SoFi Invest Review: Is It Legit to Use?

Welcome to our comprehensive review of SoFi Invest, a platform disrupting the investment world with its tech-driven service. We’ll delve into its features, benefits, and potential drawbacks, providing you with the insight needed to make an informed decision about your financial future. Let’s explore this in our SoFi Invest review.

What is SoFi?

SoFi Technologies is a personal finance company and online bank headquartered in San Francisco. The company began as a lender specializing in student loan refinancing but has expanded over the past dozen years to include credit cards, auto loans, investing, personal loans, and online banking services.

The investing wing of the company began as SoFi Wealth before taking on the name SoFi Invest. Officially, the service is known as SoFi Securities LLC.

SoFi Invest offers regular brokerage services and specialized accounts for retirement, saving, and wealth building. It offers several styles of investing, the most popular being Sofi Active Investing. There is also a service called SoFi Automated Investing for those seeking a more passive approach.

SoFi Invest offers access to stock and ETF trades and provides access to certified financial planners at no additional cost. It is a solid overall option for investing but is one of the best choices for certain investors. Here is a look at what Sofi Invest accounts offer and what they don’t.

Types of Investment Accounts

SoFi Invest offers a range of investment account types, each catering to different financial goals, risk profiles, and levels of involvement.

The first choice when choosing a SoFi Invest account is to decide what advisory or brokerage services you need. Primarily, this choice is between active or passive investments.

Active Investing accounts are for hands-on investors who want complete control over their investment choices. Active investing accounts offer access to multiple investment types, including stocks, ETFs, mutual funds, and even cryptocurrencies. Active investors are automatically qualified to be SoFi members and get access to initial public offerings (IPOs) and specialized low-fee ETFs.

While SoFi offers investment advice and educational materials, active investing account holders must make decisions independently. Small investment amounts, such as $5 fractional shares (which SoFi calls Stock Bits) can limit losses and help meet the risk tolerance levels of novice investors.

A SoFi Invest automated Investing account (a Robo-Advisor account) offers a different approach. This account relies on algorithms to provide investment advice based on your information about goals, risk tolerance, areas of interest, budget, and other factors.

Account holders can set up automatic contributions and allow the system to purchase securities fitting your profile. These transactions happen automatically, so you do not have to actively research and manage your trading positions. New investors and those who want a hands-off approach to wealth growth can benefit from this type of account.

In addition to regular personal accounts, non-retirement investment accounts are available to joint members.

Retirement Accounts through SoFi Invest

SoFi also offers several retirement account types.

• IRAs are available in both traditional and ROTH varieties. Traditional IRAs are tax-deferred accounts, while ROTH accounts do not have upfront tax benefits, but proceeds, including investment gains, are tax-free upon withdrawal.
• SEP IRAs are an alternative for business owners or self-employed individuals who do not get an account through an employer. Like traditional IRAs, contributions are tax-deferred until you withdraw the money after retirement. SEP contribution limits are slightly higher than traditional IRAs. They can be up to 25% of your annual income.
• 401(k) accounts are also available through SoFi. Employers fund these accounts, so you must work with your HR department to set up the 401(K).

Like individual accounts, retirement accounts provide free access to financial advisors.

Cryptocurrency Account

SoFi Invest also offers access to cryptocurrency markets. Investors can open a specific account to trade or buy Bitcoin, Ethereum, and other digital currencies. You can also access these products through a regular brokerage account.

Requirements for Opening a SoFi Invest Account

Opening an account with SoFi Invest is a straightforward process, but some requirements and considerations must be considered.

• A minimum deposit is not required to open most types of SoFi accounts. There is also no minimum to access markets. However, fractional shares start at $5. This amount is necessary to participate in the market. However, other brokerage services require hundreds or even thousands of dollars for the initial deposit, so SoFi is an attractive option for investing on a budget.
• Personal documents are required to verify identity and eligibility. The necessary information includes your Social Security Number (SSN), date of birth, and contact details. Applicants must have an address in the 50 US states. In most cases, they can use a PO box if the address is approved and included in the US Postal Service Database. 
• You also need a US bank account to withdraw funds. If you lack this account type, you can open one with SoFi’s banking wing before applying for an investment account.
• SoFi may require your Tax Identification Number (TIN) for tax reporting purposes if you open an IRA or SEP retirement account. 
• Applicants need to be 18 years of age or older. However, SoFi offers joint accounts. One person of eligible age can open a joint account for a minor and allow them to have ownership when they reach age 18.
• Accounts are available to US citizens and permanent residents (such as Green Card holders). Non-permanent residents and visitors do not qualify for a visa.

Overseas addresses are not eligible for SoFi investing accounts. The exception to this rule is a military address for someone stationed overseas.

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Types of Investments Available through SoFi Invest

SoFi Invest offers a diverse range of investment products that you can access on its trading platform. You can purchase these securities manually with an active investing account or use an automated investing account to build your portfolio using these assets.

