It is both. I believe whole-heartedly in sola fide, and I believe that saving faith manifests in obedience/good works. This is the heart of the issue from James 2.
Quote:
James 2:1426
14 What good is it, my brothers, if someone says he has faith but does not have works? Can that faith save him?
15 If a brother or sister is poorly clothed and lacking in daily food, 16 and one of you says to them, "Go in peace, be warmed and filled," without giving them the things needed for the body, what good is that?
17 So also faith by itself, if it does not have works, is dead.
18 But someone will say, "You have faith and I have works." Show me your faith apart from your works, and I will show you my faith by my works.
19 You believe that God is one; you do well. Even the demons believeand shudder!
20 Do you want to be shown, you foolish person, that faith apart from works is useless?
21 Was not Abraham our father justified by works when he offered up his son Isaac on the altar?
22 You see that faith was active along with his works, and faith was completed by his works; 23 and the Scripture was fulfilled that says, "Abraham believed God, and it was counted to him as righteousness"and he was called a friend of God.
24 You see that a person is justified by works and not by faith alone.
25 And in the same way was not also Rahab the prostitute justified by works when she received the messengers and sent them out by another way?
26 For as the body apart from the spirit is dead, so also faith apart from works is dead.
Works justify, or prove, that one's faith is genuine.
The following I wrote in seminary related to this topic, and maybe someone will find it helpful...
James 2:23 finds itself in a passage (2:14-26) where James is discussing the relationship between faith and works. He is answering his own questions given in verse 14, "What good is it, my brothers, if someone says he has faith but does not have works? Can that faith save him?" James' primary concern in this section is not how one becomes righteous before God, but rather that faith, if it is a genuine, saving faith, will necessarily manifest itself in good works. To illustrate this point, James says, "If a brother or sister is poorly clothed and lacking in daily food, and one of you says to them, "Go in peace, be warmed and filled," without giving them the things needed for the body, what good is that?" The implied answer to this question is given in the next verse: "So also faith by itself, if it does not have works, is dead." James argues that faith without works is dead, and therefore it is not a genuine, saving faith.
James continues with another illustration, this time from the story of Abraham, to further emphasize his point "that faith apart from works is useless" (2:20). In verse 21, he writes, "Was not Abraham our father justified by works when he offered up his son Isaac on the altar?" James clarifies in the following verse that Abraham's faith was active along with his works, and his faith was completed, or fulfilled, by his works. The verb used for "completed" in verse 22 is
telos, which implies that the action was brought to its intended outcome or goal. This means that the intended outcome of saving faith is good works. This is what James means when he wrote in verse 21 that, "Abraham was justified by works…" Abraham's faith was not a mere intellectual assent, but rather one that actively obeyed God.
This then brings James to write in verse 23 that "the Scripture was fulfilled that says, "Abraham believed God, and it was counted to him as righteousness"and he was called a friend of God." Abraham's works seen in Genesis 22 proved that his faith, expressed in Genesis 15, was genuine. Abraham's works verified the authenticity of, or "justified" (verse 21), his faith. Verse 23 is necessarily located at this point of the letter because it grounds the believer in the truth that one is counted righteous before God by faith alone, but that faith is always accompanied by obedience and good works. 2:23 is essential for this letter because it is surrounded by moral exhortations and imperatives which must be obeyed, but with the correct understanding of the relationship between faith and works. The one who does good works in faith will be considered a "friend of God" just as Abraham.