I apologize for the delay. It's been a rather busy week. Nevertheless, we're back again with the third installment of my trading app reviews. This one is just a little different, though. As always, I'm just a complete amateur sharing my findings and opinions. I'm clearly not someone to be giving financial advice.
SoFi Technologies (Social Finance) is more than just a stock trading app,
although that's all I really use it for. It markets itself as an all encompassing personal finance service, and it really does try to offer a one stop shop. It's list of services are:
Banking
Credit Card
Investing
Loans
Relay (a place to monitor you spending, asset values, and credit score)
Insurance
While I may yet avail myself of their services, I'll be focusing just on their investing service for this venture.
On it's face, SoFi has a sleek, simple, modern feel to it's user interface. A simplicity that belies that complexity of the app itself. Much like Robinhood, I was originally put off a bit by how simple it seemed, but after spending increasingly more time with the app, I'm finding quite a bit to like.
There are no account fees or trading fees (as is the norm for any investment accounts in the last few years and why it's on this list). This begs the question then, how do they make their money? Afterall, TANSTAAFL.
SoFi started business in 2011 as a project by a handful of Stanford business grads as a pilot program offering student loans to Standford students. This is their meat and potatoes. They raised 2 million from Stanford Alumni the first year to loan out to 100 students. By the next year, they were up to 77 million, and by the year after, they were up to 500 million raised from outside investors. While originally a platform to pair students with alumni in a school specific funding model, they eventually shifted gears as they grew to a non-traditional approach to underwriting, focusing on providing funds to individuals that they deemed were responsible. As they grew, they also expanded their services, first expanding their loan options to include student loan refis, followed by mortgage and personal loans.
In 2018, they introduced SoFi Invest (at the time called SoFi Wealth) as a trade and commission free stock trading option. This, in turn, grew into a robust and diverse trading platform that offers a number of options to the average investor, eventually adding cryptocurrency investing in 2019. SoFi offers a self-directed investment account called Active Investing as well as a robo-advisor directed account called Automated Investing. In addition to the brokerage accounts, they also offer IRAs with Traditional, Roth, and SEP options (and yes, I had to look that last one up, too).
SoFi also has a bit of a social aspect to it, similar to Public, but with less social media interaction. When you're reviewing a stock, you can see directly who, of SoFi users, have purchased it, and you can find popular investors and review their holdings, watchlists, and activity, if you're just looking for some inspiration. Finally there's the SoFi social ETF (mentioned below) that diversifies your investment across the 50 most popular stocks on SoFi. Now, bear in mind that betting purely on the whims of the masses probably isn't the soundest strategy for financial success, still, like I said, it may serve as some inspiration.
Onto my personal experience with SoFi:
I opened up two of the investing accounts: one self-directed, and one automated. I also had some crypto for a short time before I liquidated it and bought stock. I've decided to keep my crypto investing in it's own realm for the time being. Thus far, I don't have any complaints about either of the brokerages. They're both on autopilot for me, and in truth, their holdings don't differ so much from one another. One of the biggest differences is that, when self-directing, I almost never invest in bonds.
One thing that I found particularly intriguing: SoFi offers some self-branded ETFs:
Sofi Gig Economy ETF (GIGE)
SoFi Select 500 ETF (SFY)
SoFi Social 50 ETF (SFYF)
SoFi Next 500 ETF (SFYX)
SoFi Weekly Income ETF (TGIF)
SoFi Weekly Dividend ETF (WKLY)
Like the S&P 500, the SoFi Select 500 invests in the top 500 largest publicly traded companies, with the SoFi Next 500 investing in mid-cap companies. I included these in my self-directed portfolio along with VOO, the Vanguard S&P 500 ETF. They are thus far performing comparably with VOO up 1.27%, SFY up 1.45%, and SFYX coming in at 2.67%.
The TGIF and WKLY ETFs are both dividend funds that aim to pay out weekly dividends. The main difference between the two is that WKLY is an actively managed ETF (meaning higher maintanance fees), and TGIF is a passively managed fund.
SoFi, like Robinhood, will allow you to set up automatic investments of $1.00. However, if you're looking to add funds to SoFi and then purchase shares, you'll find that there is a minimum of $5.00. However, as I said, you can set up automatic payments of $1.00. After my initial deposit, I set up some small $1.00 recurring investments in the 4 of the SoFi funds, and a once-a-month $1 investment into the Automated Investing account. I feel as though this can't be overstated enough: you can invest as little as $1.00 into an automated investment account. This eliminates two hurdles at once: cost and having to learn investing. Just set up automatic deposits and let the robo-advisor do the rest.
This isn't just my opinion. Much smarter people over at Nerdwallet also like this option for beginners and cost conscious investors. There are no fees and no account minimums, which is a fairly novel occurrence, and one that makes it that much easier for someone on a tight budget to start investing for their future. Between the brokerage options, the IRA options, and the minimal barrier for entry, it's about as painless as it can be to start taking care of your future. Jump into a tax advantaged Roth IRA or start by investing as little as $1 into the automated account and let it start working for you.
Looking through the breakdown of my investments in the automated account, it looks fairly well diversified, and doesn't look that much different than my own investments. It will split your dollar between SFY and SFYX (as above), MUB, HYD, and BSV (bond funds), and then broader global funds VEA (a developed markets fund) and VWO (an emerging markets fund), both of which at Vanguard ETFs. The Vanguard family of funds have shown some of the most promise in my Fidelity IRA, but that will be a discussion for another time. Suffice it to say, I would be rather happy with this portfolio in my actual IRA.
Having both an app and a browser based platform also serves to make this just a bit more accessible to the cash-strapped average joe, concentrating on his daily grind with little time else to learn how to invest, and then access and curate his holdings.
Overall, I'm rather fond of SoFi. I feel like it has quite a lot to offer beyond the stock trading, and if you're trying to get organized and start your journey to growing your wealth, you might can make full use of SoFi's offerings, and it may be just the thing you need to kick it off.
Again, if you use my link here to signup and invest $100, you can I will both get free stock, and while that would be greatly appreciated, it isn't necessary.
You can find my review of Robinhood here.
You can find my review of Webull here.
You can find my review of Public.com here.
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