• Stocks: SoFi allows you to invest in individual stocks and own shares in publicly traded companies. These shares are available for companies listed on US exchanges.
• Exchange-Traded Funds (ETFs): These are investment funds that hold a diversified basket of assets like stocks and bonds. ETFs can track themes, industries, index funds, economies, or categories. They are designed to allow exposure to specific areas without purchasing individual stocks. However, ETFs trade on regular markets just like single-company securities.
• Cryptocurrency: SoFi Invest provides access to the cryptocurrency market. Therefore, you can buy, sell, and hold popular cryptocurrencies like Bitcoin, Ethereum, Litecoin, and more.
• Fractional Shares: SoFi Invest offers the option to purchase fractional shares of stocks and ETFs. You can invest in high-priced assets with smaller amounts of capital. These shares are ideal for new investors and those who want to add high-priced stocks like Apple to their portfolio without purchasing a single for hundreds of dollars.
• Initial Public Offerings (IPOs): SoFi offers access to IPOs, allowing you to participate in new stock offerings at their initial prices. IPOs are offered when a stock first hits the market.
• Options: SoFi has an options-trading platform that allows users to use options to purchase or sell stocks to capitalize on different strategies. For example, you can profit with some options when the stock price decreases. This happens when you purchase an option to sell a stock at a certain price as the market price dips below this level.

SoFi Invest users can open an interest-bearing cash management account to keep money when not used in a trading position.

On the downside, SoFi does not currently offer bonds or mutual funds. Many other full-service brokers offer access to these products. While you cannot get bonds directly through SoFi, you can find exchange-traded funds that track the bond market, including US Treasury bills.

Fees for Investments on SoFi

SoFi Invest offers transparent fee structures. Here is an overview of the fees, account minimums, and other costs associated with trading and investing through SoFi:

1.  Account Minimums: SoFi Invest has no minimum deposit requirements to open and maintain most investment accounts. Therefore, investors can start with any amount they are comfortable with. However, you must fund your account to purchase assets through the platform. The amount necessary depends on the price, but it could be as little as $5 for a fractional share.
2. Trading Fees: SoFi Invest offers commission-free trading for stocks, ETFs, and cryptocurrency. You do not have to pay fees to purchase or sell these assets. A $5 “exercise and assignment” fee for trading options exists.
3. ETF Expense Ratios: When you invest in ETFs, you will incur the expense ratios associated. Expense ratios are management fees that ETFs change. These costs compensate the people managing the fund and keeping it balanced so that it accurately tracks its target sector or economy. SoFi has several in-house ETFs that do not have an expense ratio.
4. Margin Trading Costs: If you choose to trade on margin (purchase assets using borrowed funds), interest charges may be associated with the borrowed amount. These interest rates can vary depending on the amount borrowed. SoFi has a standard interest rate of 9.5%.
5. IPO Access Fees: Participating in initial public offerings (IPOs) through SoFi may involve additional fees, which vary based on the specific IPO opportunity.

SoFi Invest’s fee structure is designed to be straightforward and cost-effective, especially for investors looking to minimize expenses.

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Pros and Cons

Here is a summary of the pros and cons of SoFi Invest.

Pros 

• Commission-free trading makes it cost-effective for investors who want to build diversified portfolios without incurring trading fees or active traders who do not want to lose their profits to fees.
• Automated investing creates and manages diversified portfolios based on a client’s financial goals and risk tolerance. This feature offers an effective and hands-off tool for building wealth over the long term. It works for people who do not have the time or expertise to pick their investments.
• Cryptocurrency access allows users to buy and sell cryptocurrencies like Bitcoin and Ethereum without trading fees. While some brokers offer crypto trading, many traders must open additional accounts at crypto brokerages, prone to hacks and regulatory issues. At SoFi, you can access these assets without an additional account.
• Educational resources empower investors to make informed decisions concerning their investments. They can offer background and insights into stock and fund selection nuances to help novice investors grow.
• A low account minimum makes it accessible to investors with varying budgets. You can start a portfolio for as little as $5.

Cons

• SoFi has limited investment offerings compared to some brokers. For instance, you cannot access mutual funds or bonds through the platform.
• Fractional shares start at $5. Even though there are no deposit requirements, you will need this amount to invest. Some other platforms may allow investments for as little as $1.
• Limited research tools make it difficult for those who prefer to gain data on stocks themselves. SoFi is geared toward education, but it lacks some of the detailed data that other platforms provide.
• US-based savings and checking accounts are necessary to open an account. You can open these accounts with SoFi, but you cannot deposit directly to SoFi with other forms of payment.
• SoFi does not offer advanced features like tax-loss harvesting. This feature allows you to use losses to reduce your tax bill, but it is unavailable on SoFi. High-end online brokers may offer this service, which is typically useful for professional traders and people with large portfolios.

