SoFi has already made a name for itself in the student loan refinancing, mortgage and personal loan fields. Now it's expanded into the wealth management field, with an approach defined as “powered by technology, guided by advisors.”
SoFi's investment management service, SoFi Invest, offers a robo-advisor service called Automated Investing. Robo-advisors are services which offer online investing accounts and advice. They’re an affordable alternative to expensive financial advisor firms. These services are typically online or mobile, making robo-advisors useful and accessible.
SoFi Automated Investing distinguishes itself by its lack of both management fees and minimum investment amounts.
Current SoFi users; Investors who want both a human and robo-advisor; Starting investors with a low minimum deposit
SoFi Automated Investing doesn't offer tax loss harvesting, which minimizes taxes on taxable accounts; for high investors, this can result in lower returns
Pricing: How Much Does SoFi Automated Investing Cost?
|Option Name||Management Fee||Minimum Balance||Features|
|SoFi Automated Investing||0.00%||$1|
SoFi Automated Investing
SoFi Automated Investing’s main selling point, especially for novice investors, is its fee structure - or lack thereof. It does not currently charge any management fee whatsoever.
This makes it easy for someone to invest without worrying about their returns getting gobbled up by fees. There are also no trading, transfer or commission fees. You’ll have to pay the fees that come with the investments in exchange-traded funds (ETFs), but these are typically low. These low costs help maximize your return rates, without having to spend extra money.
SoFi Automated Investing’s Investment Strategy
Investment portfolios are made up of ETFs. ETFs are a popular and affordable way to investment. They represent different groups of investments, or asset classes, and works like a mutual fund with lower taxes. SoFi invests primarily in passive assets. These assets are stable, rarely straying from the base index. They offer lower returns, but also have lower fees.
The company works with over 20 different asset classes, with a variation of bonds, stocks and other investment indexes. This variety creates personalized and diversified investment portfolios. Investing in multiple different assets helps maximize gains and minimize losses. In the case that one investment has a bad week, you’ll still get some return from your other investments.
These investment portfolios are based on your age, income, assets and risk tolerance. SoFi also takes your savings goals into account when creating these portfolios. It offers a risk simulation calculator to help you understand your portfolio further. If needed, changing your risk tolerance will alter the portfolio and timeline to reach the goal.
The portfolio is looked at monthly or quarterly, depending on whether your investment values have shifted from your original investment portfolio. If they have, this triggers an automatic rebalancing of your portfolio. The mix of ETFs in your portfolio are adjusted based on your risk tolerance and their value.
For example, if your preferred portfolio sits at 70% stocks and 30% bonds, SoFi will keep the investment funds at those levels. If the stocks go above 70%, some will be sold and more bonds will be bought to rebalance the portfolio. This prevents any panic if the high-value assets suddenly drop. Rebalancing means that risk factors are kept low.
SoFi monitors the market and offers projections of different ETFs to see how they’ll perform. This long-term oversight allows you to accurately gauge your progress with your portfolio. These portfolios are personalized to you and are made to best help your goals.
- Traditional IRA
- Roth IRA
- Rollover IRA
- Taxable Individual Accounts
- Taxable Joint Accounts
- Long Term Investing
- Stock Diversity
When investing with SoFi, its personalized portfolios are meant to work with your financial background and risk tolerance. This attention to the investor makes this robo-advisor a good choice for those who are just starting out in investing. Automatic rebalancing and market projections set you up for long-term investing.
The company's qualified and licensed advisors are also there to help. They are meant to work in your best interests and answer your questions at no extra cost. This helps the transition into the investing world easier.
- Mobile App
- Auto Deposits
- Single Stock Diversification
- Portfolio Rebalancing
- Fractional Shares
- Human Advisors
- Fraud Protection
- Direct Indexing
- Tax-Loss Harvesting
Who SoFi Automated Investing Is For
This is a good choice for beginning investors whose priority is to gain access to basic investing plans without giving away money to fees. SoFi has many of the services that other robo-advisors provide, along with access to live advisors, with no management fee. With this combination, you’re able to get both a personal and hands-off experience. You can invest long term while learning more about investing, without paying any fees.
To help you decide whether SoFi is right for you, it offers a free consultation with an advisor, during which you can learn more about the services and decide if they fit your needs.
If you’re an existing customer of SoFi, you can use your existing account the transition from borrowing with SoFi to investing with them easier.
How SoFi Automated Investing Works
To create an account, all you’ll need is $1. Then, you share your age, income, assets and financial goals. Your investment portfolio will come together based on these factors. The risk level can be adjusted at any time to alter your investment portfolio and timeline. Generally, a longer timeline can afford higher risk.
Then, you’ll be able to open your account and deposit funds from your bank account. Once the account and bank is authorized, you can start investing.
As you continue to invest, your portfolio’s progress and projections are monitored. The portfolio changes based on how the current investments are doing. If the investment values stray away from your portfolio, it will automatically be rebalanced.
With a straightforward start process, SoFi offers a quick and easy way to get into investing. The automatic portfolio rebalancing and personalized investment mix allows for a hands-off approach to investing. And if you have any questions or want to learn more, the live advisors are there to help.
What’s the Catch?
Unlike other robo-advisors, SoFi doesn’t offer direct indexing or tax-loss harvesting. These features minimize the money lost to taxes, maximizing your returns. So if you’re investing a large amount of money, you’ll still be subject to these taxes.
While SoFi Automated Investing is fee-free, its other services - including other investing services and core offerings like loans and loan refinancing - may come with their own fees and interest rates. So if Automated Investing proves to be a gateway to other SoFi services, be sure to take a close look at what those services might cost you.
Competition: How SoFi Automated Investing Stacks Up
SoFi Wealth Management offers competitive prices and services. Its fees are much lower than traditional advisors, whose rates could go as high as 1.50%.
When it comes to having both a robo-advisor and live advisor service, SoFi isn’t the only company to offer this. With no account minimum and tax-loss harvesting, Betterment can also provide high returns on investments. But it’s at a higher cost, with a management fee of 0.25% - 0.40%.
Wealthfront’s prices rival SoFi. Its fee is 0.25%, with a slightly higher minimum account deposit of $500. It also offers tax-optimized investing and more account options available, but don’t have a live advisor service. Still, those fees and minimums don't match Sofi's.
Schwab Intelligent Portfolios has no management fee, regardless of the minimum balance. It also offers diverse asset classes for investment. But it has a higher minimum deposit of $5,000, which isn’t as financially accessible as SoFi’s $1 deposit.
Overall, SoFi offers high-quality service at low fees. With the combination of live advisors, diverse investment portfolios and affordable costs, it is strong competition for other robo-advisors in the field.
Bottom Line: Should You Use SoFi Automated Investing?
SoFi has been in the finance industry for years now, but is relatively new to the investing game. In a short amount of time, it has managed to attract attention for its low fees and great service. The company provides technological tools, while offering a personal touch. You learn more about investing through a hands-off approach. For those just starting out in investment, this could be a good option for you.
Tips for Finding an Advisor
- Sometimes, a robo-advisor with occasional human guidance doesn’t quite make the cut. If that’s the case for you, let us help you find a traditional financial advisor. Just take a short quiz and we’ll do the rest. We’ll pair you with three advisors in your area who fit your preferences and financial needs. Then we’ll put you in touch with these advisors to help you find the right one.
- When choosing a financial advisor, keep your goals and needs in mind. Are you putting a child through college while also saving for a new home? Find an advisor who can help you with that. It helps to ask advisors questions about their credentials and experience to better determine whether they’re right for you.