform and change different strategies to see how the outcome may differ.
The final step involves picking the right portfolio for your brokerage account. If you aren’t planning on using this account for retirement, you’ll need to choose between a Personal Investment Account, which is the most common option, and a Joint Tenants with Rights of Survivorship account. If you choose to open a retirement account, you’ll be able to select between a Traditional IRA, a SEP IRA, or a Roth IRA.
Creating a self-directed IRA is very similar to the above processes. The only difference is that instead of things being automatically managed the way they would be if you were creating an automated portfolio, you’ll be responsible for making the investment decisions and actively working with your portfolio with a self-directed option.
How much does SoFi Invest cost?
SoFi Invest, like many other online brokerages, has minimal fees associated with its accounts. For starters, the minimum to open an account is just $1, so you don’t need to have a lot of money saved up in order to begin investing in your future. Additionally, stock trading is free with SoFi Invest, and you won’t pay any management fees either – even if you’re using SoFi’s robo-advisors to help run your portfolio.
SoFi Invest also offers a wide range of low-cost ETFs, and most portfolios have expense ratios of just 0.05%. This makes SoFi Invest a real standout when it comes to low-cost online brokerages.
SoFi Invest features
SoFi Invest has a lot of features going for it, making it a strong competitor in an already strong field of online brokerages. Here are just a few of the top-level features that may be appealing to you as an investor:
Integration with other SoFi services
Existing SoFi members will likely want to heavily consider SoFi Invest for the simple fact it keeps all of your financial accounts in one, simple place. For existing borrowers with an existing loan amount with SoFi or those with a savings account taking advantage of the company’s high-yield interest rates, it just makes sense to keep all of your accounts in one place if you don't already have a brokerage.
Free access to financial advisors
One exciting feature many other online brokerages don’t offer is the ability to work with financial advisors for free. SoFi’s financial planners are held to a fiduciary standard as CFPs, meaning it’ll always advise you in your interest and not its own. This goes above and beyond the general type of customer support offered by other companies, especially when you consider it's available via phone and video starting at 7:30 a.m. all the way until 6:30 p.m. If you’re a new investor this service alone can give you peace of mind, and the fact it’s provided free-of-charge with no limits is a major selling point.
It’s also worth noting that if you invest at least $20 a month, you’ll also get access to complimentary career coaching services, which can ultimately increase your income—and your ability to invest more in your portfolio.
Flexibility and choice
From the types of accounts you’re interested in opening to the ability to choose from a variety of securities, SoFi Invest offers a good amount of options for even the most active trader. Stocks, ETFs, IPOs, fractional shares (called Stock Bits on SoFi’s platform), and cryptocurrencies are all available for trading through the platform, with a current promotion offering an additional $10 in Bitcoin when you make your first crypto trade.
Who is SoFi Invest best for?
If you’re just getting into investing, SoFi’s user-friendly platform with a variety of portfolio estimations can be a welcome change from more intimidating brokerages like Vanguard. SoFi is great for those with less capital who want to get started investing now, and offers a good mix of options and automated portfolio tools to ensure you create an account that matches your goals.
If you’re interested in saving for the long-term, an automated investment account through SoFi Invest can offer you the peace-of-mind to know that you’re going to reach your financial goals. SoFi’s automated investment portfolio creation process really forces you to drill down and define what it is you’re saving for and when you want to get there, then automatically determines the best asset mix and investment strategy to use based on your income, age, risk-tolerance, and monthly contribution level.
Active traders who love being ahead of the curve will appreciate options like IPOs and crypto, not to mention the ability to buy fractional shares through SoFi Invest. If you’re an active trader who needs to have access to cutting-edge options and securities, you’ll find a lot to like investing with SoFi.
Who shouldn’t use SoFi Invest?
Traders with a lot of capital
If you already have a decent amount of money to invest, you’re likely better off picking a larger, more name-brand brokerage for SoFi. This is because you’ll be able to meet account minimum demands for accounts that may be of more use to you and ultimately won’t be as limited by the ETFs and other options set forth by SoFi Invest. While these options are plentiful for newer investors, someone with seasoned money will likely demand even more variety.
Traders who want to mitigate capital gains taxes
Compared to other robo-advisors, one feature SoFi Invest doesn’t offer investors is a way to minimize the impact of capital gains taxes. While some platforms offer tax-loss harvesting to help you use your losing investments to offset some of the capital gains generated by your winning investments, SoFi Invest doesn’t give users access to this kind of tool.
