Rewind just five years ago and very few people inside or outside of the investing world considered robo-advisors to be capable options for individual traders and investors. And while investing without the guidance of a financial advisor is still something that people have to be cautious about, platforms like SoFi Invest, Betterment, and dozens of others are streamlining the DIY investment process and making it a much more realistic option.
While robo-advisors are widely recognized as legitimate options in today’s investment marketplace, questions remain. For example, how do I choose the right robo-advisors for my individual investment needs? Or, which robo-advisor is best?
We recognize that it can be challenging to filter out the noise and focus on what matters most, so we’ve created this helpful guide that will give a better idea of how SoFi Invest and Betterment stack up against one another. (If you’re looking to compare Betterment with other robo-advisors, here’s a guide comparing Acorns vs. Betterment.)
Let’s start with a very basic, high-level overview of these two platforms. SoFi Invest is an individual product within the much larger SoFi ecosystem. It’s a much more active, hands-on platform that gives individual investors the option to buy and sell individual stocks. (In this sense, it works a lot like Robinhood or WeBull.) However, it also gives users options for automated investing and different types of portfolios.
Betterment is known as one of the original robo-advisors. It’s been on the scene for several years and has established a loyal following, even among certain sophisticated investors who want alternative options for investing their funds.
Betterment’s developers have worked to make their platform a sort of hybrid between user-friendly apps like Robinhood and a more advanced platform that offers personalized advice and recommendations. It takes a goals-based approach and lets individual users track their progress over time.
Both applications – SoFi Invest and Betterment – have the same overarching goal of streamlining investing and making it a less-expensive, more hands-on process by removing the “middle man” from the equation.
The best way to analyze SoFi Invest vs. Betterment is by looking at how they stack up in a head-to-head comparison. Here’s a convenient table to help you quickly compare the two.
|Minimum account balance to open||$0 minimum||$0 minimum|
|Number of Portfolios Allowed||Up to 10 portfolios||Up to 101 Portfolios|
|Tax loss harvesting||❌||✅|
|Customer support||Email & Phone||Email & Phone|
|Mobile app||Android & iOS||Android & iOS|
Now that you have a basic overview of how SoFi Invest and Betterment compare with one another, let’s take a more detailed look at individual features, as well as some of the pros and cons of each DIY investment platform.
SoFi Invest, which is short for “Social Finance”, is a DIY platform that offers active and automated investing services for individual users. It’s basically a self-directed account where you’re able to trade a wide range of products, including stocks, ETFs, and even cryptocurrencies like Bitcoin and Ethereum.
SoFi Invest is known for its simplicity and hands-off management. This makes it an ideal option for newbie investors who are just getting started and don’t necessarily need the help of a real-life financial advisor.
Perhaps the biggest advantage of using SoFi Invest is the lack of fees. There are no annual advisory fees and you get access to financial advisors at no additional cost. Plus, you only need $1 to get started investing. This low barrier to entry makes it ideal for anyone who wants to start investing without having to meet the high minimums that other platforms have (like $5,000, $10,000, or more).
SoFi Invest is a relatively “new kid” on the block. They have a limited track record as an investment firm, which creates limited confidence in people who want to see a long history of returns. And as part of automated investing, your portfolio is going to include plenty of SoFi exchange-traded funds, which have higher costs associated with them. Another con is the lack of tax-loss harvesting. (This isn’t a big deal for most new investors, but it’s worth mentioning.)
Betterment is one of the original robo-advisors. They’ve been around for a decade and have perfected their range of tools and features over that time. It’s an intuitive, user-friendly app, but it also offers advanced features that set it apart.
Unlike So-Fi, which offers no advisor fees, Betterment has some. Thankfully, they’re low (ranging from 0.25 percent to 0.40 percent depending on the type of account you have). Another benefit is the ability to choose from different portfolios based on your target goals. And unlike SoFi, Betterment does offer tax-loss harvesting.
If you want professional advice from a real-life advisor, you’re going to pay relatively high fees for their guidance. And while they offer something called an “emergency fund portfolio” for storing cash, it’s probably not the best idea for more conservative investors.
Okay, so the question remains: Should you choose SoFi Invest or Betterment. And while you’d probably like a definitive answer, it really depends.
If you’re someone who is totally new to investing and just want to get started, SoFi invest is a great choice to get your feet wet. And with zero management fees or account minimums, you’re free to just invest.
However, SoFi doesn’t offer much in terms of comprehensive financial planning. If you have specific goals that you’re saving for – like buying a house or investing in real estate – this isn’t the best robo-advisor for you. You may consider Betterment instead.
Betterment does have some fees, but it’s much better suited for identifying target goals and creating portfolios to help you move closer toward them.
At the end of the day, we can’t choose a platform for you. However, the hope is that this article gives you some basic information that you can use to make a wise decision.
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