SoFi Invest is a robo-advisor aiming to offer a low-cost, hassle-free investment option for people who want to plan for the future.
Not everyone has the time or the inclination to learn about the markets and to keep updated on the latest news. This is part of a new generation of investors, and investors with SoFi can put most of their portfolios on autopilot.
In our SoFi Invest review, we discussed the core features of this platform. Now it’s time to talk about how good this platform is for beginners.
What Pain Points Does SoFi Invest Overcome?
The reason why SoFi has been such a big hit with small-time retail investors is its ability to overcome the pain points presented by traditional brokerages. By breaking down these barriers to entry, SoFi has democratized access to investing.
Some of the usual pain points of investing for the first time include:
- High Fees – Some brokers will charge hundreds of dollars a year to simply hold your assets with them. Plus, many of them will even charge additional trading fees every time you buy and sell.
- Account Minimums – Brokerages traditionally want you to commit a certain amount to invest before they will process your application to open an account. Most brokerages charge between $1,000 and $2,000 minimum.
- Lack of Guidance – Newbies rarely know what they want to invest in. Older brokerages offer no insights and no guidance into what you should do, so you’re on your own.
It wouldn’t be a stretch to say that millions of people have turned away from the idea of investing simply because they find it too expensive or too complicated.
Now, let’s discuss how SoFi is geared toward beginners and how they help overcome some common pain points.
1. Low-Cost Investing
One of the major triggers that scare beginners away is the potential for spending hundreds, if not thousands, of dollars per year on management fees, trading fees, and brokerage fees. In particular, most brokerages require you to deposit thousands of dollars before they’ll even open your account.
SoFi investors operate in a completely different space to other investors because there are no minimum balances, no account minimums, and little to no trading fees.
This makes it a highly inclusive investment platform where everyone can start investing with a minimal outlay.
2. No Advanced Investment Features
Although many would consider it a disadvantage, SoFi has made it clear that it’s a platform geared towards beginners because there are no advanced investment features.
For example, you cannot enter stop-loss orders and you cannot execute short-term investment strategies. Furthermore, tax-loss harvesting, which involves strategically selling certain holdings at a loss to reduce your overall tax burden, is also unavailable.
Even though these advanced features are missing from the platform, beginners still have everything they need to get started.
3. Automated Portfolios
The greatest challenge beginner investors with SoFi have is deciding which assets they should buy. Unfortunately, newbies tend to make the wrong decisions because they’re either choosing blind or basing their decisions on what’s going on in the media.
SoFi specializes in automated investing, with a selection of pre-defined portfolios. They are transparent about what each of the 10 portfolios contains, and they have also calculated risk levels.
Even if you know nothing about the markets, you’ll have everything you need to know what you’re getting into.
4. Access to Certified Financial Planners
One standout feature aimed at beginners is free access to a team of certified financial planners. These financial experts are ready and waiting to discuss what you want to achieve when you want to reach your goals, and the strategies needed to get you there.
Investing is not solely about making money but is about accomplishing a goal of some kind. Whether you are looking to put down a mortgage on a house or plan for retirement, these are the issues SoFi financial planners can discuss with you.
5. SoFi Stock Bits
Beginners often lack the capital to invest in large quantities of shares from major companies. This has left a gap for years that has meant beginners feel frozen out of the markets.
Not so with SoFi. Since beginners may only be investing a few hundred dollars at a time, you don’t need to wait to buy one full share.
With SoFi Stock Bits, every single dollar works for you because you can purchase fractional shares and gradually build up your holdings.
This is an excellent way of gaining exposure to the market immediately, rather than waiting until you have enough money.
The Bottom Line
SoFi Invest is a dedicated robo-advisor for beginners. They have overcome most of the major pain points presented by traditional brokerages. The low-fee approach to investing has been a game-changer and more and more ordinary Americans are now able to get started with investing.
At Modest Money, we believe that this is one of the most affordable ways to gain exposure to the markets. If you want to invest for free, create a SoFi Invest account today by following this link.