In the world of stock trading, low-cost brokerages are starting to be a thing of the past. The new trend, no-cost brokerages like Robinhood and now SoFi Active Investing, are the new lowest-of-the-low-cost brokerage companies.
With zero fees on stock and ETF trades, you can’t get a trading platform that’s much cheaper than SoFi Active Investing. But should you use it?
- Commission-free stock and ETF investing
- Ability to invest in fractional shares
- No minimums and just $1 to open an account
SoFi Active Investing Details
SoFi Active Investing
What Is SoFi Active Investing?
SoFi Active Investing is a comission fee-free brokerage company that allows users to buy and sell stocks and ETFs in a brokerage account.
Right now, all trading has to happen in the after-tax brokerage account. That means that your investing will have tax implications. For example, you may have to pay a tax on capital gains if you sell a stock, or you may have to pay tax on any dividends you earn.
In addition to providing comission-free brokerage services, SoFi offers some limited investing features. For example, you can read explainers on how stocks work, and you can start a watch list of your favorite stocks.
Pros of SoFi Active Investing
There’s plenty to love about SoFi Active Investing. Here are a few of the most important benefits of the platform.
Become a SoFi Member
SoFi has created a network where membership has a lot of value. In particular, SoFi members qualify to attend local meetups (usually in major metro areas across the U.S.) or to get advice from career coaches. Most of the perks are geared towards younger people, but the perks can be valuable for the right person.
It’s not often you find a no commission brokerage. SoFi Active Investing doesn’t charge any trading fees.
No Account Minimum
Not that you can find many stocks for less than $1, but you can start your brokerage account with just a buck.
Fractional Share Investing
SoFi's most compelling offer is the ability to buy fractional shares. This is great when you are starting out and don't have a lot of money.
Cons of SoFi Active Investing
Of course, a fee-free brokerage account isn’t going to be full-service. Here are a few drawbacks.
SoFi Active Investing is for the DIY crowd. Don’t expect professional stock recommendations.
No Options or Mutual Funds
A big reason to consider active trading is to buy options to hedge against losses in your main portfolio. SoFi doesn’t allow account holders to trade options.
If trading options is important to you, check out our list of the best places to trade options.
They also don't allow you to invest in mutual funds. You have to stick to stocks and ETFs.
Only After-Tax Brokerages (Right Now)
The Active Investing accounts are taxable brokerage accounts. That means you cannot start a Roth IRA, traditional IRA, or other tax-advantaged account right now.
Where Else Can I Find Free Investing?
SoFi is a standout in the free-investing space, but it’s certainly not the only brokerage offering free — or nearly free — trades. Here are a few others to consider:
Bottom Line: Should I Opt to Trade Through SoFi Active Investing?
Right now, M1 Finance is still the leader of the pack when it comes to free brokerage accounts. The platform allows you to automatically rebalance custom portfolios which is a really wise way to invest.
However, if you’re interested in learning about trading stocks or selecting individual stocks, SoFi may be the route to choose. After all, no-fees is hard to beat. Just be careful when you start an active trading journey. It is easy to lose money by allowing your emotions to dictate what you’ll buy and sell.