You've probably heard how important it is to save, invest, and keep track of your personal finances.
Well, one of the first steps to accomplishing these goals is to get your investments in order. And finding the right broker to invest with is a perfect place to start.
However, with so many different online brokers available to choose from, it can be a very difficult task. This is made even harder if you are new or just getting on your feet financially.
That is why in this article, we will be breaking down two popular brokerage services known as SoFi and Robinhood. We'll be giving you the full rundown on the features, fees, pros, and cons of each broker.
Whether you are interested in saving for retirement, investing in stocks, or socking away money for that dream vaca, each of these brokers are unique in what they offer. Let's take a closer look!
Robinhood is a commission-free trading app that allows you to invest in stocks, ETF, options, and cryptos. The app has become well-known for its simple interface and beginner-friendly platform.
SoFi Invest is one piece of the SoFi umbrella that also allows investors to invest commission-free. The platform offers stocks, ETFs, and crypto. However, the crypto trading does come with commissions.
Both of these apps are tailored towards beginner to intermediate investors, however they do vary in a few key areas. While Robinhood is more of a stand-alone investing app, SoFi is an all-in-one platform for personal finances. In addition to investing, SoFi offers loans, insurance, and coaching to their users.
SoFi is committed to being a one-stop shop for all your financial needs.
As a business built on a foundation of success and integrity, SoFi's mission is to be the most reliable broker and company that you can turn to for any service. From investing, to saving for retirement, to student loans, SoFi is designed to be there for you.
Now, what do I mean by a one-stop shop exactly?
SoFi offers a wide variety of services that can strategically position your money. From private student loans, to automated investing, to homeowner's insurance, SoFi has all of the main features of a bank all in one place.
And what's even better, all of these features can be accessed on the company's digital platform and mobile application!
SoFi can accomodate all of these top-quality characteristics through the extensive array of features on its platform. You name it, SoFi probably has it. Let's take a look at some of the most important features of the platform.
SoFi is ranked overall at #126 on the App Store which should tell you something about how well regarded it is. The SoFi app lays out important features and tools in a way that is easy to understand, even for newcomers to managing their finances and trying to grow their net worth.
SoFi believes that you should not have to pay to invest!
So it guarantees no extra fees or commissions when you execute a trade on one of the many stocks or ETFs that it offers. This move to cut extra fees shows they are catering to the needs of SoFi members. Basically, you will get access to cheap and reliable services.
However, do keep in mind they charge a mark up of 1.25% on each crypto transaction.
SoFi's automated investing feature takes the stress of picking individual stocks and ETFs out of the equation.
SoFi will take a close look at your goals, whether they are to save for retirement, buy a new vehicle or sock money away for your first house.
Then, it will automatically build a portfolio of securities that matches your risk tolerance. SoFi wants you to reach those goals and fulfill your aspirations, so it automatically rebalances your portfolio and makes sure you are well-diversified across a vast array of investment products.
Interested in buying shares of expensive companies such as Amazon or Google, but don't have the money to make those trades?
SoFi has you covered. Stock Bits is a feature that lets you buy small percentages of stocks and ETFs. When you do this, you can earn a proportional return depending on the performance of the security.
This means you can invest in the largest and most expensive companies with as little as $1!
For beginner investors, this is huge because it allows them the ability to build a diversified portfolio on the cheap.
If you are interested in Cryptocurrencies like Bitcoin, Ethereum, and Litecoin, SoFi Invest may be a good choice for you.
Cryptocurrency can be traded 24/7 on SoFi's platform and lumped into traditional investment portfolios. With the capability to buy stocks, ETFs, and cryptocurrencies, SoFi makes it possible to create a diverse portfolio spread out among various asset classes.
SoFi does charge a fee for this crypto trading service of 1.25% of the transaction.
I'm sure you have heard of this popular online brokerage app by now.
Robinhood has been splashed all over the headlines and acts like a magnet to attract new investors into the market. While highly publicized, you may not have a full understanding of Robinhood's mission and features.
Let's take a closer look now.
