With the rise of fintech and online investment platforms, it’s easier than ever to start investing in the stock market. One popular option is SoFi Invest, a platform that offers commission-free trading and a range of investment products. But, as with any investment platform, it’s essential to understand the fees associated with using SoFi Invest. After all, fees can eat into your investment returns and impact your overall financial goals.
What Fees Does SoFi Invest Charge?
The short answer is that SoFi Invest doesn’t charge traditional brokerage commissions. That’s right; you won’t pay a commission to buy or sell stocks, ETFs, or options. However, that doesn’t mean SoFi Invest is completely free. There are some fees you should be aware of, which we’ll discuss in detail below.
SEC Fees
One fee that SoFi Invest passes on to its customers is the Securities and Exchange Commission (SEC) fee. This fee is charged by the SEC to fund its regulatory activities. The SEC fee is a tiny percentage of your transaction value, typically around $0.000022 per dollar traded. For example, if you buy $1,000 worth of stock, you’ll pay around $0.022 in SEC fees.
FINRA Fees
Another fee you might encounter is the Financial Industry Regulatory Authority (FINRA) fee. FINRA is a self-regulatory organization that oversees broker-dealers like SoFi Invest. The FINRA fee is typically around $0.000119 per dollar traded, which is also a small percentage of your transaction value.
Trading Activity Fees
SoFi Invest also charges a trading activity fee, which is a small percentage of your trading volume. This fee is used to cover the costs of trading and maintaining the platform. The trading activity fee is around $0.00001 per dollar traded, so if you trade $1,000 worth of stock, you’ll pay around $0.01 in trading activity fees.
Other Fees to Be Aware Of
While SoFi Invest doesn’t charge traditional brokerage commissions, there are other fees you should be aware of. These fees may apply depending on your investment activities and account type.
Inactivity Fees
If your SoFi Invest account is inactive for an extended period, you may be charged an inactivity fee. This fee is typically around $10 per month and is waived if you have a balance of at least $1,000 or make at least one trade per month.
Wire Transfer Fees
If you need to transfer funds into or out of your SoFi Invest account via wire transfer, you’ll be charged a fee. The wire transfer fee is around $25 for domestic transfers and $50 for international transfers.
ACH Return Fees
If you try to deposit or withdrawal funds from your SoFi Invest account using an ACH transfer, but the transfer is returned due to insufficient funds or other reasons, you’ll be charged a fee. The ACH return fee is around $25.
Other Fees
SoFi Invest may also charge other fees, such as a paper statement fee ($5 per statement), an account closure fee ($20), or a stop payment fee ($25). However, these fees are relatively rare and typically apply only in specific circumstances.
How Do SoFi Invest Fees Compare?
When evaluating the fees charged by SoFi Invest, it’s essential to compare them to other investment platforms and brokerages. SoFi Invest is a commission-free trading platform, which means it doesn’t charge traditional brokerage commissions. However, it still charges some fees, as we’ve discussed above.
Compared to traditional brokerages, SoFi Invest’s fees are relatively low. For example, Fidelity Investments charges a $0.005 per share commission on stock trades, while Charles Schwab charges $0.005 per share on online equity trades. SoFi Invest, on the other hand, charges no commission on stock trades.
However, some online brokerages, such as Robinhood, charge even lower fees. Robinhood doesn’t charge any fees for trading stocks, ETFs, options, or cryptocurrencies, making it an attractive option for frequent traders.
Minimizing Fees with SoFi Invest
While fees are an inevitable part of investing, there are ways to minimize them when using SoFi Invest.
Use the SoFi Invest App
SoFi Invest offers a mobile app that allows you to trade and manage your investments on the go. By using the app, you can avoid paper statement fees and other fees associated with traditional brokerage accounts.
Keep Your Account Active
To avoid inactivity fees, make sure to keep your SoFi Invest account active by logging in regularly and making at least one trade per month. You can also set up a recurring investment to ensure your account remains active.
Use ACH Transfers
Instead of using wire transfers, use ACH transfers to move funds into or out of your SoFi Invest account. ACH transfers are generally free, although they may take a few days to process.
Monitor Your Account
Keep a close eye on your SoFi Invest account balance and avoid overdrafts or insufficient funds. This will help you avoid ACH return fees and other charges.
