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Sofi Invest Review | Is it legit?

Sofi Invest

8.2

Fees

10.0/10

Account minimum

10.0/10

Ease of use

7.0/10

Beginners

10.0/10

Advanced users

4.0/10

Pros

  • No management fee
  • No account minimum
  • No additional fees
  • Automatic Rebalancing
  • Free access to CFP

Cons

  • Limited investment options
  • No tax loss harvesting
Disclosure: Please note that this article may contain affiliate links

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.

Great for Beginners
Account Minimum
$1
Management Fee
0.00%
Portfolio
10 different strategies with different risk levels. ETFs and stocks.
Account types
Individual and joint taxable accounts; traditional, Roth and SEP IRAs
Rebalancing
Tax Loss Harvesting
Frational Shares
Automatic Deposits
Smart Beta
SRI
401(k) Assistance
Human Advice
Best for
Investors who are looking for an automatic investment service at a minimum of expenses and have access to human financial advisors whenever necessary.
Summary
SoFi Automated Investing stands out as one of the few "free" robo advisors that come with the option to use a smart beta strategy. Choose between 10 investment portfolios which mainly consist of ETFs.
Current Promotion
-
Great for Beginners
Account Minimum
$1
Management Fee
0.00%
Portfolio
10 different strategies with different risk levels. ETFs and stocks.
Account types
Individual and joint taxable accounts; traditional, Roth and SEP IRAs
Rebalancing
Tax Loss Harvesting
Frational Shares
Automatic Deposits
Smart Beta
SRI
401(k) Assistance
Human Advice
Best for
Investors who are looking for an automatic investment service at a minimum of expenses and have access to human financial advisors whenever necessary.
Summary
SoFi Automated Investing stands out as one of the few "free" robo advisors that come with the option to use a smart beta strategy. Choose between 10 investment portfolios which mainly consist of ETFs.
Current Promotion
-

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.

3. Diversification

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.

Account opening

account-opening

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
  • Check
  • 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.

Interface

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.’

App

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:

  • NYSE
  • NASDAQ
  • AMEX

Costs

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.

Research

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.

Education

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

PROs
No account minimum
CONs
No tax-loss harvesting
No management fee
Only available for those in the U.S.
No withdrawal or inactivity fees
Research tools leave a lot to be desired
Commission-free trading of U.S. stocks and ETFs
The investment options are limited
A large selection of low-cost investments
You can only open individual and jointly owned IRAs, Roth IRAs, and SEP IRAs (you may roll over a current 401K)
Automatic rebalancing makes it easy to set it and forget it
-
Free access to certified planners
-
Fractional shares and crypto
-
PROs
No account minimum
No management fee
No withdrawal or inactivity fees
Commission-free trading of U.S. stocks and ETFs
A large selection of low-cost investments
Automatic rebalancing makes it easy to set it and forget it
Free access to certified planners
Fractional shares and crypto
CONs
No tax-loss harvesting
Only available for those in the U.S.
Research tools leave a lot to be desired
The investment options are limited
You can only open individual and jointly owned IRAs, Roth IRAs, and SEP IRAs (you may roll over a current 401K)
-
-
-

FAQ

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.

Summary

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.

 

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