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Is SoFi Invest the Right Investment Platform for You?

SoFi Invest has become a leader among low-cost investment platforms. With no account minimums, no commissions, and no trading fees, platforms like this have transformed the way people invest.

Demand has especially sprung up throughout the COVID-19 pandemic, where  total US equity trading volume rose 4% as a result of individual investors. This number has almost doubled since 2010.

Unfortunately, the investing landscape has always been hesitant to change the way it operates. In our SoFi Invest review, we discussed how this is one of many platforms disrupting the industry.

But is a SoFi Invest account the right way forward for you? We discuss which types of investors will benefit from SoFi and which ones may want to look elsewhere.

Beginner Investors

Investors who are new to the markets may want to consider this platform as it is geared towards them. The SoFi Automated Investing platform enables you to choose from 10 different pre-made portfolios.

These default portfolios are separated across 13 asset classes and come with five for brokerage accounts and five for retirement accounts. They are further split by five different risk tolerance levels.

Risk-tolerance levels generally denote the split between government bonds and stocks within your portfolio, with the most conservative portfolios consisting almost entirely of bonds.

SoFi is highly transparent about what forms part of each portfolio. For example, SoFi prefers ETFs from major brokerages, such as iShares and Vanguard.

Investors Who Lack Funds

Not everyone has five figures to throw into an investment portfolio. On the contrary, this is one of the most common barriers to entry. For people who only have a few dollars to spare, getting into the markets can feel out of reach.

Investment inequality is nothing new, with 88% of households earning more than $100,000 owning stocks. While there are many reasons for this, lack of funds is a huge factor.

So, with no account minimums and no fees, SoFi allows ordinary people to get into the markets; many for the first time.

Long-Term Investors

Ultimately, SoFi Automated Investing lacks the variation necessary for short-term trading. Swing traders and day traders cannot simply move in and out of positions.

The SoFi team chooses its investments based on the idea of long-term investing. It is why half of the 10 available portfolios focus on retirement accounts.

If you’re unwilling to spend time in the market for years at a time, SoFi likely isn’t the right option for you.

A cool perk offered by SoFi for long-term investors is access to a certified financial planner at no additional charge. If you’re still in the early stages of your investing career, their advice can be invaluable.

Investors Who Want to Buy Cryptocurrencies

Unlike other investment platforms, SoFi Invest has empowered its users to purchase crypto for the first time. With crypto dominating market headlines over the last year, it’s not a surprise that more and more people are trying to figure out how to invest in crypto.

SoFi offers 21 different cryptocurrencies to invest in, including Cardano, Ethereum, Litecoin, and, of course, Bitcoin.

Take note, cryptocurrency is maintained in SoFi’s own wallet, so you will not receive an individual wallet with your own individual key. Crypto bought through SoFi is not designed to be spent or used elsewhere.

Also, due to the volatile nature of crypto, crypto investors should proceed with care. The lack of a stop-loss order function means you need to keep a close eye on your holdings.

Is SoFi Invest Ideal for Advanced Investors?

Truthfully, there are far superior investment platforms for advanced investors. SoFi Automated Investing portfolios come with no fees because of the lack of functionality open to users.

SoFi only uses market orders, for example, with no option for implementing stop-loss orders. Investors who want a greater level of control won’t find it here.

Plus, there’s no tax-loss harvesting, which is where an investor sells a stock or a mutual fund at a loss in exchange for tax benefits.

Finally, there’s little in the way of advanced charting and stock screening on the site. Understand that this is aimed at the hands-off investor who doesn’t want to dedicate their lives to knowing the intricacies of the markets.

The Bottom Line

SoFi Invest is ideal for several types of investors, but it’s primarily a platform that’s about breaking down barriers. With no fees, no account minimums, and no commissions, ordinary Americans with just a few dollars can invest for the first time.

For now, SoFi is open only to residents of the U.S. It is hoped that international investors will become eligible to join SoFi soon.

If you’re someone who wants to invest for free with a low barrier to entry, create an account with SoFi Invest now by following this link.

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