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Senior woman using SoFiOnline 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.

Picking the trading platform that best suits your goals, timeline and level of engagement is 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 $2,000 in your brokerage account (minus any crypto positions).

SoFi vs. Robinhood: Services & Features

Candlestick chartRobinhood 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, the 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 IRA. 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 where 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 within the recent year 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 brings 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

Young Asian male investorSoFi 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. While it’s good to see opportunities open up for new and even intermediate traders, there may still be some features that could hold you back. Robinhood’s overall “gamified” design is slick but can trivialize consequential investment decisions. You may also feel limited by either platform if you need advanced market research on your side.

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

  • 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 towards your investments. You can check if your strategy is matching up with your risk tolerance with our asset allocation calculator. Or you can use our available investment calculator to see what your investments could grow to over time.
  • SoFi and Robinhood let you take a hands-on approach with your investing, but even active traders can benefit from a financial advisor’s help. They can help sharpen up your investment strategy and improve your portfolio diversity. You don’t even have to go looking for one. SmartAsset’s financial advisor match-up tool connects you with local financial advisors who have the credentials to help you improve. So, if you’re ready to change up your routine for the better, get started now.

Photo credit: ©iStock.com/playb, ©iStock.com/MicroStockHub, ©iStock.com/Tirachard

 

Ashley Kilroy Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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