Robinhood's mission is to make the financial markets accessible to all. The company specializes in investing, specifically in the stock market, and has developed a highly acclaimed and recognizable mobile app to supplement its top-notch investment features.
Robinhood's features are widely recognized for competitive pricing and reliability. For example, its mobile app has received many awards over the years for being simple and effective.
And no doubt, there are more accolades in Robinhood's future!
Robinhood offers $0 trading fees for all stocks, options, crypto, and ETFs.
Robinhood Cash Management is a unique feature that lets you earn high interest on all uninvested money that you move into your savings account?
This is especially attractive for people who know how to be patient and wait for the right opportunity to get into the market.
That's because when you keep funds in your cash management account, you can transfer them instantly to your investing account. A standard transfer from an external account could take up to 3 business days. This could be the difference between getting in on a good trade and missing the boat entirely.
On the Robinhood platform, you can buy slices of shares instead of having to buy the whole thing. This can allow smaller investors to participate in some of the largest and most expensive companies listed on the market!
Like SoFi's Stock Bits feature, Robinhood lets you buy fractions of companies and receive proportional returns based on stock movements.
For example, if you are interested in buying a stock that costs $100, but only have $10, you can buy 1/10 of a share and receive all of the stock appreciation gains/dividends on that 10% ownership.
Not a bad deal, especially if you want a piece of pricy names Amazon and Google.
Robinhood provides members with a highly detailed customer service help center with hundreds and hundreds of questions and answers. If members are unable to find the answer they are looking for, they can also email or request a phone call. Both emailing and requesting a phone call are managed within the app under "Help" inside of settings. Members can expect an answer to their email within 1 business day or a phone call within 30 minutes.
While this may not be as convenient as a simple phone number that you can call, it is more efficient for Robinhood as many questions can be answered in the help center.
Robinhood Gold members gain access to the typical features in a normal Robinhood account with additional research and a reduced interest rate with margin.
Much of the extra Robinhood Gold functionality is tailored towards shorter-term traders. Long-term investors in most cases won't get much use out of the additional benefits.
These extra features come at a price, and will be covered in the "Robinhood Fees" section below.
Many platforms offer individuals the ability to invest in a retirement account, namely an IRA. With Robinhood, you also have this option. However, it comes with an extra perk: matching.
Most people are aware of what a 401k is - a retirement account offered by many employers. An IRA, or an Individual Retirment Account, is one that individuals can open on their own without their employer. A 401k is often highly prioritized because many employers offer a match of some percentage. For example, an employer may offer to match the contributions made by an individual up to 5%. With an IRA, their is no match.
However, with Robinhood's IRA, you instantly get an extra 1% of every dollar you contribute. This is a great way to augment your retirement account.
While Robinhood does keep its costs to a minimum for its users, there are still some fees associated with margin and its Robinhood Gold Account.
There is a fixed $5 monthly fee for Robinhood Gold accounts.
A Robinhood Gold account may be worth it for someone who is looking for both high-quality research and also a reduced interest rate with Margin trading.
Investing on margin is when you borrow money from your broker to finance your investments. Interest payments made for the investor go back to Robinhood on that cash borrowed.
With Robinhood Gold, you can take out $1,000 of margin with no interest payment needed.
However, after that $1,000 minimum, you will be charged a 7.25% yearly interest fee. Be careful when investing on margin as it can be very risky without knowing your way around. Without Robinhood Gold, you can still access margin, though the interest rate increases to 11.25%.
Now that we have outlined the features, fees, pros, and cons of both Robinhood and SoFi, it's time to come to a final decision on which online broker is best. It is safe to say that both SoFi and Robinhood have exceptional features but to keep it short, it all depends on you.
Are you looking for a full-service financial company that will offer you student loans, mortgages, refinancing options, and automated investing? If so, then SoFi may be a great fit for you.
If you are more interested specifically in the stock market and using all of Robinhood's top-of-the-line market investing features, it may be a better choice.
Regardless of SoFi Invest vs Robinhood, it is safe to say that both brokers have very outstanding features that make each unique. Only you can choose what's best for your goals and financial future. I hope this article will help steer you in the right direction on your path to financial success!
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