San Francisco, California, is home to SoFi, an investing and lending company founded in 2011 that is currently valued at $4.5 billion. The company is most known for its lending side of the house but does offer an extensive investing platform known as SoFi Invest. The platform comes with a streamlined mobile app, low account minimums and even the ability to invest in unique offerings like cryptocurrency and fractional shares.
It does not appear that you have the ability to invest in more complex investment mediums like options and futures through SoFi. Additionally, bond investments are only available through the SoFi-managed IRA accounts. For beginners and investors looking to invest in stocks and exchange-traded funds (ETFs), SoFi is a great fit. For more advanced investors looking to make more unique investments or those looking for increased diversity, this won’t be the platform for you.
SoFi Invest at a glance
|Account Minimum||Stocks and ETFs (per trade)||Bonds||Mutual Funds||Key Benefit|
|SoFi||$1||$0||N/A||N/A||Fractional stock share purchases available|
What we like about SoFi Invest
For beginner investors or people not interested in complex products, SoFi is a good fit. No account minimums and fee-free trades on stocks and ETFs are becoming an industry standard, and it’s great to see it from SoFi. The company offers several self-managed and company-managed investment services, which provides options for many different investment goals.
An additional benefit to SoFi Invest is the fractional shares program. Investors can buy parts of stock from companies with high price tags without spending the full price.
Things to consider
An important part of investing is diversification. While you can diversify across the different companies and ETFs you invest in through SoFi, you have some limitations in investment products. The company does not give you the ability to actively invest in bonds, mutual funds, options or futures. Additionally, the company does not provide any additional research products for investors to look into companies they might be interested in investing in.
Stock and ETF trading
The bulk of the trading you can do through SoFi is in stocks and ETFs. With no trading fees, SoFi is following the lead of many other investment companies offering an affordable way for smaller investors to move money around without getting swallowed up by transaction fees.
What’s very cool about the SoFi platform is that you can invest in fractional shares that the company calls Stock Bits. Many companies are several hundred or thousands of dollars for a single share. For example, one share of Amazon stock is several thousand dollars. Before fractional shares, the only way to invest in this would be to have thousands of dollars to commit. With Stock Bits, you can buy a fractional piece of a share and invest at a much lower price point.
SoFi’s active investment platform does not list the ability to purchase or trade bonds. That being said, the company does invest in bonds for you if you choose to open a company-managed IRA with the company. The company-managed IRA products are available as Roth or traditional IRAs, and included investments are diversified between stocks and bonds. If you’re looking to trade bonds on your own, you can check out other investment houses like Chase or Bank of America.
Options and futures trading
SoFi does not allow investors to trade in options or futures. Additionally, the company does not include these investments in its company-managed investment products. Often, these types of investments carry additional risk and may not be a good fit for newer or less-experienced investors, which does appear to be the target clientele of SoFi Invest. Those people who want to trade options can do so on other trading platforms like TD Ameritrade, E*Trade or Ally Invest.
All trading through SoFi is done through the company’s mobile app platform. These apps can be downloaded from the App Store or on Google Play. Account setup can be completed online, through the SoFi website.
All trading and account management takes place through the SoFi Invest mobile app. The app is available for free and can be downloaded through the App Store or on Google Play. Overall, the app gets high marks with a 4.8 out of 5.0 rating through just under 29,000 reviews on the App Store. This makes the SoFi Invest app the 78th ranked app in the finance category.
The company’s app does link all SoFi accounts together into one place. For those investors also using additional SoFi products (loans, savings, checking), this will add a nice layer of convenience. You’ll be able to follow all of your active investments through the app, as well as create a watchlist for companies that you may be interested in for the future.
Research and resources
SoFi offers quite a bit of basic and general investing knowledge great for beginners. Things like ‘How to Choose Your First Stock’ and ‘Putting Goals-Based Investing into Practice’ are some of the types of topics covered. Additionally, the company has a market news column, though, it does not seem to be updated daily. Investors looking for research on potential investments will not get that through SoFi.
If you’re looking for extensive investment advice and information, you’ll want to use an investment house that offers these tools. For example, Bank of America comes with Merrill Edge. Those people who want to use SoFi still can also use outside independent sources for research.
The bottom line
For many, SoFi could be an easy way to get started investing in stocks, ETFs and retirement. The Sofi mobile app comes highly rated and allows users to handle all transactions and tracking in one convenient location. Investors looking for more diversity in investment options to include options, futures, mutual funds and some bonds, will need to look elsewhere. But if you’re looking for a way to invest without feeling overwhelmed, you may like SoFi Invest.