SoFi Invest vs. Betterment [2024]: SoFi’s Minimal Fees Give It the Upper Hand (2024)

The choice between SoFi Invest and Betterment isn't always clear-cut, as both offer unique benefits. Personally, I lean towards SoFi Invest because it offers both automated and active investing with a low $1 minimum requirement and no trading or advisory fees¹². This makes it incredibly accessible for everyone, even if you’re new to investing and want to start with small amounts at first.

However, I can see the appeal of Betterment for those already familiar with investing. While it does charge $4 a month or 0.25% annually based on your account, these fees are lower than what you'd typically pay a traditional advisor. Betterment's pre-selected exchange-traded fund (ETF) portfolios and automatic rebalancing mean it’s also a solid automated investing option for those who don't want to actively manage their investments.

Key takeaways

• Is there a low-cost option? Yes, SoFi Invest’s $1 minimum investment, $0 trading and advisory fees, and complimentary access to financial planners make it a holistic yet cost-effective choice.
• Can I make ethical investments? Yes, Betterment offers pre-selected ETF and socially responsible investing portfolios for diversified and ethical investing, making it the better option for this form of investing.
• Do I earn interest? Yes, both SoFi and Betterment offer high-yield deposit accounts. SoFi Checking and Savings³ offers up to 4.60%⁴ APY with direct deposits⁵, while Betterment Cash Reserve⁶ offers up to 5.50% (as of Jul. 31, 2023)⁷ APY⁸⁹.
• Can I reduce my tax burden? Betterment offers a tax loss harvesting feature that might help you minimize your tax liability, while SoFi doesn’t.

SoFi Invest vs. Betterment

My verdict

SoFi Invest is the clear winner for people looking to start investing with minimal upfront costs, thanks to its $1 minimum for automated accounts and $5 for active trading — not to mention its $0 trading fees and $0 advisory fees. While using SoFi Invest, I valued the ability to quickly toggle between hands-off robo-investing and self-directed trading.

However, SoFi Invest doesn’t offer tax-loss harvesting, and that’s where Betterment has an edge. This tax strategy can yield a meaningful difference in the performance of larger account balances. On top of that, I like that Betterment offers socially responsible investments and crypto portfolios. However, the advisory fee it charges is hard to justify at a time when several of the best robo-advisors don’t charge such a fee.

How does SoFi Invest work?

SoFi Invest offers two investing methods—one is active, where I’m able to choose my investments manually, and the other is an automated one, where I only need to deposit money, and SoFi chooses the investments for me.

Automated investing

I started with the automated option and let SoFi’s robo-advisor handle portfolio selection using a wide selection of ETFs. The robo-advisor also handled rebalancing my portfolio based on my tolerance for risk.

The ability to begin investing with just $1 made it easy to start, while the $0 advisory fee meant that I didn’t have to worry about what investing with SoFi was costing me.

To grow my retirement savings, I also opened an automated Roth IRA account with SoFi. As with the taxable automated account, SoFi's robo-advisor built and maintained my retirement portfolio and provided performance information in a clear and simple layout that made it easy to see daily and historical movements.

Active investing

Once I gained more confidence, I opened an active investing account to pick my own stocks, ETFs, mutual funds, and other asset classes. SoFi’s trading platform made placing my orders quite easy, although it lacked advanced analysis tools that advanced investors may need. It’s worth mentioning that I didn’t have to pay any commissions or trading fees for these purchases,

SoFi Invest supports fractional shares starting from a $5 minimum, which was essential for me — I could buy slices of stocks like Amazon (NASDAQ: AMZN) that would normally be out of my budget.

While my SoFi Invest account provides access to financial planners, I couldn't get specific trade recommendations, which was a bit limiting as an active trader. But overall, SoFi's low-cost, user-friendly platform was ideal for starting my investing journey.

SoFi Checking and Savings

In addition to investing accounts, SoFi also offers a banking account that comes as bundled checking and savings accounts. This truly simplified moving money in and out of my investment accounts and allowed me to set up small recurring deposits for each day of the week.

The SoFi Checking and Savings account offers up to 4.60% annual percentage yield (APY) with direct deposits, which is a great rate. Although Betterment offers an even higher APY rate, I chose to stay with SoFi for my banking needs to have my cash and investments under one roof and simplify monitoring my financial picture.

Visit SoFi Invest or learn more in our SoFi Invest review.

How does Betterment work?

Betterment is a great robo-advisor choice, especially for investors with bigger balances who are willing to pay a bit more in fees to access features like tax-loss harvesting and crypto investing.

Automated investing

When I started using the platform, the account opening process was seamless — I simply answered some questions about my financial goals, risk tolerance, and investment timeline.

Based on my responses, Betterment recommended one of its pre-built ETF portfolios that include stocks and bonds. As a set-it-and-forget-it investor, I appreciated this hands-off approach to automating my portfolio management.

What caught my eye were Betterment's socially responsible investing options. For example, its climate-focused portfolio exclusively holds companies with low carbon emissions, which enables me to invest while supporting a cause at the same time.

The ability to invest in cryptocurrencies through Betterment’s crypto portfolios was another unique offering that many robo-advisors I reviewed didn’t have.

Betterment’s portfolios come with built-in tax loss harvesting, which aims to optimize tax liability each year by offsetting capital gains with losses. While my portfolio balance and account activity weren’t significant enough to yield meaningful results, I could see how important this would be for investors with large portfolios.

