December 31, 2020

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Hey SoFi members,

This week we’re taking a break from our normal stories on business news and stock market happenings. This is part four of our four-part series Looking Back & Planning Ahead. For the latest breaking news and how it may affect your finances, visit the SoFi app. Have a Happy New Year, and we will be back in your inbox on Tuesday January 5!


The SoFi Team

Top Story

A Review of Q4

Stock Market Volatility

2020 has been a year to remember. Industries have adapted to changing consumer habits, markets have fluctuated, and people have spent countless hours on Zoom (ZM). We’re breaking down important events that took place during each quarter of the year. Today, we’re taking a look at Q4 of 2020.

The beginning of the fourth quarter was a time of uncertainty. In October investors were anxious about the results of the US presidential election. As the weather turned colder, COVID-19 cases began to rise in many parts of the world, causing governments to place more stringent restrictions on businesses. At the beginning of the quarter vaccine trials were still in progress, and investors were unsure if and when a vaccine would become available. Over the course of October the S&P 500 dropped by 2.8%, the Nasdaq fell 2.3%, and the Dow Jones tumbled 4.6%.

Indexes rebounded in November. The S&P 500 rose 10.8%, the Nasdaq climbed 11.8%. The Dow Jones also surged 11.8%, posting its most significant monthly gains since January 1987. In December investors were concerned about rising COVID-19 cases impacting businesses in the near future, though sentiment was lifted because of positive news on the vaccine front.

A US Presidential Election for the History Books

On November 3, 2020, millions of Americans headed to the polls. By this date, millions of other citizens had already voted by mail. About 160 million Americans voted in the presidential race—an all-time record high. The election also had the highest voter turnout rate among eligible citizens since 1900.

President-elect Joe Biden won 306 electoral votes and President Donald Trump won 232 electoral votes. Democrats kept control of the House. Control of the Senate will be decided by a January 5 special election in Georgia. The presidential election, and many races up and down the ticket, were close and contentious.

There are still many questions about what lies ahead for the economy and markets. But now that some of the uncertainty surrounding the election has subsided, investors have a clearer picture of how the next four years will look.

COVID-19 Vaccine Rollout Begins

After nearly a year of tragedies brought on by the COVID-19 pandemic, the world finally saw glimmers of hope thanks to the fastest vaccine development initiative in history. Over the summer Moderna (MRNA) and Pfizer (PFE) shared positive news from Phase 1 and 2 trials.

The companies then began Phase 3 trials with over 70,000 people participating around the world. These trials showed both vaccines to be about 95% effective, and both vaccines went on to receive emergency approval from the FDA Developing COVID-19 vaccines this quickly was a remarkable accomplishment. Now the challenge will be distributing them to millions.

Though the pandemic is far from over, investors in a number of industries and average people who have faced innumerable difficulties in 2020 have some form of a light at the end of the tunnel.

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Getting Ahead on Estate Planning

A Little Planning Now Can Go a Long Way

2020 might go down in history as the year of canceled and changed plans, but it is almost over and 2021 is within sight. Kicking off 2021 with a few simple money management plans is a great way to turn over a new leaf, or build on previous saving successes. This week in our newsletter we’re bringing you a series of easy money-management tips to help get your year off to a good start. Today we’re focusing on a few easy estate planning strategies.

Estate planning means deciding who will inherit your assets and manage your responsibilities if you die or are incapacitated. Though it might seem like a bit of a strange or sad task, a few simple steps can save you and your loved ones hassle down the road.

Taking Inventory and Establishing Legal Directives

A good first step in estate planning is taking inventory of your tangible and intangible assets and estimating their value. Your tangible assets include your home or other real estate you own, as well as vehicles and other personal positions. Intangible assets might include investments in stocks, bonds, or mutual funds, ownership in a business, or life insurance policies. To determine the worth of some of these items, outside valuations can help, like recent appraisals of your home or business, and statements from your financial accounts.

Once you know the value of your assets, it’s a good idea to think about a few key legal directives. You might want to establish a medical care directive, also called a living will. This document contains information about your preferences for medical care if you are no longer able to make those decisions. Setting up a durable financial power of attorney can also be helpful. This allows another trusted person to handle your financial decisions if you are no longer able to do so. If turning over complete control to someone else feels concerning, consider setting up a limited power of attorney.

Updating Plans as Changes Occur

Live can be full of unexpected changes, and as these changes occur it’s a good idea to revisit your estate plan. Marriage, divorce, the birth of a new child, a career change—all of these events can impact your estate plan. It’s still a good idea to check in on your estate plan from time to time even if your situation hasn’t been significantly altered, because laws surrounding estate planning can change.

If you have recently moved to a new state or are planning a move soon, be sure to check up on your new state’s estate laws, because taxes can vary from state to state. A tax professional can be a helpful resource for navigating how to update your estate plan. Estate planning might seem intimidating, but like all money management, a little planning goes a long way.

Not-So-Breaking News

Financial Planner Tip of the Day

"How much life insurance do you need? To calculate your coverage, factor in your expenses and how much income you want to replace. Use this calculator to help you do the math."

Brian Walsh, CFP® at SoFi

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