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SoFi Automated Investing: A Platform Designed for the Uninitiated

As a beginner investor, you have a lot of choices at your disposal, and while initially intimidating, you will eventually find this a boon. No longer are the days when you had to enter the musty chambers of a stock brokerage. The world of investing is now at your fingertips.

But it is a vast world, full of options and strange terminology. There are stocks, bonds, options, annuities, and a dizzying array of options for retirement. Where do you start? Thankfully, auto, or robo-investors, had made this first step so much easier.

You may have heard of SoFi before; initially billed as a way to refinance student loans, it has since expanded into the arenas of mortgages, mortgage refinancing, and auto investing.

SoFi is a relatively new company, founded by graduates of Stanford University in 2011. But don’t let their lack of experience fool you: SoFi is quickly establishing pedigree in the market, and has become a go-to for beginner investors.

What makes it so great for those just starting out? We will concentrate on SoFi’s automated platform in this article, but keep in mind that they do offer the more advanced “SoFi Active Investing” for those who are more experienced or perhaps are merely fishing for a little “clout” with their market-savvy friends.

SoFi Automated Investing

First and foremost, SoFi Automated Investing is cheap. There are no account minimums, zero management fees, and it costs just $5 to start investing. With a plethora of account types ranging from individual taxable to rollover IRAs, it is also versatile. There are a lot of easy ways to make money, but investing with a service like SoFi is one of the easiest.

Perks of SoFi Automated Investing (especially for beginners)

  • No account minimums or management fees
  • Quarterly automatic rebalancing, plus rebalancing for 5% drift
  • A comprehensive “goal planning” system which allows you to find the portfolio to fit your exact needs
  • Free investment advice from certified financial planners

SoFi offers 10 different portfolios from 13 asset classes, insuring virtually any investor of finding an allocation that suits them. These are robust portfolios that are designed by professionals for solid growth; SoFi is not in the business of get-rich-quick – this is honest investing done smartly.

They also break down their portfolios by “risk class”, so that you know what you are getting into. For example, say you are relatively young and are looking to start investing for retirement. That means you can choose a portfolio that is a bit riskier since you have the time to absorb momentary losses. A person closer to retirement would probably lean in the other direction.

With that said, there are some drawbacks to SoFi Automated Investing. These are probably more critical to moderately advanced investors, but we think a breakdown of the cons is worth noting.

Cons of SoFi Automated Investing

  • There is no tax-loss harvesting
  • Their portfolios consist of a variety of exchange-traded funds (ETFs), each of which comes with its own fee
  • SoFi’s auto invest locks you into a single strategy. Unlike M1 Finance, which allows you to add its “expert pies” to an existing portfolio, SoFi is not so easily manipulated. You pick the portfolio and that’s all she wrote.
  • Since it is an entirely free service, SoFi must make its money somehow. What they do is sell its users’ order flows, i.e. your personal information and investing habits. This is similar to the way many social media sites operate. While this may not seem so overtly wrong, there are some deep existential concerns that come into play.

No tax-loss harvesting is probably SoFi’s most glaring con. While this may not seem like much at first, but it is something that could cost you some revenue down the road. Find out more about tax-loss harvesting here.

SoFi’s Customer Service

For beginner investors, having reliable customer service is a real boon. SoFi Invest excels in this area. As a member, you have the possibility of speaking to customer support via live chat, email, or telephone.

Note that SoFi’s stock advisors don’t give you stock picks per se, but they help you get the most out of their investment services, and that includes lining up your specific investment needs with their premade portfolios.

Why SoFi?

You may be wondering why SoFi and not another of the popular automated or robo-advisors out there. And there are a lot of great ones out there, including M1 Finance and Vanguard’s Digital Advisor. But the answer is quite simple: it really depends on what you want out of an auto advisor platform.

SoFi quite frankly excels with beginners. If you are looking to start trading, or merely thinking about starting, SoFi is hard to beat. With its $5 minimum to start, zero balance requirements, and virtually free service, it is a haven for beginners.

Don’t let your money mold over in some saving’s account with little yield. Start investing today and get your “piece of the pie”.

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