Money at 30: SoFi Active Investing Review
Has there ever been a better time to be a newbie investor? It wasn’t long ago that trading stocks and purchasing ETFs required “a guy” who you could give orders to and they’d make it happen. Oh, but they would charge you a significant commission for the service.
Cut to 2019 and things are much different. Not only has stock market trading moved online, allowing investors to make trades for themselves but the fees associated with trading have also come way down — like down to zero. While that’s thanks to FinTech players such as Robinhood, that app isn’t the only free trading options. Enter SoFi Invest.
Hailing from the online lender SoFi, SoFi Invest makes it easy to start investing by offering low minimums, no fee trades, and now even the ability to purchase fractional shares. So how does this platform stack up against other options? Let’s take a closer look at SoFi Invest’s active investing platform.
What is SoFi Invest and How Does it Work?
Active vs. Automated
Notably SoFi Invest offers two main options: Active investing and Automated investing. While the former allows you to buy and sell individual stock and ETFs, the latter serves as a roboadvisor. What’s great is that both options allow users to start with as little as $1 and don’t charge any fees.
Despite my interest in SoFi’s Automated option, I decided to start with Active instead. Therefore, for the purposes of this review, we’ll focus exclusively on this aspect of SoFi’s offerings.
Signing up for SoFi Invest
Getting started with SoFi Invest is fairly simple. First you’ll need to create a SoFi account using the basic info such as your name and e-mail address, followed by setting up a password. Then, when you select whether to open an Active or Automated investment account, you’ll need to provide a bit more info, such as your address, employment status, occupation, citizenship status, birthdate, and Social Security number. Moreover, after I finished the sign-up process, SoFi requested a photo of my I.D. or passport to verify my identity. From my experience, this is all pretty standard for opening a brokerage account, although I can see why some might be hesitant. While I personally trust SoFi (a company large enough to purchase naming rights for a stadium has to be pretty legit, right?), you’ll need to decide if you feel comfortable providing the required information.
Using SoFi Invest
Buying and selling stocks with SoFi Invest is quite simple. Whether you’re on the desktop site or mobile app (more on that in a minute), all you’ll need to do is select the stock or ETF you want to buy, enter how many shares you want, and confirm your order. Then your purchases will display in your account, allowing you to easily view your portfolio’s performance.
When I first started using SoFi Invest, my biggest issue was that they only allowed for Market Orders. This meant that you could purchase a share at the current price but were unable to set orders to execute when a stock hit a certain price — something that apps like Robinhood enable you to do. Thankfully SoFi has remedied this and you can now set Limit Orders. However these orders do expire at the end of each trading day if they’re not filled. Again, this is a departure from the likes of Robinhood that allows you to set limit orders that are good until canceled. Nevertheless it’s nice to have this option added and I hope more choices are available in the future.
SoFi mobile app
As I mentioned in my SoFi Money review, one slight downside to SoFi’s growing roster of features is that they all share a single app. On the one hand, I do enjoy being able to quickly switch between my Money and Invest accounts. At the same time, making Invest a mere tab instead of giving it its own application does feel limiting. Perhaps as the platform expands, a dedicated app could come to fruition as well.
In the meantime, while I don’t dislike using SoFi Invest on mobile, it’s not my favorite thing. For one, while limit orders do exist in the app — and they even offer a cool little interface — finding them isn’t terribly intuitive. To access a limit order option, you’ll need to tap where it says “Market Price.” Would you have thought of that on your own or found it on accident like I did? Such things may just be a symptom of SoFi’s expansion of their Invest product, but once again I make the case for a solo application.
One feature that SoFi Invest has added since I first joined that has quickly become a star in my eyes is Stock Bits. This allows users to purchase fractional shares of stock, investing as little as $1. However SoFi only offers Stock Bits for select companies — although most of the heavy hitters are represented.
If a stock is supported by Stock Bits, when you click “Buy,” you’ll be given the option to base your purchase in number of shares or amount of dollars. Something else to note about Stock Bits is that SoFi only places orders for fractional shares once per day. As a result the purchase price (and in turn the amount you own) might not match exactly what was shown when you first viewed the listing. Still, for those who want to start investing in companies but can’t afford full shares, this could be a great option.
Another feature SoFi recently added is the ability to trade cryptocurrency. Currently supported assets include Bitcoin, Ethereum, and Litecoin, although you can add several others to your watch list. For each of the available tokens, you can choose how much to buy in coins or in dollars.
One small issue I have with this Crypto feature is that it seemingly operates as a separate account from your regular Active Invest. As a result, even if you have buying power in your main account, you’ll still need to add cash before you can make a purchase. Those funds will also need to fully clear before you can buy cryptocurrencies. Thankfully I don’t intend on buying much crypto or I would find this whole process pretty annoying.
Final Thoughts on SoFi Active Investing
Given how much I’ve come to enjoy my SoFi Money account, I was excited to give SoFi Invest a try as well. Thankfully the experience has been similarly positive. In fact I’ve seen the offering truly blossom over the past few months, adding some key features that were missing (such as limit orders) as well as unveiling unique options like Stock Bits.
With that said, I do still think that Robinhood offers the better trading experience. With a dedicated app, more intuitive navigation, and honestly more appealing aesthetics, I haven’t bothered to move over my entire portfolio just yet. However, since Robinhood doesn’t currently offer fractional shares, I’ve really been making use of SoFi’s Stock Bits for buying the occasional small piece of companies I’m interested in.
Overall I appreciate what SoFi has built with their Active investing platform and would recommend it as a great alternative to Acorns — especially thanks to Stock Bits. On top of that, with the company consistently adding new features and functionality, it could certainly rival Robinhood in the near future. Therefore, considering it only takes a $1 to get started, I say it’s worth giving SoFi Invest a shot for yourself.
Frequently Asked Questions
Yes. SoFi Invest does not charge any trade commission fees, monthly fees, or other expenses. However, certain ETFs may have expense ratios associated with them.
SoFi Invest allows users to buy and sell individual stocks as well as ETFs and select cryptocurrencies. Additionally, the platform’s Stock Bits enables customers to purchase fractional shares of top companies, investing as little as $1.
Yes. SoFi Invest comes from the well-respected FinTech company SoFi, which was founded in 2011. To date they have raised $2.5 billion in venture capital funding.
Current SoFi Invest users may earn rewards for referring friends and family to the platform. Typically successful referrals will result in both parties earning free money to invest in the stocks or ETFs of their choice.
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Also published on Medium.