SoFi Invest vs Robinhood: Which Investing App is Better?
If you are new to investing and want automated guidance or access to financial advisors, SoFi is your best bet. If you prefer to go it alone and want to get into crypto and options trading, Robinhood is the clear winner.
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|Invest In||Stocks, ETFs, automated investing||Stocks, ETFs, cryptocurrency, option and margin trading (Gold members)|
|Min. Account Balance||$0, one-time deposit of $100 or $20/month auto debit required to start||$0|
|Investing Features||Investing content, real financial advisors||Investing content|
Most people know they should be investing, but getting started can seem daunting if you’re diving in alone. There’s a lot to understand, and if you make the wrong decision, you could lose your hard-earned money. That’s where web-based investing apps like SoFi Invest and Robinhood come in. Both companies offer investors a way to invest without the hassles or high management fees that come with traditional investments — and you can even get started on your smartphone.
SoFi started as a student loan refinancing company in 2011, launched SoFi personal loans a few years later, and added SoFi Invest in 2017. Robinhood began in 2013, as a barebones investing app that let you trade stock options with no commissions. Although both companies started in completely different places, they’ve both risen to be viable players in the investment industry.
Which one is right for you will depend entirely on the types of services and features you’re looking for. This review will pit Robinhood and SoFi Invest against each other to see how they stack up.
In this review:
- Investment Options
- Human Advising
- Tax-Loss Harvesting
- Minimum Deposit
- Investing Resources
- Customer Support
Robinhood has several investment options, which investors with taxable brokerage accounts can try out.
- Individual stocks and exchange traded funds (ETFs)
- Option and margin trading for Robinhood Gold members
- Cryptocurrency trading
Not many established investment companies offer cryptocurrency trading, either because they’re still relatively new or because so many crypto exchanges have gotten caught up in corruption scandals and cyber attacks. So if you’re looking for a solid way to invest in crypto without some of the added risks that come with using exchanges, Robinhood may be the answer.
The company also has cash management options coming soon. Their high-yield checking and savings were announced in December 2018, but they haven’t made their appearance quite yet.
Access to ETFs and options trading is also an important thing to look for in an investment platform, and Robinhood offers both. It falls short, however, in offering any retirement accounts. Robinhood does not currently support any types of IRAs or 401(k)s, so if you want to invest primarily for your post-career future, you’ll want to look elsewhere.
SoFi Invest offers all four types of IRAs: SEP, rollovers (from a 401(k) to an IRA), Roth, and traditional. It also offers both individual and joint taxable brokerage accounts. You can choose between SoFi Automated Investing, a robo-advisor service that invests mainly in ETFs, or SoFi Active Investing, which is similar to Robinhood’s offering.
>> Read More: LendEDU’s Best Robo Advisors
Robinhood does not offer any kind of robo-advisor, while SoFi does not offer any crypto or options trading, making the winner entirely dependent on what type of investing you want to do.
If you’re looking for a traditional investing platform for long-term goals, such as retirement, SoFi invest is your best bet. If, however, you want to get into the world of options or crypto trading, Robinhood is the better choice.
Category Winner: SoFi Invest for investing, Robinhood for trading
SoFi Invest offers unlimited access to its certified financial planners (CFPs) at no additional charge; all of their advisors are Series 65 certified as well, which means they have a fiduciary responsibility to act in your best interests. If you’re a SoFi member, then you have access to these financial advisors as much as you need, whether you’re just starting out with financial goal planning or you need advice on a trade you’re thinking about making.
Robinhood runs a bare-bones operation in order to keep their costs down, and in this particular arena, it shows — you won’t get any access to financial advisors through the program. For those who are entirely new to investing and prefer a bit more interaction with a pro, Robinhood falls short.
Category Winner: SoFi Invest
If there’s one thing that investment income means, it’s more taxes. One of the ways that some investment managers offset these taxes is by selling some of your stocks at a loss. That sale generates a capital loss, which will offset your capital gains when you file your taxes for the year. For many investors, this is a must-have for any investment company they deal with; while profits are the ultimate goal, being able to minimize any resulting tax liability is also important.
Unlike other online investing platforms, such as Betterment, neither company currently offers tax-loss harvesting. Robinhood says that it will provide you with tax documents, but they won’t automatically do any tax-loss harvesting for you. You can still do it manually, but that might be too advanced for novice investors.
SoFi Invest plans to launch automated tax-loss harvesting to all of its members by the end of 2019, so we’ll take them at their word and give this round to them.
Category Winner: SoFi Invest
SoFi has no minimum account balance, but in order to start, you’ll need either $100 as a one-time opening deposit, or you can set up a $20-per-month automatic debit from a checking account to fund your investment portfolio.
Robinhood doesn’t have a minimum balance either, but unlike SoFi there’s no minimum to start your account. Their Gold members have access to margin trading starting at $5 per month for $1,000 worth of buying power; for a standard brokerage account, however, there’s no amount that’s too small to begin with. This makes Robinhood especially attractive to new investors who don’t have a lot of money to start with or don’t feel confident enough to deposit large amounts.
Category Winner: Robinhood
Neither company charges any monthly fees or trade commissions of any kind, making this category a draw.
Category Winner: Tied
Both companies seek to provide an easy, low-cost way to invest, and each of them provides tools to help you learn as you go.
Robinhood’s tools are mostly in the form of articles that explain exactly how investing works and the various scenarios that you might get into. They offer a robust help center with detailed articles that show you how to leverage their app to its fullest potential in the absence of human advisors.
All of these resources can be studied on your own time and at your own pace. Robinhood’s goal isn’t to manage your money for you; it seeks to teach you how manage it yourself through personalized news, candlestick charts, and other resources.
SoFi Active Investing also offers news and investing articles, as well as groups where you can interact with other investors. But its real strength lies in its robust interface and the availability of human financial advisors who can help you in real time when you need it. While Robinhood’s library is helpful, sometimes it’s just easier to talk to another human being.
Category Winner: SoFi Invest
A stripped-down interface and lack of bells and whistles keeps Robinhood’s costs almost non-existent. That also means a less-than-stellar customer service experience for you, should you need it. Robinhood received a B rating from the Better Business Bureau (BBB).
SoFi’s has higher marks from the BBB, an A- rating. However, that grade reflects SoFi as a whole, including its lending and refinancing arms.
Category Winner: SoFi Invest
Bottom Line: SoFi vs Robinhood — Which is Right for You?
As you can see, SoFi Invest and Robinhood appear to be similar companies for online investors, but those similarities end quickly. Both companies are geared toward millennial investors, but depending on your financial situation and level of confidence with investing, one option is likely better for you than the other.
New investors who want a hands-off solution for long-term investing will benefit from SoFi Invest’s automatic investing platform; more advanced investors who want to try to make money on short-term trades may find Robinhood’s stripped down interface fast, uncluttered, and hassle-free.
Whatever you choose, it’s imperative to understand your own goals and comfort level before signing up for any online brokerage service.
Author: Jeanette Perez