SoFi & Betterment Investment: As much as Investing is lucrative, it can really be confusing. Many would love to invest but don’t have the time to research stocks, rebalance their portfolios, or assess the long-term viability of their investments.
Although actively managed portfolios can handle most of these tasks for you, not everybody wants to pay the huge fees that come with them.
SoFi Invest (Initially SoFi Wealth) and Betterment are two of the best robo advisors on the market, and both seek to make investing accessible for all by reducing investing fees and building online interfaces that anyone can use. This review will compare the two platforms and which is best for you.
Which Platform Offers Better Options?
SoFi Invest offers active and also automated investing.
With SoFi Automated Investing, you set your investment goals with their tools, and their robo-advisor will automatically decide exchange-traded funds (ETFs) to help you reach your goals.
SoFi also strategically reinvests dividends and sell certain shares to keep your investment portfolio in line with the asset allocation your that goals require.
On the other hand, SoFi Active Investing leaves the choices to you. It however, gives you the chance to human financial advisors, real-time investing news and curated content, and a host of active investors, so you ccould have the tools you need to invest intelligently.
SoFi Invest lets you to set up the following types of accounts:
Individual and joint taxable accounts
high-yield savings account (called SoFi Money
Roth, traditional, SEP, and rollover IRAs.
Betterment, like SoFi Invest, uses ETFs in its portfolio management strategy. Betterment basically, uses Vanguard ETFs, which are known for their low expense ratios. The ETFs Betterment invests also include worldwide stocks, letting you to diversify your holdings across many industries and asset classes.
When you set up new funds with Betterment, the program asks you questions about your goal for the money, how much you need, the period of time you have to reach that goal, and the level of risk you’re willing to tolerate. It will then give you a recommended allocation of stocks and bonds then manage the investment for you, including services such as daily rebalancing and reinvesting your dividends.
Like SoFi, Betterment gives the full spectrum of individual retirement accounts (IRAs) as well as both individual and joint taxable accounts and a Smart Saver fund which operates like a traditional savings account, but with a higher APY.
Betterment does not let you to choose individual stocks, so it has no match for SoFi Active Investing. Where Betterment wins is in the ability to set up a trust. If you are looking to set up trusts that you can designate to specific beneficiaries for later in life, Betterment is the winner.
Category Winner: Betterment for people looking to set up a Trust, SoFi Invest for people interested in active trading.
Although most of the financial guidance you will need is handled by both platforms’ robo-advisor algorithms, Betterment and SoFi Invest also offer real-life, licensed CFPs to help you make hard decisions and to guide your financial planning.
SoFi gives free and unlimited access to certified financial planners who can help you get set up or advise you subsequently. Whether you need to refine your goals, change them totally, or have a completely different money-related concern in mind, SoFi’s experts are on call to help. Also, they offer career coaching.
Betterment takes a slightly different style. If you subscribe to their Digital plan (which comes with a 0.25% annual fee), you can talk to their customer support team every day in a week.
These representatives are responsive and helpful in explaining the more technical aspects of Betterment’s own platform, but they are not necessarily licensed CFPs, and they can not give you direct financial advice.
If you have over $100,000 in your Betterment account and you subscribe to their Premium plan, you can talk to their CFPs via phone about any financial question you have, whether it relates to money you have invested with Betterment or not. However, the Premium plan comes with a 0.40% yearly fee.
Category Winner: SoFi Invest
Tax Loss Harvesting
If your investments are appreciating in value, then you are generating capital gains — and that means taxes. Gladly, experts have long-since come up with a way of deferring capital gains taxes and keep more of your profits invested: tax loss harvesting.
Tax loss harvesting is the style of selling securities that have gone down in value to offset the capital gains of other securities that have appreciated.
This keeps your net capital gains closer to zero, so you pay less in taxes now, and the cash from sold securities is immediately used to buy comparable funds, so you are not really losing anything. Tax loss harvesting is a good way for investors to defer capital gains until later, so their money has more time to grow.
Betterment gives day to day tax loss harvesting on all their taxable accounts, and they also have different tools that will help you minimize your liabilities. Their Tax-Coordinated Portfolio tool automatically allocates all your investment assets across your accounts to smooth out liabilities.
Also, you can check the projected liability after making any portfolio changes with the Tax Impact Preview tool. Additionaly, you can donate assets through the Charitable Giving Tool to help make up for any liability.
SoFi Invest, on the other hand, does not offer tax loss harvesting at all. SoFi intends to roll out a tax loss harvesting program for all customers later in 2019, but there is currently nothing in place, leaving you to additional tax liability unless you manually harvest losses yourself at the end of the year — a complicated task better left to professionals.
Category Winner: Betterment
Betterment gives permission for a $0 minimum balance for its Digital tier. You can begin setting up goals depositing a single dime. But if you would rather prefer the company’s top-shelf option, which usually comes with an access to CFPs and in-depth advice on investments outside of Betterment, you will need not less than $100,000 in your account.
With SoFi Invest, your account minimum must either be $100 as a one-time deposit, or a $20/month automatic debit which will keep your account funded.
Either ways, the minimum amount required is insignificant for investors that are expecting to make any meaningful profits, so it’s a draw.
Category Winner: Tie
There are no hidden charges for disbursements or minimum balances with both.
SoFiInvest has no chrges at all; you just have to start your account with $100 or set up a $20 monthly deposit. If you chose, you could fund your account with $100 and never add any more money, and you still wouldn’t be charged any fees except the expense ratios of the underlying funds you aree invested in. However, you can’t make much money taking that approach.
Betterment In contrast, charges a yearly management fee. Digital plan subscribers will have to pay 0.25% yearly, and Premium plan subscribers will pay 0.40% (on top of the ETFs own expense ratios).
These fees are automatically removed from your investment balance, and they are graciously low compared to the management fees most actively managed funds demand from their clients. However, since SoFi does not charge any fee at all, the point goes to SoFi.
Category Winner: SoFi Invest
Automatic rebalancing is free with both of these platforms. This implies that they will reinvest the profits from the ETFs that are doing well to buy more of the ones that lost some money, so you always stay really close to your planned asset allocation.
However, note that SoFi Invest rebalances your account 4 times every year, while Betterment does it everyday (as dividends become available for rebalancing).
Category Winner: Betterment
Betterment’s customers gave only a 2.5 star rating out of five stars on Consumer Affairs, although that just represented the feedback of a few customers. Most negative reviews stated the ease in moving money into Betterment, but difficulty or delays when it comes to moving funds out to other firms.
Betterment’s customer service team is available by phone and email on working days from Monday to Friday, 9am to 6pm Eastern Time. During the weekends, you can email their customer service team from 11am to 6pm Eastern Time.
SoFi has the same star rating on Consumer Affairs, although it reflects SoFi’s business as a whole, and not just their investing branch.
SoFi Invest phone support is available from Monday through Thursday, and from 7am to midnight Eastern time, and Friday through Sunday 7am to 8pm Eastern Time.
Category Winner: Tie
SoFi Invest vs Betterment Comparison— Which is Best?
When chosing between Betterment and SoFi Invest, each company has its good and bad sides to consider. SoFi is better for investors who want to play an active role in the stocks they invest in, but who need guidance in the process.
SoFi also takes the upper hand when it comes to cost, since it doesn’t charge management fees for its services. Before choosing any service, make sure you understand your financial state and what face of investing is important to you.