The barrier to entry for investing is lower today than in the past, thanks to features such as low account minimums and fractional share investing. Other tools, such as automated recurring investments and automatic rebalancing, might help make life easier. SoFi Invest offers many of these features and tools.
This SoFi Invest review can help you decide if the platform is a good fit for you.
Start investing in stocks and ETFs for as little as $5.
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What is SoFi Invest?
SoFi was founded in 2011 and aims to help its members get their money right. Initially, the company did this by refinancing student loan debt. In 2019, SoFi added two new products, SoFi Money and SoFi Invest. In 2022, SoFi became a bank, and it phased out its SoFi Money product in favor of SoFi Checking and Savings account.
Today, SoFi boasts 3.5 million members, and the SoFi Invest platform offers a wide variety of investment options, from traditional stocks and exchange-traded funds (ETFs) to cryptocurrency and IPO investing.
How does SoFi Invest work?
SoFi Invest works much like other investment apps and brokerage firms but puts its own spin on the process.
SoFi focuses on offering low-cost investing by not charging commissions on active trades or management fees for its automated investing service. While some fees do exist, SoFi Invest has a relatively low-cost structure overall. One particular area with a fee to watch out for is investing in cryptocurrency. SoFi charges a markup of up to 1.25% on cryptocurrency purchase transactions. ETFs may also come with expense ratios, which is typical, no matter which investment platform you choose.
SoFi Invest at a glance
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Investment options with SoFi
Once you have a SoFi invest account, you can choose to invest in stocks, ETFs, and specific cryptocurrencies.
For those looking for how to buy cryptocurrency, SoFi Invest supports 30 cryptocurrencies as of March 17, 2022, including:
- Bitcoin Cash
- Ethereum Classic
You get to choose whether you want to pick your investments yourself, called active investing, or have SoFi’s algorithms help build an investment portfolio and manage it for you, called automated investing.
SoFi also allows some investors to invest in initial public offerings (IPOs) of new stocks at IPO prices. To take advantage of this opportunity, which is not guaranteed, you must submit an indication of interest, and follow specific rules to participate.
When you purchase stocks with SoFi Invest, you have the option to buy whole shares or fractional shares. These bits typically start at $5 and are only available on certain stocks. This can be useful if you want to invest in a $200 share of stock but only have $10 to start investing.
If you’re wondering how to withdraw money from Sofi Invest, you may also be concerned about withdrawal fees. You can easily withdraw money from your account in the withdraw section of the Sofi Invest app. Sofi Invest does not list a fee for ACH transfers out of your account. Typically, ACH transfers don’t come with fees, though SoFi does mention that you could incur a $15 ACH return fee if a transfer is reversed by your bank.
When you open and fund your SoFi Invest account, you choose which of their two major investing service options you want to use. Neither of these options charges commissions or management fees.
SoFi automated investing
SoFi’s automated investing option can be useful if you’d prefer a more hands-off approach to investing and no management fees. SoFi’s technology helps you set and plan goals and create an automated portfolio based on those goals. It also automatically rebalances your portfolio allocations quarterly and helps keep your portfolio diversified.
Unlike SoFi, other robo-advisors may charge a fee for assets under management (AUM). This fee is usually a percentage of the assets you hold with the firm, such as 0.25%.
SoFi active investing
SoFi’s active investing option could be a good choice if you prefer a more hands-on approach to investing. It allows you to learn how to invest money as you go, selecting companies or assets you’d like to invest in and trading when you choose.
SoFi also offers an active investing option where you use a self-directed individual retirement account (IRA), but it isn’t a self-directed IRA in the traditional sense of the phrase. SoFi does allow you to invest in any investment option available on its platform, except cryptocurrency, through the IRA. That said, you can’t invest in alternative investments, such as gold or physical real estate, as you can with a traditional self-directed IRA. Instead, SoFi says that self-directed means choosing your own investments rather than using SoFi’s automated investing option.
Who can use SoFi Invest?
SoFi Invest could potentially work well for both new and experienced investors looking for a low-cost investing option. SoFi offers solutions for people who want to choose their own investments and those who want to invest on autopilot. SoFi automated investing stands out because it can build and help you maintain a portfolio without charging a management fee; offering these services without a management fee is rare.
