From SoFi to Brokerage Account: A Beginner's Guide to Investing

Investing can seem intimidating, but it's actually quite accessible. You can start with a SoFi account, which offers a range of financial services, including investment products.

SoFi allows you to invest in a variety of assets, such as stocks, ETFs, and index funds, with as little as $1. This low minimum investment requirement can make it easier to get started.

As you get more comfortable with investing, you may want to consider opening a brokerage account. A brokerage account is a type of account that allows you to buy and sell securities, such as stocks and bonds, directly.

With a brokerage account, you can trade securities on your own or with the help of a financial advisor. You can also use the account to diversify your investments and potentially earn higher returns.

Opening a brokerage account is a straightforward process. You can start by choosing a brokerage provider, which is the first step in opening an account.

To get started, you'll need to visit the brokerage provider's website and click the "Invest Now" button. This is where the process begins, as seen with SoFi Invest.

You'll be asked a few questions about your risk tolerance and investing experience. These questions will help the brokerage provider choose the right portfolio for you.

Linking a bank is the next step, which allows you to add funds to your brokerage account. Once your first transfer arrives, you can begin trading stocks and ETFs commission-free.

There are several types of brokerage accounts to choose from, each with its own unique characteristics.

A cash brokerage account allows you to trade securities using your own cash, without borrowing any money from the broker. This is a great option for beginners or those who want to keep their investments separate from their daily spending money.

Margin accounts, on the other hand, allow you to borrow money from the broker to trade securities, but this comes with a higher level of risk. You'll need to put down a margin, which is a deposit of cash or securities that serves as collateral for the loan.

Joint brokerage accounts are perfect for couples or families who want to share investment responsibilities and goals. This type of account allows multiple people to have control over the account and make trades.

Discretionary accounts give the broker complete control over the investment decisions, which can be beneficial for those who don't have the time or expertise to manage their investments.

Investing with a brokerage account is a popular choice for investors, allowing them to buy and sell investments and financial securities.

Brokerage accounts come in different types, but they all have their pros and cons and associated risks. It's beneficial to speak with a financial professional to learn more about how to use a brokerage account to your advantage.

SoFi Invest offers a range of investment options, including stocks, ETFs, mutual funds, and alternative funds, without charging commissions, but other fees apply.

SoFi's cash management platform sweeps customer funds into partner banks, benefiting from FDIC insurance. This means your money is protected up to $250,000.

The SoFi invest account offers an above-average rate of interest. No overdraft fees or monthly fees are charged, which is a big plus for investors.

SoFi reimburses third-party ATM fees, so you won't be charged extra for using out-of-network ATMs.

Investing with SoFi offers a range of benefits, including the ability to buy and sell investments and financial securities with ease.

You can invest in a variety of assets, such as stocks, exchange-traded funds (ETFs), and mutual funds, all commission-free.

SoFi doesn't charge commissions, but other fees may apply.

Opening an investment account with SoFi is a straightforward process, and you can get started right away.

The SoFi invest balance in your account is comprised of two categories: buying power and transferable or withdrawable cash.

Transferable cash includes all the funds that SoFi settles, clears, and is available to transfer back to your bank account.

Once all activities in your account settle, transferable and buying power become equal.

SoFi Active Investing allows users to buy and sell stocks, options, and ETFs commission-free, making it a great option for active investors who want to pick and choose individual securities.

You can contribute to an IRA up to the IRA contribution limits, giving you more control over your investments.

SoFi offers both taxable accounts and IRAs (Roth, Traditional, and SEP), providing flexibility in how you manage your investments.

You can even read explainers on how stocks work and start a watch list of your favorite stocks with SoFi Investing.

Fractional share investing is a game-changer for new investors who don't have a lot of money.

With SoFi, you can buy fractional shares of over 4,000 stocks and ETFs.

This means you can invest as little as $5 in any of these securities, making it easier to get started with investing.

You can invest small amounts of money, and SoFi will help you build a diversified portfolio over time.

Options trading can be a powerful tool to manage risk and potentially increase returns.

SoFi currently supports level 2 options trading execution, which allows you to buy calls and puts, and sell to close positions.

Selling covered calls and cash secured puts is not currently available on SoFi, but it's expected to be added soon.

Options trading can be used to hedge against losses in your main portfolio, but SoFi doesn't allow account holders to trade options.