Pros & cons
Easy to get started. As you can see from the above screenshots, setting up an account with SoFi Invest can be done in under 10 minutes. Best of all, with no investment minimums, you can get started today even if you only have $5 to put in your brokerage account.
Low-cost. For those who are conscious of how much money in their portfolio could get eaten up by extra fees, the fact that SoFi Invest’s managed portfolios have no management fees makes their already low expense ratios even more attractive.
Access to customer support and financial planners. SoFi Invest’s customer support goes well beyond troubleshooting the platform itself. By offering free access to financial planners and career coaches, SoFi Invest helps you understand not just how to make certain trades, but why those trades are a good idea for your financial situation. If you really want to understand the ins and outs of your portfolio, this sort of free service is a major boon.
Can’t use tax-loss harvesting. As mentioned earlier in this review, investors who want to minimize their taxes from investing won’t be able to use a strategy called tax-loss harvesting with SoFi Invest, since this feature isn’t supported by the platform. If you trade a lot, this could mean that your taxes owed are higher through SoFi than a different online brokerage.
Only for investors in the United States. Currently, you can only create an account on SoFi Invest if you live in the United States. This means that foreign investors will need to find a different platform to create and manage their portfolios.
Some limits on active traders. While there are a lot of things active traders will like about SoFi Invest, one drawback of its platform is that it doesn’t allow stop-loss orders. Instead, market orders are the only way to actively invest in securities so timing and availability become more important if you’re actively trading with SoFi.
SoFi Invest vs. Betterment vs. Robinhood
SoFi Invest isn’t the only online brokerage out there. Here’s how it compares to two popular competitors: Betterment and Robinhood.
Compared to SoFi Invest and Robinhood, Betterment is really only worth considering if you’re interested in taking a hands-off approach to investing. With a $0 account minimum, you can get started with Betterment today if you’d like, but it would make more sense to choose SoFi Invest where your management fees will be 0% and you have access to certified financial planners in addition to a robo-advisor — all for free.
Robinhood is a lightning-fast mobile platform for active investors, so if you want a hands-on approach to investing on your smartphone, Robinhood is definitely worth considering. Like SoFi Invest, Robinhood offers the ability to invest in cryptocurrencies and fractional shares in addition to stocks and other securities. That being said, if you want to open an account with the flexibility to switch to an automated account in the future, SoFi Invest is likely a happier medium, even if Robinhood has more bells and whistles.
Can you withdraw money from your SoFi Invest account?
Yes. In your account, all you need to do is click on the “Withdraw Money” button and you’ll be able to withdraw all or a portion of your money from your investment account. Keep in mind that depending on the account type and reason for withdrawal, you may wind up owing capital gains taxes on any income you earn from your withdrawal.
Will opening an account affect your credit score
No. While your social security number will need to be provided during account creation, this is solely for identity verification. Your credit score won’t be impacted by opening a SoFi Invest account.
Can you rollover a 401k or IRA from somewhere else to SoFi Invest?
Yes. SoFi Invest offers rollover accounts from other 401ks or IRAs, so if you have an account from an old job you’d like to manage more actively, rolling it over to a SoFi Invest account is a great idea.
The bottom line
While SoFi has only been in the investing game since around 2018, that doesn’t mean that its platform is any less worth considering than brokerages that have been around longer. SoFi’s reputation in offering student loan refinancing for those facing forbearance, unemployment protection, and personal loans with no prepayment penalties and the option for cosigners in no way precludes them from creating a great investment product. In fact, being a relative newcomer means its platform can offer a lot of features that consumers want from an online brokerage.
From automated investing portfolios with simple autopay features to the ability to invest in cryptocurrencies, IPOs, and fractional shares, there are a lot of things SoFi Invest gets right. Especially when you consider the fact its automated portfolios are managed completely free-of-charge and come with unlimited financial planning advice from certified professionals, there are a lot of value new investors get to reap when they open a SoFi Invest account. Compared to options like Betterment and Robinhood, SoFi’s investing platform is a much more substantial offering by giving customers the ability to choose between an actively managed or automated investing portfolio.
All that being said, there are a few limits to using SoFi Invest, such as an inability to utilize tax-loss harvesting to minimize your capital gains taxes and geographic requirements means you need to live in the United States in order to open an account. Even so, there’s enough going for SoFi Invest that if you haven’t opened an investment account yet, it’s definitely worth considering.
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