SoFi Automated Investing Review: Pros, Cons, & What We Love

Written by Drew ChenelerUpdated: 2nd Sep 2021
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Robo-advisors are everywhere these days, offering cost-effective and accessible investment platforms for new investors or individuals just wanting to start saving up for retirement. However, it can be tough to know which automated investing platform you should choose.

Today, let’s break down SoFi Automated Investing in a little more detail and explore everything it has to offer for a prospective investor.

As a robo-advisor service, SoFi Automated Investing has you choose from several premade portfolios, which its automated algorithms then use to invest your money in a variety of ETFs or exchange-traded funds.

Fortunately, SoFi Automated Investing offers its services with no account minimum and generally low fees, making it a very beginner-friendly investing service.

Let’s dive a little deeper into SoFi Automated Investing and see where it shines and where it could be better.

SoFi Automated Investing Pros and Cons

Pros:

  • Offers a very broad range of low-cost investments
  • Free account management
  • Automatic portfolio rebalancing
  • Good customer support
  • Provides access to CFPs (certified financial planners)

Cons:

  • Only a few types of accounts are available
  • No tax-loss harvesting

How SoFi Automated Investing Works

In brief, SoFi Automated Investing is a kind of “robo-advisor,” meaning it’s an automatic investing service. Your portfolio will be managed with little to no human interference; instead, it’ll be managed using automated investing algorithms and pre-set, computerized decision trees.

Like most other robo-advisors, SoFi Automated Investing manages the portfolios of its users based on premade portfolio templates.

Customization options are relatively limited, but this can be a good thing for new investors who don’t have a lot of time on their hands or who aren’t interested in active investing (i.e., choosing their stocks or other instruments).

Most interestingly, SoFi Automated Investing is one of the few robo-advisor financial services that does provide access to human advisors.

You can get unique, human insights from time to time rather than relying entirely on algorithms.

In addition, SoFi Automated Investing offers both traditional and Roth IRAs for its users, plus SEP-IRAs.

You can roll over any existing retirement funds into a new SoFi retirement account, making transferring your current savings to this platform quick and easy.

SoFi Automated Investing Review

  • Account Minimum: $1
  • Fees: 0.05% fee for ETFs

Who Should Use SoFi Automated Investing?

SoFi Automated Investing is primarily ideal for investors that need a program they can rely on for steady growth without having to pay attention to their portfolio very often.

It may be an especially good choice for young or new investors who are learning how to start investing, as you can simply sign up, choose a portfolio profile that suits your financial goals, and be on your way.

Furthermore, SoFi Automated Investing is a great choice due to its relatively low fees and low barrier to entry.

Unlike other trading platforms and brokerages, you don’t need several hundred or several thousand dollars in the bank just to open an account.

Plus, SoFi Automated Investing is great for flexibly changing your portfolio over time. Thanks to the fact that it gives you access to human, financial advisors, you can always go against what the algorithms decide as you learn more about trading and grow your wealth.

SoFi Automated Investing Asset Allocation

Once you make an account, you’ll be required to choose from 10 different portfolios. These model portfolios track typical MPT assumptions, so they are similar to the portfolios used by other robo-advisors.

They can also be customized with different risk levels or asset allocations. The risk levels to choose from are:

  • Aggressive, which has between 90% and 100% stocks
  • Moderately Aggressive, which has 80% stocks and 20% bonds
  • Moderate, which has 60% stocks and 40% bonds
  • Moderately Conservative, which has 40% stocks and 60% bonds
  • Conservative, which places all your investments in bond funds

With these five portfolios, you’ll be able to reach your financial goals, at least in a broad sense.

While it’s not as customizable as active investing services or other trading platforms, SoFi Automated Investing still allows most casual or beginner investors to pick a portfolio profile that matches their needs.

SoFi Automated Investing Features and Benefits

Not sure whether SoFi Automated Investing is worth your time? Let’s take a detailed look at this investment service’s primary features and benefits.

No Fees

One of the best features of SoFi Automated Investing is its lack of fees. Not only can you get started for a single dollar, but you don’t have to worry about any fees for money transfers, annual account charges, and so on.

The only fee you’ll see is a 0.05% fee for ETF investment funds. But even this is among the lowest in the trading platform industry.

Robust Financial Planning Services

SoFi Automated Investing offers a suite of financial planning services on its app, which allows you to customize your strategies for automated investing.

Furthermore, SoFi Automated Investing allows you to contact human advisors, each of whom is fully registered professionally.

With the assistance of these financial advisors, you’ll be able to better budget, save, and meet your financial objectives. Even better, there aren’t any ancillary fees for using these financial planning services or advisors.

Goal Planning

SoFi Automated Investing allows you to plan for different financial goals like retirement or saving up for buying a house at the beginning of your profile creation process.

This planning feature ensures that the robo-advisor’s performance will be well matched to your broader objectives, rather than simply following the performance of the general stock market generically.

Auto Rebalancing

As mentioned earlier, SoFi Automated Investing provides automatic rebalancing every quarter for your portfolio.

This ensures your portfolio is well balanced between risk and return depending on your risk tolerance level and financial goals, which you will provide to the platform when you sign up for your account.

