Daily lives have changed drastically in the last few weeks as the world has responded to the COVID-19 outbreak. In addition to the health pandemic, we have seen the start of a global recession. With increased volatility in the markets, SoFi has created a hub to provide you with information and resources to help guide you through this uncertain time.
Let’s first dive into some resources that briefly explain what a recession is, the causes, and the effects. Although there are multiple definitions used for a recession, a widely accepted version is: a slowdown of economic activity lasting several months.
With the markets changing every day, it is important to stay up to date on the latest information about coronavirus and the global economy. The articles below will give you insight into the newest information available to help you make informed decisions about your finances:
Here are some important definitions to know regarding the current economy and what the government has deployed to help mitigate the financial crisis. Below each definition you’ll find an article to get a deeper dive into the term.
Also known as shares or equity investments, stocks are usually bought and sold on publicly-traded stock exchanges. There are two main different types of stocks: common and preferred stock. Common stocks are the most prevalent and are the stocks someone will most likely purchase on the open market.
Preferred stocks, on the other hand, don’t come with voting rights, but they are given a special status (earnings are paid out to preferred stockholders first). In many cases, stocks will appreciate in value as the company grows. Stocks generally have a high potential for return which is why they are a popular addition to many investment portfolios.
Also called a share repurchase, a stock buyback is when a company decides to buy back a number of shares from the open market to decrease the amount of shares outstanding. Because there are fewer shares in the market, this causes the price of the remaining shares to increase in value.
Companies decide to engage in stock buybacks for a number of reasons. A few include: increasing stock value, improvement of financial ratios, reducing the cost of capital, and returning money to shareholders.
There are many different factors that are important to consider when managing finances during a recession. Since the economy is volatile and uncertain, there isn’t one perfect strategy to help mitigate loss. But, there are a few tips and topics that can help you formulate a plan for managing your money during an economic downturn.
For some investors, the erratic market provides an opportunity to buy low and earn gains as the market corrects itself. Other investors are left with confusion and panic as they see their investments decline with no idea how to move forward.
There is no one best investment practice during a recession, but keeping your portfolio balanced during turbulent times may help create a strong foundation to help savers get through to the other side successfully.
Not only is this time stressful as you think about your health and the health of your family, it can also be extremely upsetting to review your finances.
As the market has had extreme lows as of late, many people have seen their net worths decrease. For different strategies on how to face your financial challenges, check out the articles below.
Still have questions? SoFi offers financial planning to all of our members at no cost. Whether you are looking to build a budget, save for the future, start investing, or set your financial goals, our planners can advise you based on your unique needs. SoFi Financial Planners can help you navigate your specific financial situation.
Make an appointment to receive complimentary, customized financial advice today.