SoFi Automated Investing Review: Is this a legit broker?

SoFi review
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SoFi, which stands for “social finance,” gained popularity for its customer-focused approach to student loans and other financing products. With its excellent SoFi Invest platform, it is currently creating a stir.

Customers can invest in equities, mutual funds, ETFs, and cryptocurrencies via the SoFi Invest platform.

SoFi offers automated investing for investors who would rather keep their portfolios running on autopilot.

To help you decide if SoFi Automated Investing is ideal for you, we’ll dig deeper into the Robo-advisor platform in this review and examine its benefits and drawbacks.

Pros

  • A Certified Financial Planner is available to all clients.
  • No management charge for investments.
  • $5 to start investing after opening an account for $1.
  • Flexible options for SoFi loans, cash management, and self-directed investing.
  • Before inputting personal information, one can examine a portfolio.

Cons

  • There is no claim for tax losses.
  • There are no socially conscious portfolios.
  • No customization of a portfolio.

Top benefits

Low prices

One of the greatest low-cost Robo-advisors is SoFi Automated Investing. The organization has no account minimum and doesn’t charge a management fee; clients can start investing with $5.

The underlying investment funds could have additional costs. The standard fees are undoubtedly on the lower end of the spectrum, but SoFi has its own unique ETFs and is waiving fees on them for Automated Investing subscribers until at least mid-2022.

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MIN. DEPOSIT

$250

EXCL. OFFER

USER RATING

9.8

4.9/5

73% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

MIN. DEPOSIT

$50

EXCL. OFFER

USER RATING

9.7

4.8/5

CFDs are complex instruments and carry a high risk of losing money quickly through leverage. 78% of retail investor accounts lose money when trading CFDs from this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

MIN. DEPOSIT

$250

EXCL. OFFER

USER RATING

9.3

4.5/5

CFDs are complex instruments and involve a high risk of losing money quickly because of the leverage effect. 65.3% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Additionally, there are no charges for money transfers, and opening or maintaining an account is free. You won’t pay any trading commissions if you utilize SoFi’s investment platform for active investing (such as buying a specific stock).

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Access to human advisors

There aren’t many Robo-advisors that provide access to a financial advisor and those that usually restrict access. Financial advisors are available to SoFi Automated Investing customers at no additional cost. SoFi’s advisors are Certified Financial Planners. 

They are obligated to uphold the fiduciary standard, so they won’t try to sell you goods merely to earn a sizable commission but instead must prioritize your best financial interests.

Automatic rebalancing

Based on your financial objectives, SoFi automatically modifies your investments every quarter to ensure that your portfolio has a fair balance of risk and return.

Experience with mobile and online

The user-friendly mobile and online apps from SoFi are its best qualities. Notably, both its Android, and iOS apps get favorable reviews.

If you fully utilize a SoFi membership, the apps give you access to all SoFi products, allowing you to handle your banking, investing, and lending needs in a single location.

Reduced prices on additional SoFi products

Customers of SoFi Automated Investing receive interest rate discounts on other SoFi products, including personal loans and mortgages, when they make recurring deposits of $20 or more. Additionally, eligible members receive free career counseling and admission to SoFi member events.

What could be improved?

No capturing of tax losses

To balance out taxable gains across your portfolio, you (or your broker) may decide to sell some investments that are losing value. This practice is known as tax-loss harvesting. By doing this, you pay less tax on investment profits.

A potential major disadvantage for investors with sizable accounts or who are otherwise in high tax brackets and want to lower their tax burden is that SoFi doesn’t provide tax-loss harvesting services.

Conflict of interest

SoFi has a conflict of interest because it may invest your portfolio in its internal funds. It reveals this conflict of interest and the funds its Robo-advisor may invest in. Until June 2022, SoFi funds employed in the automated investment plan will incur no expense ratio. However, this could alter later, and you could need to pay fees.

SoFi, however, clearly states that its financial counselors receive salaries rather than fees. It is a crucial point to remember since it eliminates one of the situations where egregious misconduct is most likely to occur: when an advisor tries to upsell a customer on a product they don’t need.

SoFi Automated Investing: How it works

SoFi Automated Investing offers traditional and Roth IRAs and SEP-IRAs, and enables customers to roll over existing retirement money into a SoFi account in addition to standard brokerage accounts. Members can access their accounts via SoFi’s user-friendly mobile app or website.

Customers of SoFi Automated Investing can select from several investment portfolios with a range of risk profiles and financial objectives. Alternatively, if unsure, fill out a questionnaire about your financial goals, assets, and income on SoFi.

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Like most Robo-advisors, portfolios consist of exchange-traded funds (ETFs), which invest in stocks, bonds, and other assets. Contrary to many of its rivals, SoFi uses a few customized ETFs in its Automated Investing portfolios as an additional means of cutting costs.

