SoFi vs Robinhood | SmartAsset

Online investing has become increasingly popular, and with the growing appeal comes new pools of traders who want to begin building their own investment portfolios. Finding the right broker is essential to starting your investment journey. However, choosing between all the various options can be a challenge. Luckily, there are certain brokers that want to support novices and experts alike. SoFi and Robinhood are two low-cost options. Here’s a look at how these platforms compare against each other. It should be noted that picking the trading platform that best suits your goals, timeline and level of engagement is typically best done in consultation with a financial advisor.

Overview of SoFi vs. Robinhood

SoFi offers services for a broad range of financial needs. It offers student loan refinancing and insurance. But, it also brings some choice into its trading platform, SoFi Invest, where you have the option to automatically invest.

Robinhood offers a comparable set of assets to invest in, including stocks and cryptocurrency. It encourages a slightly competitive investment style through its easy-to-use interface. Although Robinhood focuses more on active investors, both SoFi and Robinhood target new to intermediate investors. They accomplish this in different ways, but their $0 commissions are one of the main reasons.

SoFi vs. Robinhood: Fees

SoFi and Robinhood prioritize accessibility, so they ensure commission-free trading on their offered stocks and exchange-traded funds. You can also start investing on either platform without worrying about an account minimum balance. Both platforms also avoid account management and inactivity fees, but there is a $75 outgoing account transfer fee (aka ACAT) with each.

These traits apply to both SoFi’s active and automated investing. The main difference between SoFi’s trading fees and Robinhood’s is how they go about cryptocurrency. SoFi implements a 1.25% markup on every crypto transaction.

With Robinhood, you also have the option to pursue its Robinhood Gold service. It costs $5 per month and allows users to begin margin trading. The margin loans begin with a 5% interest rate and they require a minimum of $2,000 in your brokerage account (minus any crypto positions).

SoFi vs. Robinhood: Services & Features

Robinhood and SoFi both have their limitations in terms of investment opportunities. SoFi offers two avenues for investing styles: automated and active accounts. The former allows you to pick a portfolio and then take on a passive role as the money comes in. In contrast, active accounts are self-directed, where you can choose which assets to trade in. You have the options of stocks, ETFs and cryptocurrency.

With SoFi, you also have the option to invest in retirement accounts. That includes Traditional IRAs, Roth IRAs, SEP IRAs and Traditional Rollover IRAs. You can set up an individual account to trade with or a joint account, like Community Property or Rights of Survivorship. So, while there is this additional option, the range of investment products is relatively limited.

In comparison, Robinhood does not currently offer IRA products or joint accounts. However, it does offer options that its competitor does not. It also allows extended trading hours so that you can trade during pre-market and after-hours sessions.

Its premium account, Robinhood Gold, costs $5 a month and gives you access to margin trading as well as some higher-end features like Level II market data and Morningstar research.

However, the feature you’ll find unique to SoFi, in this case, is its financial planning opportunities. Clients have access to SoFi’s noncommission financial advisors who are CFPs with the Series 65 designation at no extra charge. With Automated Investing, you’ll also have auto rebalancing but no tax-loss harvesting. On the Active Investing side, you have fractional shares, which Robinhood Financial also supports.

SoFi vs. Robinhood: Online & Mobile Experience

SoFi and Robinhood have an advantage over their competitors when it comes to ease of use. Many investment platforms are looking for ways to entice beginner investors. However, their interfaces are dense and come with heavy learning curves. SoFi and Robinhood are relatively intuitive with navigable interfaces, whether you are using their mobile or online iterations.

However, their simplicity can also come with unique problems. Robinhood has come under fire in recent years for its layout. In particular, its app has contributed to the issue of “gamifying” investing. Originally, investors were congratulated on their first trade with a confetti animation (although that has been removed following criticism). Investors were also encouraged to sign friends up for a chance at a high-price glamour stock and they can also browse the most-held stocks by fellow users. While the goal was to engage novice investors, it brought down the gravity of investing.

Both SoFi and Robinhood’s online iterations offer learning platforms, though. Since each platform caters to new investors, they promise opportunities to improve your financial knowledge. Robinhood primarily focuses on investment information. So, its articles explain basics like aggregate demand, although they can also delve into topics like saving for retirement. In comparison, SoFi tackles more, such as loans. As a result, in addition to articles, you encounter guides, calculators and other tools on its Learn platform.

Who Should Use SoFi?

SoFi is designed to act as a one-stop-shop financial platform. So, its application works for more than just investing. However, SoFi Invest does work well for certain types of investors better than others. In particular, new investors will find the simple interface, access to financial planning guidance and education welcoming. On top of that, both passive and active investors have options thanks to the Automated and Active trading routes that are available.

However, if you are looking for certain trading products, like mutual funds or bonds, you will have to look elsewhere. It’s a useful platform, but if you want a sophisticated trading experience, you might need to check out options like E*TRADE or Fidelity.

Who Should Use Robinhood?

It is difficult to recommend Robinhood at the moment. In particular, its target audience of new to intermediate investors might be the least inclined to benefit from it. You can read more about Robinhood’s shortcomings on our in-depth brokerage review page under the section Robinhood: What’s the Catch?

However, Robinhood can be a useful tool for more dispassionate investors. They should have an active style and come equipped with enough investment knowledge to keep them from making hasty decisions. Also, the platform’s low fees are a useful opportunity for many traders.

Bottom Line

SoFi and Robinhood are two investment platforms that are focused on the beginning or novice investor. They highlight stocks and ETFs with minimal commission and account fees, which appeal to the everyday individual. In the end, it depends on your personal experience and financial knowledge. The right investor can take advantage of either SoFi or Robinhood as tools, as long as they know how to use them.

Tips for Investing

SoFi and Robinhood let you take a hands-on approach to your investing, but even active traders can benefit from a financial advisor’s help. They can help sharpen your investment strategy and improve your portfolio diversity. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
You have to know your financial situation when you invest. Your risk tolerance and time horizons will determine how much you are able to put toward your investments. You can check if your strategy is matching up with your risk tolerance with our asset allocation calculator.