Funding a brokerage account is relatively straightforward. You can deposit money from another account, such as your checking or savings account, to fund your investment.

Some brokerage firms, like SoFi, don't require any initial deposit, while others may have minimum funding requirements. In most cases, there are no restrictions on how much money you can put in, and you can withdraw your cash at any time.

SoFi stands out from other brokerage firms by not charging fees on stock and ETF trades. However, they do charge a markup of up to 1.25% on both buy and sell orders for crypto trades. There are also no monthly account fees or inactivity fees with SoFi, but be aware that they will charge a $75 ACAT fee if you decide to transfer your account to another broker.

Here's a breakdown of SoFi's fees:

Brokerage accounts and checking accounts have a key difference in how they handle cash and interest. Checking accounts typically don't earn any interest.

Brokerage accounts, on the other hand, can sweep your cash into a money market fund, allowing you to earn interest. This is a nice perk, but it's not a guarantee.

Checking accounts usually have insurance provided by the Federal Deposit Insurance Corporation (FDIC), which protects up to $250,000 of your deposits. This means you can withdraw your money even if the bank fails.

Brokerage accounts have insurance provided by the Securities Investors Protection Corporation (SIPC), which protects cash up to $250,000 and securities and cash combined up to $500,000.

Funding a new account can be a crucial step in getting started with investing, and some brokerage firms are offering incentives to make it more appealing. You can get up to $1,000 in stock when you fund a new Active Invest account.

To fund a new account, you'll typically need to deposit money from another account, such as your checking or savings account. This can be done by moving money over, and from then on, the brokerage firm can help you execute buy or sell orders on stocks, ETFs, bonds, or mutual funds.

Unlike a retirement account, there are generally no restrictions on how much money you can put in. You can invest as much as you like, and there are typically no restrictions on when you can withdraw your cash from the brokerage account.

Brokerage firms often have different requirements for funding a new account, but some don't require any initial deposit. SoFi Invest, for example, only takes a couple of minutes to open an account, and you can start investing right away.

Here are the basic steps to fund a new Active SoFi Investing account:

Keep in mind that it may take 2 to 3 business days for the funds to transfer into the chosen account, based on a typical ACH deposit time frame.

Fees can be a major consideration when choosing a brokerage provider. SoFi doesn't charge any fees on stock and ETF trades, making it a great option for those looking to save on commissions.

There are, however, some fees to be aware of. SoFi charges a markup of up to 1.25% on both buy and sell orders for crypto trades. This is the only fee associated with trading on the platform.

If you decide to transfer your account to another broker, SoFi will charge you a $75 ACAT fee. This is a one-time fee, but it's worth considering if you plan to switch providers in the future.

Here's a breakdown of the fees you can expect with SoFi:

It's worth noting that there are no monthly account fees or inactivity fees with SoFi. This means you can keep your account open without incurring any additional costs.

SoFi's website is TLS 1.2 Encrypted, providing a high level of security for users.

Two-factor authentication can be set up for extra account security, giving you an extra layer of protection.

SIPC insurance up to $500,000 is provided on all securities, with $250,000 coverage for cash.

SoFi Money accounts are also protected by FDIC insurance up to $1.5 million, giving you peace of mind.

These security measures put SoFi on par with other reputable financial institutions, making it a safe choice for your investments.

Your money in a brokerage account is insured by the Securities Investor Protection Corporation (SIPC), which covers up to $500,000 worth of losses, including $250,000 in cash losses.

The SIPC only provides protection for the custody function of a brokerage firm, meaning they'll help you get back the cash and securities that were in your account when the firm went bankrupt. They don't protect against declines in value of the securities you hold, nor do they protect against bad investment advice.

SoFi's website is TLS 1.2 Encrypted for extra security, and users can set up two-factor authentication for an extra layer of protection.

SIPC insurance up to $500,000 is provided on all securities, and $250,000 for cash, just like with other brokerage firms.

SoFi is certainly not the only brokerage offering free trades. It stands out by offering fractional shares but it falls short of some full-service brokers by offering fewer investment choices.

Some brokerages offer more investment choices, but SoFi's free trades make it a competitive option. SoFi is a great choice for those who want to invest in a variety of stocks without breaking the bank.

Check out this quick comparison chart to see how SoFi stacks up against the competition.