Is SoFi Active Invest One Of The Best Investment Apps For Beginner Investors? We investigate
The company SoFi (aka “Social Finance inc”) has quite an interesting backstory. SoFi was born in 2011 out of an idea from Stanford business school students who wanted to help connect recent grads with alumni in their community to provide more affordable solutions for students to fund their education- hence the “social” in “social finance”. In doing that, the company got its start in the student loan space.
Eventually, SoFi started expanding outside of the student loan arena to offer new financial products such as mortgages and personal loans and eventually also became an investment platform that includes robo-advisor services, and a full-service brokerage platform and app.
Users can use SoFi to meet many of their financial needs, from lending and banking services to investing and cryptocurrency trading. We’re going to dive into the SoFi Active Invest specifically in this review and focus on the Active Investing option to investigate if it’s a good option for beginner investors.
Table Of Contents
SoFi Invest At A Glance
For beginner investors, we think that SoFi is an excellent choice. They offer complimentary access to live humans who are Certified Financial Planners who can help you map out a solid financial plan to help meet your financial goals at no cost to you.
This sharing of knowledge is invaluable and can be a huge asset to a new investor. Think of the financial planner as a coach, there to help you do your absolute best. Then you can take the reins and get going on your investing journey with confidence. This feature alone is a game-changer when compared to other investing platforms that offer little to no guidance.
SoFi offers commission-free stock and ETF trading as well, making SoFi Invest a solid investment and trading platform.
However, for more advanced investors, SoFi may not be the best choice. SoFi lacks some advanced features such as stop-loss orders and tax-loss harvesting. The company has a limited history in the space (having only been in the investing sphere since 2017). There are no options or ADRs (American depositary receipts).
But if you’re simply looking to get started with investing, SoFi has all you need and in our opinion has a lot of great value packed into its investing platform.
Pros & Cons Of SoFi Active Invest
No minimum required to start investing
No trading fees, no account fees, commission-free stock and ETF trades
Low fund fees
No additional cost to speak to Certified Financial Planners
Great customer support
No management fees
Easy and fast to open an account
High-quality mobile app
No tax-loss harvest
No stop loss options
Limited history as a company in the investing space
Available to US residents only
Limited tradable securities
SoFi charges a $75 outgoing transfer fee
SoFi Automated Investing does not support wire transfers
SoFi Active Invest Review: Is It Good For Beginners?
What SoFi Does Well For Beginner Investors
Free Financial Advice
Financial advice can come in many forms, but when it comes to hiring a professional financial planner, someone who can legitimately sit with you and create a financial plan, you will be hard-pressed to find someone to do that with you for free. And I’m not talking about your uncle who is an accountant – a certified planner who really knows their stuff, isn’t likely to come cheap these days.
You’re probably wondering, does free financial advice actually exist? The answer is actually yes if you’re investing with SoFi.
When you sign up for SoFi Invest you’ll have access to complimentary financial planners to speak with them about setting and meeting financial goals. They’re there to then discuss how to pursue those goals. It’s like having a financial coach in your corner – without additional cost. It’s practically unheard of in the industry.
Having the opportunity to speak to an expert – no strings attached – is a phenomenal offering that SoFi has for new investors to take advantage of.
Easy To Use
SoFi has an easy, all-in-one app that serves as your home base for the SoFi investing platform and all of their financial products.
Investors can buy and sell stocks, ETFs, and cryptocurrencies through SoFi’s desktop platform and its highly-rated app. The SoFi app is known for its ease of use.
Getting started is relatively simple. There’s no account minimum, and your first investment can be as small as just $5.
Educational Tools And Incentives
SoFi is a fully integrated personal financial system that offers incentives for implementing sound financial practices. You can earn SoFi points when you spend, save, get paid, monitor your credit, and more. You can then use those points to redeem for rewards such as getting cash back, turning your points into crypto, and even converting points into fractional shares. This gamification feature can be an excellent feature for some newbie investors.
SoFi Learn also offers tons of free resources to help educate you about important financial topics like investing, paying off debt, budgeting, blockchain and so much more.
There’s also an interesting community feature called the leaderboard that shows you who is winning the investing game using their SoFi Active Invest account. This can give you an extra boost of confidence and shows you what other successful investors are up to. Don’t just blindly follow the leaders of course but check out the leaderboard and see where you might be able to take some inspiration for where to put your money.
Invest In IPOs
What’s an IPO you might ask? “IPO” stands for “initial public offering” which means when a company switches from being privately funded to being publicly funded and thus becoming available for the public to purchase shares on an exchange platform.
