The battle of commission free investing.
Everyone can invest in the stock market with tools like SoFi and Robinhood. These two brokerages promise similar outcomes but they function in different ways. Let’s dig in and see how these two brokerages compare.
SoFi (Social Finance) launched SoFi Invest in 2019. SoFi was started by Stanford business college graduates in 2011. It appears that these students like to provide solutions for their peers. In 2012 they offered student loans and refinancing. In 2014 SoFi added mortgages to its offerings followed by personal loans in 2015. They might be a bit late to the robo-investor party but SoFi Invest is legit.
SoFi Invest includes active trading via SoFi Securities, LLC and automated investing with SoFi Wealth, LLC. Active investing allows investors to buy/sell stocks and ETFs commission free. They have no management fees.
Their other investing product is called Automated investing. Automated investing is also fee free. Yep, it’s free. Basically, you pick a risk tolerance portfolio strategy and they invest your contributions into a mixture of ETFs for you. This includes automatic contributions and rebalancing. It’s a true auto-pilot plan with only the fees within the ETFs.
With SoFi Automated investing you can not buy single stocks and you can’t pick which ETFs you want with the Automated investing account. If you want more control you need to select the Active investing account type.
Regarding account type, SoFi offers taxable brokerage accounts along with all the common tax saving retirement accounts. With both the active account and the automated account you can pick from Traditional IRA, ROTH, or SEP IRAs.
SoFi also offers investors an entrance into Crypto trading, IPO investing and Fractional Shares. Fractional shares can be purchased from over 4,000 companies. Fractional shares are great for building your own mini portfolios.
Get started with SoFi Invest here.
| Pros | Cons |
| Commission Free | Limited to Stocks/ETFs |
| $0.00 Management Fees | No Options Trading |
| Great Customer Service | Lacks advanced order types |
| Automated or Active | Limited track recorded (2019) |
| A Variety of Account Types | |
| Only $5 to Start |
Robinhood was built for traders that want to take advantage of zero-commission trades. Traders try to profit quickly by timing their entry and exit from the market.
Robinhoods simplicity and first rate user interface has opened the door for many traders to learn about the markets and to trade stocks using their smartphone.
Just because Robinhood looks simple doesn’t it can’t offer some advanced features. Robinhood offers traders and investors lots of choices to trade in stocks, ETFs, Options and more. For a full rundown click here –
Robinhood can be used for advanced day trading strategies like scalping, swing trading and following momentum both short and long.
With Robinhood and can set up recurring investments which allows you to automatically deposit funds from an account or source of your choice into a particular stock or ETF. This recurring investment selection isn’t as advanced as many of the robo-advisor automations – but if used correctly it could get the job done.
For example, if you wanted to “automate” your investing with Robinhood using Vanguard ETFs you could set up 3 recurring investments of $100 per week or month (they offer several choices). A common 3 fund portfolio could be 60% into VTI (Total US Stock), 20% into VXUS (International Stock), and 20% into BND (US Total Bond). Obviously, you can pick the mix according to your goals and this is not investment advice – just an example.
Follow this link to sign up with Robinhood today.
| Pros | Cons |
| Commission Free | No Automated Portfolios |
| $0.00 Management Fees | Little Guidance |
| Built for Active Traders | They “pay” for order flow |
| Options Trading is Available for Advanced Traders | Unstable during the GameStop Fiasco |
| Easy to Use App | |
| Fractional Shares |
1. Robinhood was designed for traders and SoFi was designed for investors – and yes, there is a difference.
2. Robinhood gives traders access to trading Options and they also have something called Robinhood Gold. Robinhood Gold is $5/month but gives traders access to:
3. The tax savings of a ROTH IRA or Traditional IRA vs a brokerage account might be reason enough to pick SoFi over Robinhood.
When it comes down to it investors must eventually make a decision and choose a platform or app that they trust. Investing is all about putting your money to work for you instead of holding it idle.
Set your goals, make a plan and stick to it.
I would go with Robinhood if you want to “play” around with the stock market and learn about trading stocks. If you are ready to invest on a regular basis and build a stable future then I would go with SoFi Invest.
For more information check out this in depth review:
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