SoFi makes investing seem easy – but what's the catch? Making investing simple and easy is important to help beginners put their money into the market, but where should you start? What app should be the one to get you started. First of all, let's get out the pros and cons of the SoFi Investing App and see who should consider using it before investing.
SoFi started as a student loan refinancing company to help people with student loans. As beginners start investing, they need more than just a refinancing company; they need to know how to invest.
When a student loan refinancing company decides to branch out into the investment world, you get apps like SoFi. Short for “social finance,” the brand vibrates with a spirit of youth, value, and community.
But besides all the marketing jazz, what does SoFi Invest have to offer that makes it different from other investment apps? Allow me to break it down for you.
What is the SoFi Investing App?
SoFi Invest prides itself on offering wrap-around investing services easy enough for anyone to use. It provides a broad range of investment options that include:
- ETFs (exchange-traded funds)
- Fractional shares
- IPOs (initial public offering)
- Retirement Accounts
The SoFi investing app includes several features designed to support young investors emerging into the trading scene: commission-free trades, no account minimum, and tons of educational and networking resources.
How does the SoFi Investing App Work?
Like other investment trading apps, the SoFi investing app allows users to deposit funds from their personal accounts to purchase shares in various financial markets.
The Pros of the SoFi investing App
This investment app has some great things going for it. For example, SoFi Active Investing offers free trades of ETFs and stocks, access to 30 cryptocurrencies (including major market movers like Bitcoin and up-and-comers like Shiba Inu), and allows fractional shares so new investors can savor a piece of Amazon or Netflix if they so desire.
Since the app is geared towards newbies, it includes some next-level artificial intelligence investment options to ease the stress of building a portfolio from scratch.
In addition, SoFi Automated Investing is an excellent alternative to a live money management advisor because it doesn't charge any fees. The SoFi investing app automated option gives clients a choice of ten different portfolios, each diversified with a selection of affordable ETFs.
And if you ever need live human guidance, SoFi also has you covered there with free, unlimited access to CFPs (certified financial planners). There are also member-only benefits that include educational seminars and meetings to learn more about financial wellness and investments.
The Cons of SoFi
If you're looking for less sexy (but admittedly tried and true) investments like bonds, mutual funds, index funds, or bond funds that are commonly used in retirement portfolios, you'll have to find them elsewhere. Unfortunately, these options aren't currently available, and it doesn't seem as though they're going to be anytime soon.
The other major downside is that SoFi doesn't offer tax-loss harvesting – where investors sell securities at a loss to offset capital gains tax liability.
So if you manage to make significant investment gains using the SoFi investing app, you're going to have heftier taxes to pay. Many competing financial institutions offer tax-loss harvesting services to prevent this from happening.
Finally, the SoFi investing app robo-advisor has only been around since 2017. With strong competitors that have been around and have established a proven track record, SoFi has some work to do to prove itself as a worthy contemporary in the investment industry.
SoFi comes with a range of features.
The features offered by the SoFi investing app are excellent for emerging investors.
Recurring investments make it easy to establish a long-term strategy in building your portfolio. With every purchase, SoFi will prompt you with the option to commit to a recurring investment in a given period. That's one less thing to remember to do after every paycheck.
A Peer Community
Several social features make the platform feel like a real peer community. For instance, take the leaderboards that track who has made the most gains with SoFi, and the popular investors feed that serves up the hottest users with the most prominent social followings.
The buy and hold approach is one of the best ways to invest money. One popular investor writes in his bio – “My strategy: I'll sell when I'm dead,” and I have to hand it to him – it's simple and establishes a solid approach. Clicking on another investor's profile offers a chance to see their investment profile and learn from their wisdom.
Learning from a community helps you gain maturity and confidence as you invest more money.
But the thing that really sets the SoFi investing app apart is the robo-advisor – an artificial intelligence feature that builds your investment portfolio for you. The fully-automated investing AI starts by assessing your goals.
Are you trying to get out of debt? Buy a house? Start a business? After coming up with a diversified investment plan to help achieve your goals, the AI automatically rebalances your portfolio every quarter. The AI can be a game-changer for investors who otherwise have no idea how to approach diversification and quarterly rebalancing.
How do you sign up?
To get started, head to the app store and download the SoFi investing app. The sign-up process is relatively intuitive and even offers some surprises along the way.
Before you enter your personal information, the app offers (among other options) a choice to claim up to $1000 in free stocks. Selecting it prompts the app to guide you through their investment pathway.
This is where it gets fun – after entering your personal information, the app prompts you, “Now, drop the claw to play.”
I wasn't sure what to expect, but thought, hey, what's the worst that could happen?
Voila! I won $10 in free stock! The app presents a range of options for investment, but you're limited to a few dozen offered choices.
This is definitely the kind of thing aimed at young investors, and that's likely no accident.
Sign-up with SoFi investing app here.
Who should use the SoFi investing app?
With several features that allow users to take a hands-off approach, the app is excellent for passive investors with a small investment budget. You can opt for time-saving recurring auto-investments and put everything into the hands of the robo-investor.
The SoFi investing app is also handy if you're looking to grow your knowledge of investments. The SoFi Learn feature includes many resources to educate users, from Investing 101 to What is Cryptocurrency? Members also receive access to educational experiences, including virtual workshops that cover topics like Smashing Glass Ceilings and Financial Freedom 101.
The target audience is clearly young and inexperienced investors who can benefit most from using this app.
So what are you waiting for? If you're a new investor looking for an app that can automate your portfolio, and you have $1 to get started, then head over to SoFi and give it a try for yourself.
How Does SoFi Investing Compare?
With companies like Betterment and Wealthfront making moves to become some of the best robo-advisors you must take a look at fees, options, and what is considered the best bang for your buck.
SoFi Automatic Investing does not offer tax loss offerings as Betterment and Wealthfront offer. If this is not a deal breaker then you are in luck.
Both Betterment and Wealthfront have a 0.25% advisory fee or portfolio management fee. Sofi Automatic investing has a $0 fee, which makes it appealing.
As a beginner not knowing much about investing, a free financial advisor can bring on much value. They can help with questions about allocations, risk tolerance, stock investing, and how to create a compelling portfolio. Sofi Automatic Investing also offers financial advisor help that comes at the cost of $0.
In the end, the biggest bang for your buck is the ability to use SoFi for free, and you get much value out of it.
Sign-up with SoFi investing app here.
As you are thinking about investing, you need to look at all options. People often talk about the possibilities they hear about. There are Acorns, M1 Finance, Vanguard, Betterment, and Fidelity. These are all great platforms to invest in but look at SoFi investing. It is something newer, but it offers a good deal for beginners.
The question is should you use the SoFi investing app? If you are a beginner, DIY, or someone who likes to invest in a lot of different things, then yes. Now, some options like the Automated Investing App may not offer tax-loss harvesting or even a classic index fund, but having the ability to buy index fund ETFs gives you many great options in creating a great portfolio.
If you are looking at options, take a look at SoFi investing.
I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.
2 thoughts on “Should You Use the SoFi Investing App? Get the Facts Before You Try”
Sofi doesn’t offer tax loss offsets?
If I sell at a loss and this is to be reported on my taxes how is it that I do not receive the benefit of the loss towards my gains?
It is tax-loss harvesting. A lot of roboadvisors and investment apps offer this. What they do is they will automatically do tax-loss harvesting for you as in selling the losses to offset any gains. So basically, the SoFi Investing app doesn’t do that for you. You must do it manually. It is like with any other trading app. Some people want it done automatically like what Betterment and Wealthfront do.