Diversification

All of SoFi Automated Investing’s profiles and investments are relatively diverse. This exposes your portfolio to less risk and helps to ensure that it will remain stable and profitable for a long time to come.

Because of this, SoFi Automated Investing is a nice choice for long-term gains rather than short-term boosts to your bank account balance.

Low-Cost Investments

Lastly, SoFi Automated Investing offers primarily low-cost investments. All told you’ll be able to choose from a very diverse selection of low-cost ETFs that expose you to all sorts of instruments, such as high-yield treasury bonds, US stocks, developed international stocks, and much more.

How Does SoFi Automated Investing Compare to Other Robo-Advisors?

While SoFi Automated Investing has a lot of things that make it an interesting choice, let’s break down other robo-advisor services in detail, so you know which is better.

#1. SoFi Automated Investing vs. Betterment

Betterment is one of SoFi Automated Investing’s primary competitors, and for a good reason. The former offers more complex and/or customizable portfolio profiles, including socially responsible investment portfolios.

In addition, Betterment offers tax-loss harvesting. That being said, you’ll need to pay more fees with Betterment than you would with SoFi Automated Investing.

>> More:Betterment Review

#2. M1 Finance vs. SoFi Automated Investing

Compared to SoFi Automated Investing, M1 Finance focuses more on long-term investing and requires a $100 minimum deposit.

While M1 finance also offers commission-free trading for stocks and ETS, SoFi Automated Investing offers easier-to-understand prebuilt investment portfolios.

Overall, SoFi Automated Investing is generally better than M1 for new traders or those who want an accessible, easy-to-use investment platform.

>> More:M1 Finance Review

#3. Wealthfront vs. SoFi Automated Investing

Wealthfront has been an established robo-advisor for a longer time than SoFi Automated Investing. It offers a simpler stock selling plan if you have a business and need to handle larger amounts of money.

It offers ancillary features for larger accounts, like direct indexing and a more diverse array of account types.

Ultimately, Wealthfront is better for investors with more money to invest, whereas SoFi Automated Investing is better for beginners or those without much cash to start with.

Does SoFi Automated Investing Have Any Fees?

Yes, but these can vary from time to time depending on the ETFs your portfolio invests in. Typically, these fees are very low, averaging around 0.05% of their value.

This ensures that SoFi Automated Investing’s service is one of the most affordable and accessible in the market.

Is SoFi Automated Investing Safe to Use?

Yes. SoFi itself is well regulated by several important financial institutions, and it is insured by the SIPC. Its users are insured for up to $500,000 in total assets and $250,000 in cash.

Thus, in the event of a hacking attack or theft, you’ll be able to recover some or all of your investments’ value.

Which Is Better, SoFi Automated Investing or Betterment?

It depends on what you need out of an investment service. SoFi Automated Investing is better if you are strapped for cash and want an investment platform with very minimal fees. It’s also a good choice if you don’t particularly care about how your money is invested.

Betterment is better for the morality-minded investor or investors who want more specific portfolios that can match their philosophical or legal interests.

Furthermore, both SoFi Automated Investing and Betterment allow you to speak to human, financial advisors from time to time, so they are equal in this regard. But keep in mind that Betterment is a little pricier than SoFi Automated Investing overall.

Does SoFi Automated Investing Beat the Market?

Not usually.

The big thing about robo-advisors like this is that they typically follow the market’s progress since their algorithms are dependent on accurate predictions.

Therefore, SoFi Automated Investing doesn’t usually beat the market. If the general stock market is performing well, so will your portfolio. The reverse is true if the broader stock market takes a dip.

Is SoFi Automated Investing Worth It?

That depends on what you’re looking for in an automated investment service.

SoFi Automated Investing provides a healthy spread of portfolios to choose from, making setting up your investment portfolio quick and easy. SoFi Automated Investing also provides access to low-cost ETFs that can suit a variety of financial objectives.

However, SoFi Automated Investing is not the best choice if you have a lot of wealth you want to manage with the help of a professional. In that case, it’ll be better to speak with a human, financial advisor firm.

Furthermore, if you want to beat the market and grow wealth exponentially in a relatively short amount of time, a human investment firm is also a better idea.

Bottom Line: SoFi Automated Investing Review

All in all, SoFi Automated Investing is an accessible and easy-to-use investment platform perfect for beginners or investors who want a hands-off, reliable portfolio performance for their savings.

It’s also a good choice if you need a good retirement account platform to steadily grow your wealth over time.

However, SoFi Automated Investing leaves something to be desired in terms of portfolio customization, so more advanced traders may wish to look elsewhere.

Drew Cheneler
Drew Cheneler

Drew is our Co-Founder and is a recognized Credit, Small Business, and Personal Finance Expert. He has been featured in CNBC, Fox Business News Section, The Huffington Post, Business.com, Moneyunder30, US Chamber of Commerce, and more. He is known for breaking down complex personal finance topics into action-oriented advice, so you can make the most of your hard-earned money. Drew attended the U.S. Coast Guard Academy where he majored in Business Management with a focus on Information Systems.