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SoFi Invest vs. Robinhood

No feesCommission-free tradingFree consultations with qualified financial advisors
No account minimumsSimple to useAccess to options and crypto

SoFi Invest and Robinhood are two modern platforms aiming to change the way people invest. Research shows that 51% of younger investors have a greater appetite for risk. It’s no surprise that SoFi and Robinhood have become major draws for the influx of newer investors during the COVID19 pandemic.

But which platform should you use to build your portfolio? Here’s everything you need to know about how they operate and where the differences lie.

SoFi Overview

SoFi Automated Investing was launched in 2019 as a robo-advisor to make it easy for ordinary people to get into the markets. This is widely considered to be one of the most advanced roboadvisors available today.

Like Robinhood, the goal was to cut down on the complexity and cost traditionally associated with Wall Street brokerages. For this reason, there are no commissions to be paid on trading stocks and ETFs.

While there are zero advanced trading features, SoFi is not aimed at this audience. It’s designed for beginners with little knowledge and experience who want to plan for their futures.

Investing with SoFi requires little to no input from you. The platform does most of the work for you. While you can invest exclusively in ETFs with a basic account, a SoFi Active Investing account unlocks several assets to trade, including fractional shares, which are known as Stock Bits on the platform.

Although Robinhood was launched much earlier back in 2013, SoFi Invest shares the similarities of simplicity and no cost hurdles to overcome.

SoFi Details

Traditional IRA, Roth IRA, SEP IRA, and individual and joint taxable accounts

Stocks, IPOs, cryptocurrency, and exchange-traded funds (ETFs)

SoFi requires no account minimum and levies no management fees on your investments. If you don’t know how to build your portfolio, let SoFi take the reins for you. It handles all the effort of diversifying your portfolio for you, with a split between stocks and bonds.

Where SoFi shines is in the account types offered. Unlike Robinhood, which only offers a simple brokerage account, SoFi allows you to connect IRAs and more.

Robinhood itself is not a roboadvisor, so if you need help with creating a portfolio that will help you to reach your life goals, SoFi is the best platform.

SoFi Fees

If you’ve already browsed our in-depth SoFi Invest review, you’ll already know that you pay nothing to open an account on the platform. You’ll also know that when you invest with SoFi there are no minimum investment requirements, no commissions, no inactivity fees, and no management fees of any kind.

The only fee the platform charges is $75 if you wish to close your account or migrate it to another brokerage. While there are expense ratios charged on ETFs, these are as low as 0.05%.

Robinhood also charges no fees, but there are monthly membership fees if you want more than a basic brokerage account. Read on to find out more about these.

SoFi Pros

No feesCommission-free tradingFree consultations with qualified financial advisors

SoFi Cons

No tax-loss harvesting$75 migration/closing feeOnly available to U.S. investors

Learn more about how SoFi works by reading our complete review on SoFi now.

Robinhood Overview

When comparing SoFi vs. Robinhood, it’s obvious both platforms have the same goal. They want to make investing simpler.

Robinhood takes things one step further because day trading is also possible via the app, which is an option that isn’t available through SoFi. Since 2013, Robinhood has been a pioneer in commission-free trading. The COVID-19 pandemic brought the platform into the spotlight.

Although it has become embroiled in controversy, Robinhood remains one of the most popular mobile trading apps in the world. It now boasts more than 18 million accounts, with more than 17 million active accounts.

Finally, when you create a Robinhood account, you get free stock. The stock you get is completely randomized, but if you’re lucky it could be valued at up to $225.

Robinhood Details

Brokerage

Stocks, ETFs, IPOs, options, and cryptocurrency

Robinhood has a slight edge relating to the number of investments it offers. Options, for example, have the potential for huge profits, but they come with big downside potential and are not recommended for beginners.

Like SoFi, this is a simplified platform with no advanced charting options. For this reason, even though day trading is possible, we wouldn’t recommend using the app for day trading.

Another similarity between Robinhood vs SoFi is that fractional shares are available. Make every dollar work for you and gain exposure to any major market movements automatically. You can also use Robinhood Cash Management to gain a small APY on any unused dollars you have sitting in your account.

One area where Robinhood cannot match SoFi is in the number of account types offered. Since it only supports brokerage accounts, this isn’t the platform for long-term financial planning. For example, if you’re planning for your retirement you may want to consider investing with SoFi.

Robinhood Fees

There are no minimum investments, management fees, or commissions. The only fee charged is $75 for outgoing wires, which is common with most brokerages.

If you want to gain access to features like $1,000 in margin trading, instant portfolio transfers, and Level II market data, you’ll need to upgrade to Robinhood Gold for $5 a month. For most investors, this is hardly required and is mainly aimed at more experienced traders.

Robinhood Pros

No account minimumsSimple to useAccess to options and crypto

Robinhood Cons

No support for retirement accountsLack of customer supportLimited market analysis

SoFi vs. Robinhood: Comparison

Feature

Robinhood

Min. Investment

$50,000

Management Fees

$0; $5 per month for Robinhood Gold

Avg. ETF Expense Ratio

0.04%-1%

Account Types

Individual/joint taxable accounts, Roth IRA, Traditional IRA, and SEP IRA

Brokerage

Tax-Loss Harvesting

Financial Advisor Fee

Best For

Long-term investors

Day trading

SoFi vs. Robinhood: Which One is Right for You?

SoFi Invest and Robinhood have a lot of similarities. The lack of fees and the simplicity of both platforms is what has attracted millions of investors to these platforms.

Active investors will prefer Robinhood as there are more choices and you do have the option of day trading, including on margin. For other investors, SoFi is the better option due to its support of retirement accounts.

SoFi’s addition of free access to qualified financial advisors is a nice perk that can help you to plan for the future. Also, the fact you can invest automatically without worrying about losing your whole bank balance should give newer investors peace of mind.

The fact is that despite their similarities these are products aimed at different groups. SoFi is a robo-advisor, whereas Robinhood is a simple brokerage breaking down traditional barriers to access.

Both are viable options, but the right choice largely depends on your goals. It’s perfectly acceptable to create accounts on each platform. After all, many investors like to play passively and actively throughout their investing careers.

Ready to get started with your journey to a better financial future? Try SoFi Invest or Robinhood now.

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