That said, Betterment's fee structure gave me some pause. The $4 monthly fee on balances under $20,000 or 0.25% annual fee on balances of $20,000 or more can really add up over time, eating into returns. So, while Betterment shines for socially conscious investors wanting ethical investments and tax optimization strategies, the fees are a drawback compared to SoFi's minimal fee structure.

Betterment Cash Reserve

A standout feature that made Betterment appealing was the Cash Reserve account. This high-yield cash management solution allowed me to keep my money liquid and easily accessible while still earning a highly competitive APY.

I used the Cash Reserve as a place to park a portion of my savings and earn an APY of up to 5.50% (as of Jul. 31, 2023). What I really appreciated was the simple integration between my Cash Reserve and investment accounts. With just a few clicks, I could transfer money in or out to increase my investments or withdraw profits. This made managing my overall portfolio a breeze without having to link multiple external bank accounts.

Learn more in our Betterment review.

What both investment platforms excel at

Both SoFi and Betterment share three advantages that make them great investment platforms for hands-off investors:

• Low minimum balances: The low account minimums were crucial for allowing me to start investing with just a small amount of money. SoFi's $1 minimum for automated accounts and $5 for active trading meant I could get started without a large upfront investment. And Betterment's $10 opening deposit was still quite accessible. Not having to maintain high monthly balances took the pressure off as I was building up my portfolio.
• Automated investing and rebalancing: While I dabble in active investing, I mostly prefer hands-off investing. I like using recurring deposits to average my asset dollar cost and just let a robo-advisor do the rest. Both SoFi and Betterment offer portfolio automation along with periodic rebalancing to keep my investments properly distributed across different assets as prices fluctuate.
• High-yield deposit accounts: Both SoFi and Betterment offer banking solutions that come with highly competitive APY rates. SoFi Checking and Savings helps you earn up to 4.60% APY with direct deposits, while Betterment Cash Reserve helps you earn up to 5.50% (as of Jul. 31, 2023) APY.

Four important differences between SoFi Invest and Betterment

While both SoFi and Betterment can help grow your money, each one has its own unique strengths. Before choosing one, these were the major differences that stuck out to me:

1. Monthly fees

SoFi Invest doesn’t charge trading fees or advisory fees. The only costs were certain underlying expenses for the specific investments in my portfolio, which are pretty standard across the industry.

On the other hand, Betterment's fee structure gave me some pause. The platform charges a $4 monthly fee if your balance is under $20,000. Once your balance gets to $20,000 or more, the fee switches to an annual 0.25% advisory fee. Paying $4 a month comes to $48 a year while paying 0.25% annually on a balance of $20,000 equates to $50 a year.

Winner: SoFi Invest wins this category since it doesn’t charge trading or advisory fees, so it has no on-going monthly or yearly cost to consider.

2. Access to financial advisors

While both SoFi Automated and Betterment are robo-advisors, SoFi makes it relatively easy to talk to a financial planner and ask questions free of charge and without balance restrictions.

Betterment offers access to Certified Financial Planners (CFPs) but requires you to have at least $100,000 in assets and be on its Betterment Premium plan. This plan has an annual advisory fee of 0.65%, considerably higher than its standard plan’s fee of 0.25%.

Winner: SoFi, since it doesn’t require a minimum balance or charge extra to talk to a financial planner and discuss your portfolio.

3. Alternative investing options

Both SoFi and Betterment allow you to venture beyond just traditional stocks and bonds.

SoFi lets eligible customers invest in companies that are about to go public before they become generally accessible for traders on the stock market through its IPO access. It also offers access to options trading, which can be lucrative for advanced investors. On top of that, it offers alternative funds that help you invest in real estate, commodities, and more.

On the other hand, Betterment offers access to crypto and socially responsible portfolios. While it doesn’t have the same degree of alternative investing options as SoFi, it stands out with these two portfolio types since SoFi doesn’t offer them.

Winner: SoFi since it offers a wider variety of alternative investing options.

4. Tax loss harvesting

Selling off losing assets can help you offset some of your gains, which may help optimize your taxes. This is known as tax loss harvesting, a feature that SoFi doesn’t offer.

On the other hand, Betterment offers tax-loss harvesting through an automated algorithm that checks your account regularly for potential tax-loss harvesting opportunities. There’s no extra fee for this service.

Winner: Betterment, since it includes tax loss harvesting at no added cost, which may help you offset some of your taxes on profits you make.

Which investment platform should you choose?

When you should choose SoFi Invest

Consider using SoFi Invest if you:

• Don’t want to worry about fees
• Want to start small and grow your investments over time
• Want to experiment with alternative investments like IPOs and options trading
• Would like to have access to a financial planner no matter how much is in your account

When you should choose Betterment

Consider Betterment if you:

• Have more significant sums to invest and don’t want to pay a traditional advisor
• Want to invest in cryptocurrency or socially responsible portfolios
• Want to take advantage of tax loss harvesting
• Know your way around investing and likely won’t need to consult with a Betterment investment advisor

FAQ

SoFi Invest vs. Betterment: bottom line

At the end of the day, both SoFi Invest and Betterment provide valuable platforms for investing your money — it simply comes down to your investment goals and personal preferences.

For people looking to start investing without worrying about fees, SoFi’s automated investing accounts and lack of trading or advisory fees make it an extremely accessible and cost-effective choice. The ability to eventually transition into self-directed trading on an active investing account as your skills progress is also appealing.

However, if you plan on having a large portfolio, Betterment's tax optimization via its tax-loss harvesting feature could outweigh the extra fees involved.

No matter which route you go, having an automated option that removes the hassle of building and rebalancing a diversified portfolio can go a long way in consistently reaching your financial milestones.