Investment options with SoFi

For novice investors searching for an easy method to begin investing, SoFi Invest is the best option. Even if you don’t have much money to invest, you can still get started with SoFi because there is no minimum deposit required to register an account. It has the following fundamental features:

  • Fees on funds and accounts are low
  • CFPs are available for complimentary consultations
  • Stock fractional shares are available for investment
  • Automated or active investing
  • Cryptocurrency access

The automated investing account (Robo-advisor) allows users to create custom portfolios according to their risk tolerance and financial position. In contrast, the active investing account completely controls buying or selling of stocks. Humans created the 10 Robo-advisor portfolios offered by SoFi to reflect various financial circumstances.

Investors who wish to try out freshly public firms have yet another choice with SoFi: IPO investment.

SoFi’s fee-free accounts can be all you need if all you want to do is invest your money in inexpensive Vanguard or ETFs. You might want to look into other brokerages if you’re interested in tax-loss harvesting or trading more frequently with stop-loss orders.

SoFi provides 27 other coins and tokens in addition to bitcoin, Ethereum, and Litecoin when it comes to cryptocurrencies. Be prepared to spend an additional 1.25 percent in trading fees because SoFi adds a markup fee to every cryptocurrency transaction.

Account setup

SoFi Invest accounts are simple to open. The application requires your name, some basic identification questions, and information about your risk tolerance and investment experience. It only takes two minutes to complete the signup process. In addition to traditional Roth and SEP IRAs, SoFi also offers taxable brokerage accounts. With each of these accounts, you’ll be able to invest automatically; with SoFi’s automated investment system (also known as passive investing you may actively invest and control the fund.

As a welcome bonus, SoFi Invest regularly offers new account bonuses. Occasionally, these bonuses are available to the public, but usually, they have to be referred by an existing customer. Bonus offers for new accounts may change occasionally, and there is no guarantee that one will be available. It pays to check before opening an account since these offers can be worth hundreds of dollars.  

Investing with SoFi: Is it safe?

SoFi has an A+ rating from the Better Business Bureau. A+ to F is BBB’s grade range when evaluating a company’s trustworthiness. The BBB considers various factors – including customer complaints, licensing matters, and advertising considerations.

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In the last 12 months, SoFi has resolved 330 of the 508 complaints it has received over the past three years. The BBB profile of the platform shows zero unresolved complaints. Even with SoFi’s A rating, you should do your homework on the company. Ratings by the BBB do not guarantee the reliability or performance of a company.

SoFi was sued by the Federal Trade Commission (FTC) for misrepresenting how much its customers could save. The FTC approved an order in 2019 prohibiting SoFi from misrepresenting its loan refinancing savings. There was no confirmation or denial from SoFi regarding the allegations.

The Better Business Bureau reports that SoFi has resolved 330 complaints over the past year.

Conclusion 

For current SoFi users who use their lending, active investing, or money capabilities, SoFi Automated Investing makes sense. Beginner investors will value the platform’s ease of use, simple dashboard navigation, educational resources, and helpful phone support. Beyond that, investors of all ages might profit from the accessibility of free Certified Financial Planner appointments. Most critically, there is little competition for zero-fee investment management. Please be aware that waiving the ETF fund management charge is only temporary. SoFi Automated Investing stands apart from more feature-rich rivals who charge (albeit reasonable) fees for their services by providing a zero-management fee Robo-advisor.

Tax-loss harvesting and socially conscious investing are the two most significant shortcomings of SoFi Automated Investing. If not, the highly-diversified portfolios and affordable prices will persuade current SoFi users looking for an automated investing solution to switch—and may very well persuade new customers looking for the same thing to join the SoFi financial community.

FAQ

Does SoFi Invest charge any fees?

SoFi offers commission-free trading of stocks and ETFs and free automatic investment. However, cryptocurrency traders should be ready to pay when exchanging various assets. Each cryptocurrency transaction on SoFi is now subject to a 1.25 percent markup fee.

Is it safe to buy cryptocurrency on SoFi?

SoFi employs various security methods to keep client information and cryptocurrency transactions safe. It claims that to execute transactions, it collaborates with crypto exchanges like Coinbase and keeps customer information secret from custodians and crypto trading partners. Additionally, SoFi uses SSL encryption and two-factor authentication.

SoFi: Is it legit? 

Yes. Aside from recently obtaining a national banking license, SoFi has long been known for its financial advice and investment expertise. SoFi Securities LLC, a FINRA and SIPC-registered company, provides its active trading services for investing. An SEC-registered company, SoFi Wealth LLC, offers automated investment.

FinCEN has registered SoFi Digital Assets, LLC as a money service business responsible for the platform’s cryptocurrency offerings.

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