The ability to invest in an IPO is generally a riskier bet than other investments but can be an attractive way for newbie investors to get in with a newly public company from the start. With steady, regular fractional stock buys, a beginner investor can see a return over time if the company that went public does well.
Always remember to do homework on the company that is IPOing though as you don’t want to get caught in a situation where you buy high at the start and wind up losing your initial investment. This is common, and finding the companies that are winners after an IPO takes work to suss out and honestly, a bit of luck.
There are settings on the SoFi app that you can enable to get notifications to be alerted about upcoming IPOs.
SoFi’s customer support is readily available and can be reached via phone 1 (855) 456-7634, email email@example.com or chat on the site. This is a nice step up from some of the other investment platforms out there that require you to request a call back rather than providing the ability to reach out directly (such as Robinhood). TD Ameritrade is an exception and one of the main competitors to SoFi as far as customer service goes.
SoFi offers a bunch of opportunities to earn bonuses. Bonuses options include earning SoFi Member Reward points by doing certain activities that you can redeem for cash, crypto, fractional shares, eligible SoFi loan payments, or SoFi Credit Card statement credits. You can earn up to $930 which is pretty amazing if you ask us.
Eligible activities to earn SoFi Member Rewards include:
- Adding direct deposit to earn $100
- Signing up for the SoFi credit card to earn 2% cashback
- Open an investment account to earn up to a $1,000 bonus
- Track your finances to earn 25 points
- Check your credit score to get 100 points
What SoFi Active Invest Can Do Better
SoFi, for all that it offers, lacks advanced features that more savvy traders would appreciate such as tax-loss harvesting.
SoFi doesn’t provide an option for socially responsible investing, (aka “SRIs”) which some potential investors may consider a drawback.
Apart from these issues and the occasional technical glitch and some user interface criticisms, SoFi has a lot of good things to offer new investors.
What Real Users Think About SoFi
SoFi is currently rated at a 4.8 out of 5 in the Apple App Store, and a 4.3 out of 5 in the Google Play Store (as of November 18, 2021).
SoFi is winning rave reviews from users who are mentioning how easy it is to use for banking, saving, and investing in tandem. They love the learning opportunities when it comes to investing knowledge and tips.
Another user loves the round-up feature that pads your savings account, and the convenience of having everything in one place (the round-up feature is not unique to SoFi – check out Acorns if you want to invest that extra cash rather than save).
Some more advanced traders love the app but point out that some glitches and lack of advanced features such as price tracking can be a frustration.
Other users aren’t so happy. Some mention performance issues as well as extraneous features they don’t want or need.
One user isn’t a fan of the lack of line items for each investment and the overall awkward process it takes to look up basic information such as what you purchased and what price you bought it at.
Generally speaking, the nay-sayers lean toward the more advanced end of trading, touting their grievances such as how the app doesn’t necessarily consider all of your assets and doesn’t offer more sophisticated strategies, like tax-loss harvesting, which could help minimize your capital gain taxes.
Therefore you may end up in tax-inefficient portfolios. Also, not all types of assets are available on SoFi, including mutual funds, futures, and forex.
Do-it-yourself investing with SoFi Invest can be a great option for beginner investors who are looking to get started in the world of investing while managing their own portfolios. Make your first trade or your next trade with SoFi Active Invest and learn the market as you do it yourself.
But DIY investing is kind of like joining a sport without a coach. You can do your best to go it alone by working out and studying play strategies on your own, and you may come out a winner.
But you will likely do much better – and win more often – with a coach.
SoFi can be your personal financial coach to help you get started in the investing world. For beginner investors, Googling all you can, and playing with your money in the stock market using various investing apps can be a good way to start learning. But a great feature of SoFi is having the option to do more than that. Consider having a conversation with a SoFi financial planner– no strings attached.
They’ll listen to you and help you map out a plan that follows your lifetime financial goals for things like retirement planning, starting a family, buying a home or a car, and even career and salary advice. Again, no strings are attached. It’s just a conversation with a professional financial advisor who can provide personalized advice based on your unique financial situation. Then if you decide to go it alone anyway, you’ll only come out with more knowledge. And all of this is completely at no cost to you.
Other investing offerings that SoFi has include automated investing, retirement accounts, crypto, fractional shares, ETFs and its new IPO investing options. It’s a really well-rounded financial app.
How Do You Buy Stock On SoFi?
Buying stock on SoFi is easy:
- Log into the SoFi Mobile App and click on the “Invest” icon at the bottom of the screen.
- Choose which type of investing you would like to start with. You can choose to pick your own investments, self-directed IRA investing or let SoFi invest for you. Tip: if you choose active investing you’ll have the chance to win up to $1,000 in stock.
