Years ago, nobody would be able to imagine what robo advisors are capable of today. But they have become commonplace in 21st century investing. However, with all the options out there, how do you pick the right one as you reach for your goals?
It is easy to become overwhelmed, and even to possibly experience information overload. SoFi Invest and Betterment are both hefty competitors to the traditional investment portfolio leaders and at a fraction of the cost.
In this review, we will be comparing the two side by side to see how they stack up!
|Debit Balance||Betterment||SoFi Invest|
|Management Fees||0.25% To 0.40%||0%|
|Number Of Portfolios||101 Portfolios||10 Portfolios|
|Tax Loss Harvesting||Yes||No|
Social Finance, better known as SoFi, is an online personal finance company. They specialize in student loan refinancing, mortgages, personal loans, investing, and banking. While that is a lot to take in, for the purposes of this article, we will focus on SoFi’s investing arm, SoFi Invest.
SoFi Invest refers to a three-pronged platform for young investors ready to get their feet wet in investments. The platform is a relative newcomer to the investment community, but has already shown its value to its more than 1 million users.
You can read our full review of SoFi Invest here.
SoFi Invest is broken into three categories, each focused on separate goals for investors. These three categories are: Active Investing, Automated Investing, and Crypto.
When you invest with SoFi, you become part of the community and its many perks. For instance, you can get career coaching, financial planning advice, a paid referral program, discounts on other SoFi products, and more. Benefits like these are free for members and according to SoFi, will only be on the upswing.
In addition to member benefits, SoFi Invest is also running a promotion for new investors. If you download the app and open up an investment account, you could earn up to $1,000 in free stock! How’s that for a reason to join?
With Active Investing, there are no account minimums and fees to stop you from making the leap. In addition, Active Investing feeds news updates, so you can stay on top of the world of investing.
Fractional shares called Stock Bits, are another huge benefit to investing with SoFi. You can invest in dollar amounts instead of numbers of shares. SoFi doesn't have this option available for all blue-chip stocks, but it does have 43 of the most popular to choose from.
You can invest a minimum of $1 into companies that would be out of your reach ordinarily due to the high share price.
SoFi Automated Investing is a great choice for people stashing money away for the long-haul (retirement) or a particular goal (college). When you sign up as a member and complete a short questionnaire, SoFi will build and manage a portfolio for you with no management fee.
Through this option, members can tackle these goals and feel confident that they will meet them with SoFi’s regular portfolio rebalancing. These portfolios were created with risk in mind. Therefore, each one is diversified in order to give people their best shot at reaching financial wellness.
While management fees are not included in the portfolios offered, they do come with other expenses ranging from 0.03% to 0.08%. This is fairly low compared to other expense ratios.
Investing in cryptocurrency is relatively new to the company. When you complete your first crypto trade of $10 or more, you will automatically get $25 in bitcoin.
Unlike the stock market, cryptocurrency is open for trading 24/7. However, unlike trading stocks with SoFi Invest, trading crypto comes with a cost. They charge a 1.25% fee for each trade. All crypto trades have a minimum order size of $10 per purchase and a max of $50,000.
In addition, cryptocurrency can't be transferred to an external wallet. This is done to protect the integrity of SoFi’s user data.
Betterment is a robo-adviser offering automated and goal-inspired investments for everyday people like you and me.
Betterment lets people invest passive index-tracking equity and fixed-income ETFs portfolios. Additionally, they can open tax advantaged savings accounts like traditional and Roth IRAs.
Betterment has several features that make it stand out among other robo-advisers.
Like many other online platforms today, Betterment has a no-fee checking account, high-yield savings, goal-specific portfolios, and automated retirement savings. However, in order to compare apples-to-apples with SoFi Invest, this review will focus on Betterment’s investing arm.
Betterment prides itself on helping people shoot for specific goals.
Start by brainstorming your goals before you set up your Betterment account. Maybe it’s a dream house, a tropical vacation, or a lump of cash to pay for your child’s education. Whatever the goal, Betterment can help design the right portfolio for you.
Betterment touts that its portfolio strategy was built on Nobel-prize winning research. This was done so people will feel confident they will earn great returns at each risk level.
Betterment features ETFs in 12 asset classes set up to match your risk tolerance for your specific. Listed below are some examples of ETFs to choose from:
You can also be more hands-on with the ‘flexible portfolios’ approach letting you change the amount in a specific ETF.
Betterment knows that no two people are alike. Therefore, retirement strategies are not cookie-cutter! You start with a short questionnaire about your age, goals, income and how much risk you're willing to take.
Next, Betterment creates a personalized plan for you. Betterment lets you open a brand new Traditional, Roth, or SEP IRA, or roll over an old 401k or convert an old IRA into a new one.
One of the best features with long-term savings through Betterment is being able to project how much will need to retire comfortably and set up automatic withdrawals whenever you like. While it is free to create a retirement plan through Betterment, be aware that they charge a management fee if you decide to invest with them.
The platform's fees are based on two different pricing models that vary depending on your account balances and the level of advice from actual people!
The Digital plan comes at a 0.25% fee with no account minimum and no human advice.
Betterment Premium is for people with $100,000 to invest and are willing to pay a fee of 0.40%. In return, Betterment Premium customers get advice from the pros and one on one guidance on their money both within Betterment and outside of it.
As with other robo-advisers, Betterment will rebalance your account every time your portfolio strays too far from its original goal. This will make sure your financial hopes and dreams are always on track. When they rebalance, the company will also buy fractional shares, so they invest every dollar.
In conclusion, both platforms are extremely impressive and offer several perks outside of the old investment options. However, they are each unique and carry their own value.
If you are looking for more flexibility in how and where you invest, SoFi is the clear winner. When it comes to fees, again, SoFi takes the cake. With no management fee, it is hard to find too many issues with SoFi Invest.
Betterment has poured lots of research into its portfolio mix, which is a significant plus. This alone should help you feel more confident about your investments and justifies the larger expenses associated with the accounts.