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Sofi Invest offers a hands-off approach to investing. If you’ve held off on investing because you can’t pull the trigger on choosing stocks and ETFs, SoFi Automated Investing may be just what you need.
Is it legit?
Check out my Sofi Invest Review below.
What is Sofi Invest?
How does free automated investing sound to you? That’s exactly what SoFi Invest specializes in – this robo-advisor manages your portfolio for you without charging you a management fee.
That kind of sounds too good to be true, doesn’t it?
What if I told you that you could also start investing with as little as $1? That’s how easy SoFi Invest makes it for beginning and experienced investors alike.
Sofi is invested in helping people achieve financial independence $1 at a time. Whether you set up a one-time payment or recurring monthly payments, SoFi helps manage and rebalance your portfolio so that you don’t have to – they take the worry off investing.
How does it work?
SoFi makes it easy to start investing with their three-step process:
1. Determine your goals
What are your goals? Why are you investing? Do you have short-term or long-term goals? For example, are you saving for retirement which is 30 years away or are you buying a house in the next 2 years?
Your answers will determine how your funds get invested, so make sure you take the time to think about what you want to do with your money.
2. Auto Rebalancing
SoFi rebalances your portfolio for you based on your goals once per quarter. They’ll automatically adjust the stock and bond funds based on performance and how they are aligning with your goals. You never have to worry about rebalancing the portfolio yourself.
SoFi always ensures that your portfolio is completely diversified. They know the risk of putting all of your eggs in one basket and they don’t mess around. They automatically diversify your risk for you.
Opening an account is simple, just hop on SoFi’s website and click ‘Invest Now.’ All you need is your first and last name, state, email, and password.
Once you are registered, you’ll select ‘Let SoFi Invest for Me’ and you can then choose whether you are starting a new account or rolling over an existing IRA or 401K.
Based on your answers, including your birthdate, SoFi will recommend an investment strategy. You can play around with the numbers to see how your monthly contributions, initial investment, and investment strategy will potentially play out. Of course, no one can predict the future, so the results that are shown are merely an estimate.
Deposit and withdrawal
Can you believe that you only need $1 to get started? Of course, you’ll want to invest more because $1 won’t get you very far, but it’s reassuring to know that just about anyone can afford to invest with SoFi.
You can deposit funds using one of the following methods:
- Account transfer
- Wire transfer
You can withdraw your money from SoFi at any time as well. They request 2 days to settle the trade and send you the money. (this is actually faster than most of the competition)
Moreover, there are no fees for depositing or withdrawing money with SoFi Invest.
SoFi’s interface is user-friendly. It’s design is simple, but may be too simple for some investors. There aren’t options to customize the dashboard or make customized price alerts, which if you’re an experienced investor may be something that you miss.
If you like to conduct a lot of searches, you may be disappointed in the lack of user-friendliness of the search function as well.
You can set up pre-set alerts, but only for certain items, such as 52-week highs and lows. It does lack the ability to get price notifications on specific investments when they hit your ‘target price.’
SoFi also has a mobile trading platform. This means you can trade while on-the go!
Like its web-based platform, the SoFi mobile platform is user-friendly and has a minimalist design. It’s available on both iOS and Android phones and it works just like the web-based platform, which should make it easy for you to toggle between the two. There is a trade-off: the platform doesn’t have too many options but is therefore very easy to use.
What can you trade?
SoFi Automated Investing offers 5 portfolio options each of which have different risk tolerance. They invest in a variety of low-cost ETFs that include some of the following:
- Domestic stocks
- International stocks
- Treasury bonds
- High-yield bonds
- Real estate
SoFi trades on the following exchanges:
Best of all, SoFi charges no management fees. This is what makes them stand out in the industry. In fact, they were also one of the first platforms to offer commission-free stock and ETF trades. On average, expect a portfolio to cost between 0.03% – 0.08% of the total portfolio, which if you compare to other platforms, is a steal.
How does SoFi make money?
It may sound like SoFi doesn’t make money with no management fee and free trades, right? Trust me, they do make money, they do.
SoFi makes money through their Active Investing platform by earning interest on any uninvested cash in any account. They also make money from securities they lend to institutions and from rebates they receive from Apex Clearing.
SoFi also offers cryptocurrency, which they mark up at 1.25% and their own ETFs which they earn money on the expense ratios.
Are there human advisors?
