SoFi Invest Review: All-in-One Broker With Stocks, Crypto, and IPO Access

SoFi Invest lets you trade stocks (with no commission), ETFs, crypto, and even IPOs. You can get started with only $5. Learn if it’s the best broker for you.

SustainFi   Updated December 9th, 2021

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Rating: Excellent (4.7 / 5)

Summary

  • Minimum: $5 ($10 for crypto)
  • Commission: none for stocks and funds; 1.25% mark-up for crypto
  • Account types: individual and joint investment accounts; traditional, Roth, and SEP IRAs

Pros

  • Start investing with only $5
  • Get a bonus when you open an account
  • No commissions when you trade stocks
  • No management fee when you invest with the robo-advisor
  • Fractional shares are offered
  • One-stop-shop with trading accounts, access to crypto, IPOs, loans and banking products
  • Plenty of educational resources
  • Access to fiduciary financial advisors
  • A highly rated mobile app

Cons

  • Automated Investing does not offer socially responsible portfolios
  • No tax-loss harvesting
  • No margin loans, options trading, advanced investment research or screening tools
  • No support for custodial accounts, trusts and 529 college savings accounts

What is SoFi Invest?

SoFi, short for “Social Finance”, is a financial services company that offers a broad suite of products like loans, brokerage accounts, insurance, and credit cards. Started by Stanford Business School students in 2011 to help others refinance student loans, the startup quickly expanded, turning into a financial one-stop-shop.

This review will focus on SoFi Invest, an all-in-one broker that lets you invest in stocks and ETFs, IPOs (at IPO prices), and crypto. SoFi Invest also offers automated investing through an in-house robo-advisor.

Right now, SoFi Invest offers the following services:

  • Active Investing lets you trade stocks, ETFs, and fractional shares with no commission and even take part in upcoming IPOs. You can get started with $5
  • Crypto investing lets you trade 30 cryptocurrencies, including Bitcoin, Ethereum, and Cardano. Right now, you can get up to $100 in bitcoin when you make your first trade. You can get started with only $10
  • Retirement accounts. You can open a Traditional, Roth, or SEP IRA with SoFi and invest your savings yourself with Active Trading or have SoFi manage it for you through Automated Investing
  • Automated Investing. SoFi’s robo-advisor will create a diversified portfolio for you to match your risk tolerance and investment goals. You can start with any amount. SoFi doesn’t charge a management fee, either

Active Trading with SoFi

Account minimum

You can start investing with only $5, which is one of the lowest minimums we’ve seen.

Fees

You can trade stocks and funds with no commissions, just like you would with other popular apps like Robinhood or Public. If trading is free, how does SoFi make money? SoFi makes money from interest on cash, stock lending, and payment for order flow. You can learn more here.

Order types

SoFi offers the most common order types:

  • Market Orders (real-time or on open): buy at the prevailing market price when you place the order or when the market opens
  • Buy and Sell Limit Orders: specify the price at which you want to buy or sell
  • Stop Loss Orders: specify at which price you want to sell

Fractional shares

SoFi lets can buy fractional shares of some stocks; you can view the list in the “Fractional Collection” page in the Discovery section of the app. A fractional share is a piece of a share. For example, if Tesla (TSLA) is trading at $1,000 per share, but you only want to spend $100, you can specify that you only want to buy $100 worth of Tesla. And SoFi lets you place fractional share orders with only $5. The list of available shares is expanding all the time, so check the app to see what’s available.

Dividend reinvestment

If the shares you own pay dividends, you can choose to reinvest these dividends back into the companies that paid them, at the market price at the time. All SoFi Invest accounts (except for Automated Investing) are eligible for dividend reinvestment. The option is not enabled by default; you need to enroll through the “Manage” section of your account.

SoFi ETFs

What are ETFs? SoFi has created their own ETFs or exchange-traded funds. ETFs are collections of stocks, bonds, or other securities that trade in the market like stocks. You can buy or sell them at any time during market hours. Because ETFs own many securities, they are generally more diversified and less risky than individual stocks. So they may be a better option for investors who don’t have time to research and trade stocks, as well as those who are more risk-averse.

Right now, there are six SoFi ETFs:

  • SoFi Weekly Dividend (WKLY). This ETF invests in global stocks that pay dividends and distributes dividends every week 
  • SoFi Weekly Income (TGIF). This bond ETF is actively managed and expects to distribute interest on Fridays
  • SoFi Gig Economy (GIGE). This ETF lets you invest in high-growth tech companies soon after they IPO
  • SoFi Select 500 (SFY). A high-growth alternative to the S&P 500, this fund invests in the 500 largest publicly traded U.S. companies weighted by growth. The fund doesn’t charge a management fee for the first year. SoFi also includes it in robo-advisor portfolios
  • SoFi Next 500 (SFYX). The fund is like SoFi Select 500, except that it invests in smaller, mid-cap companies. Mid-cap companies generally have more growth potential. This ETF doesn’t charge a management fee in year one, and SoFi adds it to robo-advisor portfolios
  • SoFi Social 50 (SFYF). This ETF buys the top 50 widely held stocks on SoFi Invest. It’s a way to incorporate what is trending into your portfolio

Fees. Although buying and selling ETFs is free, most ETFs have a management fee, known as the expense ratio, which reduces your return. SoFi has actually waived fees for the first year on their SoFi Select 500 and SoFi Next 500 ETFs.