To open a SoFi Invest account, you must be a U.S. citizen or permanent resident. While most permanent residents should qualify, some won’t if they maintain citizenship in what SoFi considers a high-risk country.
As with any investing platform, SoFi Invest won’t perfectly fit every investor's needs. Active investors may want a trading platform that offers more research, trade types, and investment options. People looking for more personalized assistance may prefer working with a human financial advisor.
Maximizing your earnings with SoFi Invest
Maximizing earnings when investing can depend on a variety of factors, including stock market performance, your personal investing goals, and investment strategies. Some rules of thumb could potentially help you when you invest, though.
- Invest within your risk tolerance: Invest in assets where you feel comfortable with the risk level.
- Build a diversified portfolio: This means your portfolio contains several investments, usually spread across different investment types, sectors, and companies. Diversification could potentially help mitigate some losses if one of your assets performs poorly.
- Invest using tax-advantaged accounts: If you know you won’t touch the money you invest until retirement, investing in a tax-advantaged account might help you save money on taxes now or in the future.
- Consider talking with an investment advisor: SoFi offers complementary access to Certified Financial Planners. These advisors are held to a fiduciary standards, which means they're required to make recommendations that are in your best interest, and they don't earn a commission by selling SoFi products. Free financial advice could give you a new perspective on how to meet your financial goals.
SoFi’s automated investing tool can help you build a diversified portfolio that meets your risk tolerance and investing goals. The company also supports Roth and traditional IRAs if you’re interested in saving for retirement.
How to stay safe with SoFi Invest
Taking proper precautions with any investing platform could be essential for protecting your investments. Easy ways to do this include using unique passwords for each service you use, changing those passwords often, and using two-factor authentication.
From an investing perspective, all types of investments come with risk. You could lose any money you invest. Investing appropriately based on your risk tolerance and diversifying your portfolio could help you weather market downturns.
The good news is SoFi does provide some protections as a SIPC member. If SoFi fails, SIPC coverage may protect your investments for up to $500,000. It does not protect your investments from losses related to market performance, though.
FAQs about SoFi Invest
Is SoFi Invest legit?
SoFi Invest is a legitimate investment app you could use to invest in stocks, ETFs, and specific cryptocurrencies. The company has over 3.5 million members and is a member of FINRA and SIPC, which shows its legitimacy within the investing world. You can also receive advice from human advisors who are Certified Financial Planners.
Which is better, SoFi or Robinhood?
The better platform for you will depend on your investment strategy and goals. SoFi Invest and Robinhood offer many similar features, but there are also some significant differences to note. Robinhood offers more cryptocurrency options but doesn’t offer a robo-advisor service as SoFi does. Both platforms offer no trading fees, fractional investing, and ETF investing options. If you’re trying to decide which is better for you, read our full Robinhood review.
Is SoFi Invest good for beginners?
SoFi Invest might fit your needs as a beginner investor as long as it offers the investment options and features you want access to. If you don’t have a lot of money to invest, SoFi’s Stock Bits fractional investing could allow you to start investing with just $5. SoFi’s automated investing product could also help you start building a portfolio based on your goals, even if you aren’t familiar with the intricacies of investing.
How to open a SoFi Invest account
SoFi Invest is just one of SoFi’s many products. Even if you already have a SoFi checking and savings account, you may need to complete a profile or verify your information to get started with a SoFi investing account. You choose whether you want to invest actively with its active investing tool or prefer the more hands-off approach that its automated investing tool provides. SoFi also offers a self-directed IRA option, which is different from its two primary investing choices.
The process is pretty simple. SoFi does ask for your personal information, job field, and Social Security number. This information is necessary for tax reporting and setting up your account. You’ll also need to provide a way to fund the account, typically a linked bank account.
Other investment apps to consider
While SoFi Invest offers a wide variety of features that could fit some people’s needs, it won’t work for everyone. If it doesn’t feel like the right fit for you, take a look at our picks for the best brokerage accounts. Traditional brokerage firms, such as Fidelity and Vanguard, may also provide the account types and financial planning services you’re looking for.
If you’re interested in comparing the best investment apps, you may also want to consider Robinhood, Stash, Acorns, and Webull. Others may like the more hands-off approach of robo-advisors, such as Betterment and Wealthfront, offer. Ultimately, you’ll need to decide which option suits your goals and needs best.
Editor's note: This author has a SoFi Money Account.