SoFi Invest vs. Robinhood: Which Broker Is Right for You? | The Motley Fool (2024)

SoFi Invest and Robinhood are two platforms designed for the next generation of investors. Both aim to provide an extremely user-friendly and low-cost experience for their customers, and both are largely app-based platforms.

However, there are some major differences. In this comparison, we'll take a look at SoFi Invest vs. Robinhood side by side to see which might be the better choice for you.

When it comes to fees, these two brokerage platforms are pretty close. Both have commission-free stock and ETF trading, just like most of the brokerage industry. Only SoFi Invest offers mutual funds and alternative funds trading. SoFi Invest charges no transaction fees for mutual funds, SoFi charges investors a 0.50% purchase fee for new alternative funds.

There are no account maintenance fees with either broker. SoFi Invest charges $100 to transfer an account elsewhere; Robinhood charges $100. Both also offer no-fee options trading.

Robinhood offers crypto trading with no commissions whatsoever. SoFi Invest does not offer crypto trading.

Just like in the previous section, there are quite a few similarities between the two brokers. Both are largely designed as places where investors can buy and sell stocks rather easily, but aren't (at least not at this time) intended to be full-featured investment platforms. For example, you won't find CDs or bonds on either one, nor does either platform offer foreign exchange (forex) or futures trading. However, it's worth noting that both platforms are evolving rapidly, so it's likely that additional investments and capabilities will be added over time.

SoFi Invest recently released alternative investments and mutual funds. Investors can buy and sell mutual funds, private equity funds, real estate funds, and other investment types. SoFi Invest offers 6,000 mutual funds to choose from.

Both platforms offer commission-free options trading, a rarity in the industry.

Robinhood currently allows investors to trade 15 different cryptocurrencies with no commissions whatsoever. While it offered cryptocurrency trading in the past, SoFi Invest no longer does.

Here's one area of SoFi Invest vs. Robinhood where SoFi Invest excels.

SoFi Invest allows investors to open a joint account, and offers three different retirement accounts -- traditional, Roth, and SEP IRAs. It also offers the SoFi Automated Investing robo-advisory platform, which allows SoFi users to put their portfolios on auto-pilot and get advice from real-live financial advisors, and for a bare minimum of investment expense.

SoFi recently introduced its own credit card, which is designed to offer rewards that can be deposited into other SoFi accounts. There are certain types of accounts SoFi doesn't offer, such as custodial and college savings accounts, but it has much more variety than Robinhood.

As far as brokerage accounts go, Robinhood offers individual brokerage accounts, as well as traditional and Roth IRAs. It doesn't offer joint accounts, or any specialized investment accounts.

What's more, while SoFi and Robinhood both offer interest-bearing bank account products, SoFi's is much more of a checking/savings account replacement. In addition to earning interest and providing a debit card to access money, it offers features including free overdraft coverage, payday advances, and cash back rewards when you pay for purchases. On the other hand, Robinhood has a cash sweep feature in its brokerage account that allows investors to earn interest on uninvested cash, and also has a spending account. In a nutshell, Robinhood has quite a bit of banking functionality, but it is not likely to be feature-rich enough to completely replace your existing checking and savings accounts.

Robinhood and SoFi Invest both offer margin trading.

If you're looking for a user-friendly way to buy and sell stocks, you'll find both platforms excel in this department. Both are designed to be simple to use, as opposed to many full-service brokers.

SoFi offers more of a well-rounded financial app. In fact, its brokerage platform was an add-on to its already successful financial services app that had been around for years. On the other hand, Robinhood was purpose-built for stock and options trading, aiming to make it as easy and inexpensive as possible.

Both companies have highly rated apps that make investing easy. SoFi holds ratings of 4.8 and 3.9 out of 5 stars on the iOS App Store and Google Play store, respectively, and Robinhood's ratings are 4.2 and 4.1.

As you can see, both platforms excel in certain ways and can be quite appealing to investors who want a low-cost and user-friendly way to buy and sell stocks and certain other investments. On the other hand, they are meant for different types of customers.

For one thing, SoFi Invest is designed with long-term investors in mind, while Robinhood is still a big favorite among the short-term trader crowd, although it has done a great job of focusing on long-term solutions such as retirement accounts in recent years. Plus, SoFi is more of a one-stop financial shop, essentially designed to replace users' banks and brokers if they choose to do so, while Robinhood is designed to be an investment platform. The best choice for you depends on your goals and the features that matter the most.