How to Invest in ETFs with SoFi

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What is an ETF? ETFs, or exchange-traded funds, are a collection of securities such as stocks, bonds, or a combination of both that can be traded on an exchange like a stock. Because they’re made up of lots of different securities, ETFs are known to be intelligently diversified and auto-rebalanced. This can protect against market volatility. ETFs are also known for bundling stocks around a central theme that’s attractive to investors. Want to invest in areas like social responsibility, space, or solar? You can likely find an ETF that specializes in those areas.

So what’s the difference between an ETF and a mutual fund? The key points are: mutual funds are actively managed while most ETFs are managed passively. Some mutual funds also require a minimum investment. With ETFs, you can buy as little as one share. And while mutual funds are bought and sold at the end of the trading day, ETFs can be bought and sold throughout the day. They also have low annual fees or expense ratios. The broker commissions for ETFs are typically lower as well. ETFs are also desirable because there are typically less taxes. This is because ETFs try to minimize capital gains by doing like-kind exchanges of stock. This means you’re trading one asset for another without generating tax liability.

Overall, ETFs are a great way to diversify your portfolio. With a single purchase, you can own any number of different investments. And with SoFi Invest, it’s easy to browse and buy intelligently weighted and affordably priced ETFs. To get started, download our easy-to-use app or visit sofi.com.