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Robinhood vs. SoFi: The Biggest Differences
Robinhood and SoFi Invest are two of the best investment apps for beginners. Both offer low fees, commission-free trades, educational resources, and much more.
SoFi Invest is suitable for all kinds of investors since it offers both self-directed and automated accounts. It doesn’t cost extra to use the brokerage’s robo-advisor to trade commission-free stocks and ETFs. Plus, SoFi doesn’t charge a management fee. All SoFi accounts get unlimited, free access to certified financial planners (CFPs).
Robinhood only offers active investing accounts. It has commission-free trading on a larger selection of assets such as stocks, options, ETFs, and 17 cryptocurrencies. Although Robinhood offers slightly fewer crypto options than SoFi (which offers 19 coins and tokens), you won’t have to pay commission fees. So if you’re looking for low-cost crypto trading, Robinhood is the better option.
SoFi and Robinhood both offer tax-advantage IRAs with 1% IRA match bonuses. Robinhood was originally the only online brokerage to offer its users an IRA match, but SoFi recently launched its own competing offer. That said, Robinhood is still offering a slightly better deal since it allows IRA transfers and 401(k) rollovers to also qualify for the bonus. Robinhood Gold members can even earn up to a 3% match on IRA deposits. But you’ll need at least $2,000 in your account to earn Gold status.
SoFi’s IRAs are better for passive investors wanting automatic IRA trading and features. Unlike Robinhood, SoFi also offers a SEP IRA option — but it’s not eligible for the IRA match bonus.
Is Robinhood Right for You?
Who is Robinhood Best For?
Robinhood is best for beginner, active investors looking to invest in a large selection of investment options for generally low fees. Robinhood Gold members get the most out of the platform since it has more advanced charting tools, and provides users with access to market research and larger bonuses. But Robinhood Gold has a high minimum requirement.
Ways to Invest With Robinhood
Robinhood is a self-directed trading platform for commission-free stocks, options, ETFs, and cryptocurrencies. Investors can also trade IPOs and fractional shares. The brokerage offers 17 cryptocurrencies, including bitcoin, dogecoin, and ether.
A standard Robinhood brokerage account doesn’t have a minimum to start investing, and fees are generally low. Robinhood Gold, on the other hand, has a $2,000 account minimum and a $5 monthly fee. With a Gold membership, you’ll get access to margin trading and other advanced investing features.
With Robinhood, you can open individual brokerage accounts or retirement accounts. Robinhood offers traditional IRAs and Roth IRAs. Keep in mind that retirement portfolios only trade stocks and ETFs. Robinhood has discussed adding options trading to eligible users.
Robinhood IRA Match
Robinhood offers a traditional IRA and Roth IRA for investors to save for retirement while receiving tax advantages. Robinhood currently offers a 1% match on all IRA contributions. You’ll also get a 1% match on IRA transfers and 401(k) rollovers.
For example, for every $1,000 you deposit or transfer into a Robinhood IRA, you’ll receive a $10 match. Unlike a 401(k) match contribution, match contributions from Robinhood don’t count toward your annual IRA contribution limits.
Robinhood Gold users can earn up to a 3% IRA match on contributions, also with no cap. But Gold members must maintain Gold status for at least one consecutive year to keep the extra 2%. Robinhood’s website also discloses that users need to keep IRA contributions in their Robinhood IRA account for at least five years to prevent an Early IRA Match Removal Fee.
Check out Insider’s guide to the best rollover IRAs »
Can You Trust Robinhood?
Robinhood currently has a D- from the Better Business Bureau. The BBB says the reasons for this rating include the government actions against the business, thousands of complaints against Robinhood, and the length of time the business takes to respond to these complaints.
In 2021, Robinhood was scrutinized for preventing trading on GameStop (GME) stocks and AMC Entertainment stocks after those companies’ share prices skyrocketed. Major lawsuits and user retaliation followed even after Robinhood reopened trading on many of the temporarily restricted stocks. The case against Robinhood was dismissed by the federal court in Miami in November 2021.
Also in 2021, the Financial Industry Regulatory Authority (FINRA) claimed that Robinhood had misleading and inaccurate information on important issues, approved ineligible customers for options trading, and failed to adequately surprise its technology. Robinhood didn’t confirm or deny these allegations but did agree to pay a $57 million fine to FINRA and another $12.6 million in restitution.
Is SoFi Invest Right for You?
Who is SoFi Best For?
SoFi Invest is a good option for all kinds of investors. You can open an automatic investing account through the platform’s robo-advisor, or a self-directed account to manage your own investment portfolio. All SoFi accounts have no account minimum and require $1 to start investing. Compared to Robinhood, passive investors will have more success with SoFi’s automated trading platform.
Ways to Invest With SoFi
SoFi offers a large selection of assets, including stocks, bonds, fractional shares, ETFs, options, IPOs, and crypto.
SoFi’s robo-advisor mainly invests in diverse allocations of low-cost Core ETFs or Thematic ETFs, depending on your risk tolerance and goals. You can pick from a list of investment goals such as retirement, saving for a home, getting married, setting up a college fund, or planning to travel. You can also invest in ETFs from other brokerages like Vanguard and BlackRock.
The online brokerage currently offers 19 crypto coins and tokens, which is a little more than Robinhood. SoFi offers trades for bitcoin, ether, litecoin, and more. There is a 1.25% markup on crypto transactions (other assets are 0%).