SoFi Crypto 

SoFi lets you trade 30 cryptocurrencies, including Bitcoin, Ethereum, Dogecoin, and Cardano, with only $10. You can trade 24/7. 

Fees. Unlike stock trading, trading crypto is not free. SoFi charges a 1.25% mark-up for each crypto trade. So if you buy a coin that costs $100, SoFi will mark the price up to $101.25, and you will receive slightly less than one coin.

🔔 Learn how to buy eco-friendly crypto.

Investing in IPOs

SoFi lets you buy IPOs before they trade in the public market. Up until recently, only large institutional investors like pension funds could buy IPOs. But now, any SoFi investor can participate.

To buy an IPO, you need to go to the “IPO Investing” section in the Invest tab on the app, pick an IPO, and submit an indication of interest (IOI). Once the deal is live, SoFi will ask you to confirm your order within a short period of time. If you’ve successfully placed your order, you will find out how many shares you got on the morning of the IPO. When deciding how many shares to give you, SoFi looks at a bunch of factors like the value of your account, prior participation in IPOs, and whether you’ve violated the IPO Flipping Policy.

Regarding the IPO Flipping Policy, most financial institutions that allocate IPOs try to discourage “flippers” or IPO buyers who sell the stock as soon as it starts trading to make money if it goes up in price. They are not long-term owners and don’t help the share price. So, although SoFi will still let you sell your IPO shares, if you sell within 30 days, they may limit your ability to buy future IPOs for 180 days upon the first violation. Penalties get worse for subsequent violations.

Automated Investing with SoFi

Besides letting you trade actively, SoFi now has a robo-advisor. Robo-advisors invest your money using algorithms that match your risk tolerance and time horizon with the appropriate funds. Automated Investing is a hands-off option if you don’t have the time or the inclination to manage your investments. Note that the Automated Investing account is managed by SoFi, and it’s different from your Active Investing account.

Account minimum

You can get started with just $1.

Fees

Unlike nearly all robo-advisors we’ve reviewed, SoFi does not charge a management fee. Compare this to 0.25%+ charged by Betterment or Wealthfront.

Portfolio selection

SoFi selects your portfolio based on your goals and five levels of risk tolerance: conservative, moderately conservative, moderate, moderately aggressive, and aggressive. Then they invest your money in low-cost ETFs, including funds from SoFi, Vanguard, and BlackRock (iShares). There are ten portfolio options, and the average expense ratio is only 0.05% ($5 on a $10,000 investment each year), which is cheap.

Automatic rebalancing

SoFi automatically rebalances your investments if one type of asset outperforms and strays too far from the desired asset allocation.

Access to financial advisors

Unlike most other robo-advisors, SoFi also gives you free access to financial advisors, who are fiduciary Certified Financial Planners (CFPs). As fiduciaries, they pledge to act in your best interest. Other robo-advisors offer financial planners, but you must pay higher management fees (0.40% at Betterment, 0.49%-0.89% with Personal Capital), or they make you buy sessions a la carte.

Tax-loss harvesting

However, SoFi’s robo-advisor does not offer tax-loss harvesting, a tax-minimization strategy that involves selling funds or stocks that have lost money to minimize your year-end tax bill. Several other robo-advisors, such as Wealthfront, offer this feature.

ESG or socially responsible portfolios

SoFi doesn’t have ESG or socially responsible options that invest more of your money in stocks with high environmental, social, and governance (ESG) scores. If you are looking for an ESG portfolio, you can get one from Acorns, Betterment, or Wealthfront. Learn about sustainable robo-advisors.

Is Sofi Invest safe?

SoFi Securities is a Member of SIPC, which protects the securities in your brokerage account for up to $500,000, including $250,000 in cash. Of course, SIPC does not protect you if you make bad investment decisions and your investments lose value. But it does protect you if your broker goes out of business. You can learn more here https://www.sipc.org/.

Besides, unlike many new fintech startups, SoFi (SOFI) is now a publicly traded company with over $12 billion in market cap.

💰 Takeaway

  • SoFi is a great broker for beginner investors who want to minimize fees and commissions. You can invest in stocks (including fractions of stocks), funds, crypto, and even IPOs from the same app, which is convenient.
  • However, SoFi is not designed for sophisticated, active traders who are looking for advanced research or charts or want to trade options and futures.

🔔 Interested in other options? Check out the top 10 investing apps.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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Frequently Asked Questions

Is SoFi Invest really free?

SoFi Invest doesn’t charge commissions when you trade stocks or funds. And SoFi’s robo-advisor (SoFi Automated Investing) doesn’t charge a management fee. However, trading crypto is not free, because there is a mark-up. Also, if you buy an ETF through SoFi, the ETF’s management fee or expense ratio will be deducted from your return.

Who is SoFi owned by?

SoFi is a publicly traded company, listed on the NASDAQ under the ticker SOFI. It is owned by its shareholders.