You can weigh these advantages and disadvantages and see if SoFi Invest fits your trading style and plans. Many investors may not need tax-loss harvesting or mutual funds, so these drawbacks may not be important.

SoFi Trading Platform

SoFi has an online trading platform you can access via a browser or desktop app. The tools available include charting, price tickers, and trade tracking tools.

You can also manage trades via a mobile app from the Apple App Store and Google Play. One of the main advantages of the mobile app is that it allows you to access bank accounts, loan information, and other SoFi products and services in addition to investing. The features include access to your credit score and budgeting tools. SoFi calls it a “once-stop finance tool.”

Both mobile apps and desktops offer basic charting tools and allow you to select indicators for technical analysis. You can also perform some fundamental analysis using financial data on stocks. However, in-depth research will require access to third-party tools.

Most cost-conscious investors, novices, and those who mainly trade using technical analysis will not miss the advanced research tools.

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Investor Education on SoFi Invest

SoFi offers a range of educational content for new and intermediate investors. Once you open an account, you can access free educational seminars, informational articles, and other media. These are offered as part of the SoFi Learn platform, including educational material relevant to all other SoFi products, as well as budgeting, career planning, and other relevant topics.

Investing and other topics are also divided by life stages. These topics are arranged in categories such as “going to college,” “preparing for retirement,” “building wealth,” and “starting a family.”

SoFi also has calculators, including two investment-related tools that automatically help calculate retirement account contributions and track IRA amounts.

These educational offerings support the free access to certified financial advisors offered to all customers with an investing account.

SoFi Invest Customer Service

SoFi has a central customer support center for all of its products. Support is available in different forms. SoFi even answers some questions via social media.

Customer support specialists answer queries on the official Twitter account @SoFiSupport. You can also access customer service reps 24/7 via phone, email, or web. SoFi applications also have a chat feature that gets answered all day and night on every day of the week.

While the general 24/7 chat and phone services can answer some questions, more advanced and specific investment questions must be directed to the SoFi Invest chat and phone center. This service (available by phone at 1-855-525-7634 is open from 5 a.m. to 5 p.m. (Pacific time) from Monday to Friday. While unavailable 24/7, customer service reps are reachable before and during regular stock market hours.

SoFi generally has positive reviews for its responsive and knowledgeable customer service providers.

You need to make an appointment to speak with an investment advisor.

Other Products Available from SoFi

SoFi offers a complete range of financial products. The offerings include an online checking and savings account. These could be important for investors because they provide a convenient way to fund your account and hold funds between investments.

The savings account bears interest, so it is a good place to store capital when not used in an open trading position. Savings accounts can have up to 4.5% APY.

There is also a credit card that can accompany the other accounts. It offers 2% rewards on purchases and 3% on travel.

SoFi started as a student loan provider. It still offers private student loans and refinancing for graduates seeking a better rate or more manageable payback arrangement.

SoFi is now an insurance provider, as well. It offers auto, home, life, and renters insurance. Users can combine homeowners coverage with a mortgage. SoFi has 0% origination fees on its home loans.

Finally, SoFi has a credit score tracker that customers can use to learn their credit score and take steps to improve it.

Who is SoFi Invest For?

SoFi Invest caters to all levels of investors seeking access to stocks and ETFs. The commission-free trades and low-margin interest rates are attractive to experienced investors. However, many of the features are geared toward novices.

• Beginner investors build a diversified portfolio without worrying about high trading costs or account fees. They can do this through a SoFi automated investing account or an active investing SoFi account.
• Long-term investors who prefer a set-it-and-forget-it investment style can benefit from SoFi.
• Cryptocurrency enthusiasts are interested in digital assets like Bitcoin, Ethereum, and other digital currencies.
• Tech-savvy investors who prefer managing their investments on smartphones or tablets can use SoFi’s mobile platform. This tool can also benefit active and day traders who must follow the market regardless of location.
• Margin traders who want a low interest rate and no-commission trading.
• Anyone needing additional investment guidance can use SoFi’s financial and robo advisors to gain the insights necessary to learn more and manage their investing.
• Employees, business owners, and self-employed individuals seeking IRA, SEPs, or Roth IRA accounts can open them through SoFi. The advisory services and fee structure make this platform attractive for retirement savings.
• ETF investors seeking funds without an expense ratio can take advantage of SoFi’s in-house ETFs, which do not have the same fees as other funds.

Bond traders, those wanting to invest in a managed mutual fund, and investors hoping to speculate on foreign exchange (forex) markets would be better off seeking other platforms.

Overall, SoFi Invest caters to novice investors, those saving for retirement, and investors seeking a hands-off approach with automated investing. The commission-free trades and competitive margin rates will attract experienced investors seeking a low-cost trading platform.

FAQs

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