Believe it or not, even with their low fees, SoFi offers free access to HUMAN advisors. You can chat with an advisor one-on-one via phone, email, or online chat. All SoFi financial advisors are registered financial advisors that have at least Series 65 certification. All advisors are held to a specific fiduciary standard, which means they must work in your best interest.
If you have more complex questions or need a more complex financial plan, they also offer access to advanced planning professionals.
The SoFi research options are quite limited. It’s fine for beginning investors that only care about the highest and lowest prices of the day, but if you’re looking for robust charts or complicated data, you will be disappointed.
SoFi does show trending stocks and ETFs, but they don’t offer professional recommendations. At the most, you can see the most traded stocks for the day by SoFi investors, but that’s far from a recommendation.
Most of SoFi’s education is provided in their blog, which you must search if you want to find a specific topic. They lack educational videos and webinars.
Screenshots / Tutorial
In order to get to know the platform and all the different options it is best to check out this video by Get Smart University.
Sofi Invest Pros and Cons
Is SoFi Invest good for active traders?
No, SoFi Invest is best for traders that want a hands-off approach. You can’t trade individual stocks in the automated investing platform. SoFi chooses the investments for you; all you choose is the level of aggressiveness. Active traders are better off with a platform like M1 Finance or RobinHood.
Will SoFi financial advisors try to upsell you?
No, SoFi financial advisors only give unbiased advice. The advisors don’t receive a commission, so there’s no benefit for them to upsell you beyond what you are comfortable investing in.
What are the offered portfolios?
SoFi Automated Investing offers five portfolios:
- Conservative – A portfolio that’s best for those with short-term goals. Conservative portfolios have the lowest risk (no portfolio has no risk).
- Moderately conservative – A portfolio that’s best for investors with a little more time to allow for investment growth. The portfolios still have minimal risk, but more than a conservative portfolio.
- Moderate – A portfolio with medium risk that’s best for investors with at least 10 years to leave their money time to grow despite the ups and downs the market might take in the meantime.
- Moderately aggressive – A portfolio for those with as long as 20 years to let their money grow. The chosen investments are somewhat high-risk, but offer much higher returns. This is a good option for long-term goals, such as retirement.
- Aggressive – A portfolio with the highest risk but the greatest potential returns. You must have enough time to let the portfolio recover from any negative market events, which means at least 10 years or longer.
Who should consider a conservative portfolio?
Typically, people with ‘short-term’ goals, such as those paying for a wedding, putting a down payment on a house, or saving for vacation should consider a conservative portfolio.
It’s for those that don’t have time to withstand the ‘downs’ while waiting for the market to come back up. Otherwise, some form of an aggressive portfolio is recommended.
Can you really get free financial advice?
Yes, believe it or not, SoFi offers free access to its financial planners, all of which who are fiduciaries. This means they must act within your best interest when giving you advice rather than acting for their own benefit to earn commissions.
SoFi offers 30-minute blocks for your sessions and you can schedule it yourself using their app. You may not speak to the same advisor if you call multiple times, but each time it’s a certified financial advisor that acts in your best interest.
When does SoFi rebalance your portfolio?
Each quarter, SoFi looks at all portfolios. If a portfolio veers more than 5 percent from its original allocation, SoFi will rebalance it to get it back on track to meet your goals.
If it sees the need to rebalance your portfolio more often than once a quarter, they will do so. They often do this when one asset class experiences large movement. Their overall goal is to keep your portfolio on track to meet your goals.
Is SoFi automated investing safe?
There’s always a risk when you invest – no investments are completely risk-free. SoFi does take your security very seriously, though. They are members of the Securities Investor Protection Corporation which protects brokerage accounts up to $500,000.
Worth It or a Scam?
SoFi is worth it for beginning investors. While it doesn’t have robust options, it has affordable options that include a personal financial advisor. While you won’t have the same advisor each time and you won’t have a lot of say in your portfolio, it’s a great way to start investing with as little as $1.
Opening an account with little money, no fees, and great customer service is a great way to start investing. If you’ve never invested before or your investment needs are simple – SoFi Invest is a great place to start. Whether you have short-term or long-term goals SoFi has five portfolios to help you reach your goals one dollar at a time.
In my opinion it is one of the best hands off / low cost option out there. Only Wealthfront gives Sofi Invest a run for their money in that regard. Decide for yourself.
If you have any questions please comment below.
Michael is a senior writer at The Robo Investor. He earned his master’s at the Craig Newmark School of Journalism at CUNY, and is currently taking CFP courses at the University of Scranton. He has been an avid finance enthusiast ever since he started investing at the age of 23. Meet the Team