Conclusion
While SoFi Invest doesn’t charge traditional brokerage commissions, it’s essential to understand the fees associated with using the platform. By being aware of SEC fees, FINRA fees, trading activity fees, and other charges, you can minimize their impact on your investment returns. Additionally, by using the SoFi Invest app, keeping your account active, using ACH transfers, and monitoring your account, you can further reduce fees and make the most of your investment dollars.
Remember, investing in the stock market involves risks, and fees are just one aspect to consider. It’s essential to evaluate your investment goals, risk tolerance, and overall financial situation before investing in any platform, including SoFi Invest.
What is SoFi Invest and how does it work?
SoFi Invest is a brokerage platform offered by Social Finance, Inc. that allows users to invest in stocks, ETFs, options, and cryptocurrencies with no commissions or management fees. The platform is designed to be user-friendly and accessible, with no account minimums or trading fees.
SoFi Invest is a mobile-first platform, meaning it’s designed to be used on mobile devices, and it’s available as a mobile app on both iOS and Android. Users can open an account, deposit funds, and start trading in just a few minutes. SoFi Invest also offers a range of educational resources and investment guidance to help users make informed investment decisions.
Are there any fees associated with SoFi Invest?
While SoFi Invest doesn’t charge commissions or management fees, there are some other fees to be aware of. For example, SoFi Invest charges a small fee for options trading, and there may be fees associated with certain types of investments, such as mutual funds or exchange-traded funds (ETFs). Additionally, users may be charged fees for certain services, such as wire transfers or account maintenance.
It’s worth noting that SoFi Invest is very transparent about its fees, and users can easily find information about fees on the company’s website. Additionally, SoFi Invest offers a range of fee-free services, including bill pay and account maintenance, which can help users save money.
How does SoFi Invest make money if it doesn’t charge fees?
SoFi Invest makes money in a few ways, even though it doesn’t charge commissions or management fees. One way is through a practice called payment for order flow, in which SoFi Invest receives a small payment from high-speed trading firms for routing orders through their systems. SoFi Invest also earns interest on the cash in users’ accounts, and it offers other financial products, such as loans and credit cards, which generate revenue.
SoFi Invest’s business model is designed to be low-cost and efficient, which allows the company to offer services at a lower cost than traditional brokerages. By leveraging technology and automation, SoFi Invest is able to keep costs low and pass the savings on to users.
Is SoFi Invest safe and secure?
Yes, SoFi Invest is a safe and secure platform. SoFi Invest is a registered brokerage with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA). This means that SoFi Invest is subject to strict regulations and oversight, and users’ accounts are protected up to $500,000, including $250,000 in cash claims.
SoFi Invest also takes extensive security measures to protect users’ personal and financial information. The platform uses state-of-the-art encryption and secure servers to store data, and users’ accounts are protected by two-factor authentication and other security features.
What types of investments can I make with SoFi Invest?
SoFi Invest offers a range of investment products, including stocks, ETFs, options, and cryptocurrencies. Users can invest in individual stocks or ETFs, or they can choose from a range of pre-built portfolios that align with their investment goals and risk tolerance. SoFi Invest also offers a range of cryptocurrencies, including Bitcoin and Ethereum.
In addition to these investment products, SoFi Invest also offers a range of other financial products, including loans, credit cards, and insurance. This makes it easy for users to manage all of their financial affairs in one place.
Can I use SoFi Invest for retirement investing?
Yes, SoFi Invest offers a range of retirement accounts, including individual retirement accounts (IRAs) and Roth IRAs. Users can open a retirement account and invest in a range of assets, including stocks, ETFs, and cryptocurrencies. SoFi Invest also offers a range of educational resources and investment guidance to help users make informed investment decisions for their retirement.
SoFi Invest’s retirement accounts are designed to be low-cost and flexible, and users can start investing with as little as $1. SoFi Invest also offers a range of tools and features to help users track their progress and stay on top of their retirement savings.
How does SoFi Invest compare to other brokerages?
SoFi Invest is unique in its low-cost, commission-free model, which is designed to be more accessible and affordable than traditional brokerages. SoFi Invest is also known for its user-friendly platform and range of educational resources, which make it easy for users to get started with investing.
Compared to other brokerages, SoFi Invest is often more affordable and offers more flexibility in terms of investment products and services. However, SoFi Invest may not offer all of the features and services of larger brokerages, such as Fidelity or Charles Schwab. Ultimately, the best brokerage for a user will depend on their individual needs and investment goals.