SoFi IRA Match
SoFi Invest’s active and automated IRAs are now eligible to earn a 1% IRA match. Similar to Robinhood, every dollar you contribute toward your SoFi retirement account earns an extra 1% bonus. For example, a $2,000 deposit would earn you an additional $20. Match contributions won’t count toward your annual contribution limit.
SoFi offers more retirement account options for investors, such as a traditional IRA, Roth IRA, and SEP IRA. But only traditional and Roth IRAs are eligible for the 1% match. SoFi also offers IRA rollovers for old 401(k) plans. However, IRA transfers and rollover contributions aren’t eligible for a 1% match.
Whether or not SoFi’s 1% IRA match bonus will stick around as a permanent feature is unclear. As of right now, the IRA match is set to end on December 31, 2023.
Can You Trust SoFi?
SoFi currently has an A+ rating from the Better Business Bureau. This high score indicates that SoFi has positive interactions with customers. But it would help if you still considered talking with friends or family who have used SoFi for insight.
In March 2023, SoFi sued the Department of Education for continuing the student loan repayment pause claiming that it was damaging to businesses and unlawful. The lawsuit was dropped 60 days later in June.
There are no major lawsuits filed against SoFi.
Robinhood vs. SoFi — Frequently Asked Questions (FAQs)
When comparing SoFi vs. Robinhood, the best platform for you depends on your individual preferences. Robinhood and SoFi are both low-fee brokerages that offer multiple investment options and 1% IRA matches. But SoFi is better for hands-off investors since Robinhood doesn’t have automated investing.
Robinhood does offer commission-free trading of SoFi stock (SOFI). Robinhood offers stocks, options, ETFs, crypto, fractional shares, and IPOs.
Robinhood and SoFi both have low account minimums and fees. A regular Robinhood brokerage account has no minimum requirement to start investing. But to access the best features on Robinhood, a Gold membership requires a $2,000 minimum and a monthly $5 fee. SoFi, on the other hand, has a low $1 minimum to start investing and 0% fees for active and automated trading. Crypto transactions, however, have a markup of 1.25%.
Yes, you can transfer stocks from Robinhood to SoFi. SoFi allows users to transfer stocks and other assets from another brokerage, like Robinhood, as long as it’s Automated Customer Account Transfer Service (ACAT) eligible.
Why You Should Trust Us: How We Reviewed Robinhood and SoFi
We compared Robinhood Investing and SoFi Invest investment apps using Personal Finance Insider’s rating methodology for investing platforms to compare and examine IRA match bonuses, account types, pricing, investment options, and overall customer experience when reviewing investing platforms. Platforms are given a rating between 0 and 5.
Investment apps are brokerage platforms generally offering retirement savings accounts, trading tools, and other educational resources. Some investing platforms are better for more advanced or active investors, while others may better suit beginners and passive investors. Robinhood and SoFi were evaluated with a focus on how they performed in each category.
Tessa Campbell
Junior Investing Reporter
I'm Tessa Campbell, a seasoned financial analyst and investing enthusiast with a deep understanding of various investment platforms. Over the years, I have extensively researched and analyzed investment apps, brokerage platforms, and financial products, contributing to reputable publications. My insights into the intricacies of investment strategies and market trends have helped countless readers make informed decisions.
Now, let's delve into the key concepts covered in the article comparing Robinhood and SoFi:
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Investment Apps Overview:
- Both Robinhood and SoFi Invest are highlighted as top investment apps, particularly suitable for beginners.
- They share features such as low fees, commission-free trades, and educational resources.
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SoFi Invest:
- SoFi offers both self-directed and automated accounts, making it suitable for a wide range of investors.
- The brokerage provides commission-free trading on stocks and ETFs through its robo-advisor, without charging a management fee.
- SoFi users enjoy unlimited, free access to certified financial planners (CFPs).
- SoFi's IRAs, including the SEP IRA option, come with a 1% IRA match bonus.
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Robinhood:
- Robinhood specializes in active investing accounts, offering commission-free trading on a diverse range of assets, including stocks, options, ETFs, and cryptocurrencies.
- Robinhood Gold members can earn up to a 3% match on IRA deposits, with benefits like advanced charting tools and market research.
- The platform allows IRA transfers and 401(k) rollovers to qualify for the bonus.
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IRA Match Bonuses:
- Both Robinhood and SoFi offer tax-advantaged IRAs with a 1% match on contributions.
- Robinhood provides a slightly better deal, especially for Gold members, with the potential for a 3% IRA match.
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Trustworthiness:
- Robinhood has faced scrutiny, reflected in its D- rating from the Better Business Bureau. Concerns include government actions, customer complaints, and response times.
- SoFi, in contrast, holds an A+ rating from the Better Business Bureau, indicating positive customer interactions.
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Legal and Regulatory Issues:
- Robinhood's actions during the GameStop and AMC stock frenzy in 2021 led to lawsuits and regulatory fines.
- SoFi, while involved in a lawsuit against the Department of Education in 2023, saw the case dropped after 60 days with no major lawsuits against the company.
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Frequently Asked Questions (FAQs):
- FAQs address considerations when choosing between SoFi and Robinhood, including account minimums, fees, investment options, and the ability to transfer stocks between the two platforms.
In conclusion, both Robinhood and SoFi cater to different investor preferences and objectives. While Robinhood is geared towards active investors with a diverse range of assets, SoFi provides options for both active and passive investors, emphasizing automated trading through its robo-advisor. Trustworthiness and legal considerations play a role in the decision-making process, and users should carefully weigh the features that align with their investment goals.