- Fill in your investment profile details, including:
- Phone number
- Employment status
- Citizenship status
- Identity verification (you’ll input your social security number)
- Then affirm some regulatory statements,
- Agree to the consent form
- Add money via bank transfer implemented by the Plaid system
- Choose your bank
- Authenticate with your bank
- Choose which account/s you want to share with SoFi
- Add cash to your SoFi account (maybe start with $1 to try it out) and determine the frequency you want to add money to the account. You can opt for a one time transfer or recurring automatic transfers
- Play to win up to $5-$1,000
- Choose the investments you want to purchase
- Share with your friends the chance to invest with SoFi or finish the process
Does SoFi Have An App?
It definitely does. If you download it you’ll get 100 SoFi points that can be saved up and redeemed for rewards like free stock.
Download the app here.
Does SoFi Have Fees?
There are no SoFi fees for the following:
- 0% management fees
- $0 commissions for trading
- No fees for
- IRAs, Roth IRAs, and SEP IRA retirement accounts
- Joint accounts
- Automated bank transfer (ACH) of money to or from your SoFi Invest accounts
- Wire transfer of funds into your account
- Electronic delivery of statements, trade confirmations, prospectuses, & tax forms
- ACAT transfers into your account
There are SoFi fees for the following:
- Wire transfers out: $25
- ACAT transfers to another firm: $75
- Returned ACH / Insufficient funds: $15
- Paper confirm fees: $2 / confirm
- IRA closing fee: $20
- IPO Fees: $50 for the first sale of a security obtained through an IPO offering within 120 days of IPO; $5 for each subsequent sale within the first 120 days
- Paper statement fees: $5 / statement
- Participation in voluntary corporate action: $50
- SEC Regulatory Trading Fee: $22.10 per $1,000,000
- FINRA Trading Activity Fee (TAF): $0.000119 per share for each equity sell
- Exchange Traded Funds (ETFs) will have their own management fees
Is SoFi Legit?
SoFi is a legitimate company with various financial service offerings. It’s been in business since 2011 and is based in San Francisco, California. It’s a public company itself listed on the NASDAQ stock exchange.
Is SoFi Safe?
SoFi is regulated by financial authorities. They provide up to $500,000 investor protection as part of SIPC protection. SoFi is considered as safe as any investing platform can be, though keep in mind it is part of the user’s responsibility to invest within their means and understand the risks involved with any sort of investing.
How Long Has SoFi Been In Business?
SoFi has been around since 2011 though the investing arm started in 2017.
Should I Invest With SoFi?
This is a question that every individual is going to have to answer for themselves. SoFi has a lot of great offerings for beginner investors. The free financial planners are worth their weight in gold for any new investor. More advanced investors might want to consider other options.
How Many Members Does SoFi Have?
SoFi has 3 million total members as of the third quarter of 2021.
How Long Does It Take For SoFi Active Invest To Fund?
If you use SoFi Money, you will have instant funding availability. If you are using your bank account, your instant funding limit amount is available to trade at the time of the transfer assuming your bank account is verified and has enough to cover the amount being funded to SoFi and anything above that limit takes 3 business days after you deposit.
How Do You Withdraw Money From SoFi Active Invest?
You cannot instantly withdraw your money so be aware of that when you put money into your SoFi invest account. You can’t treat your SoFi invest account as if it were a bank.
If you are looking to withdraw your money, you need to have the funds settled for at least 2 days (this is a regulatory requirement from the SEC.) Your deposit hold must be settled for 5 full business days after your deposit has been posted (be aware the holidays and weekend days do not count). Your sell trade must be settled two business days after your trade has executed.
To withdraw from the SoFi app:
- Go to the investment tab
- Tap the account you wish to withdraw from
- Swipe down and tap on “withdrawable cash”
- Tap the “withdraw cash” button at the bottom of the screen
- Input the amount you wish to withdraw
- Tap the “review withdrawal” button at the bottom of the screen
What Does “SoFi” Mean?
SoFi stands for “Social Finance”. This came about because of the original intent the company had in which students from Stanford would be connected to the alumni network to help finance their education.
Is SoFi Available In Canada?
SoFi is only available in the US.
How Does SoFi Active Invest Make Money?
SoFi active invest makes money from the following:
- While there are limited fees on SoFi, it does drive revenue through some fees
- Securities lent to other financial institutions that need to borrow shares for clients looking to short the market
- FDIC-insured sweep programs
- Rebates from market makers
- 1.25% markup on all cryptocurrency purchases
Open an investment account today with SoFi Active Invest, and start your investing journey today.