SoFi Blog

The inverted yield curve has historically signaled a coming recession. What exactly is the yield curve and what does it mean for your finances?

It’s a question on a lot of minds. When is the next recession? Although nobody can claim to possess the trillion dollar crystal ball that predicts recessions, extensive research has been done into what causes economic downturns and where the US seems to be in the current cycle.

It may seem as though there’s always an ongoing conversation about this, and it is overwhelming to try and decipher the mixed messages coming from politicians, economists, and the media.

Uncertainty and fear about the economy can lead to inaction and missed opportunities. There is a lot you can do to prepare and stay informed in the event of a recession.

In our efforts to bring you the latest updates on things that might impact your financial life, we may occasionally enter the political fray, covering candidates, bills, laws and more. Please note: SoFi does not endorse or take official positions on any candidates and the bills they may be sponsoring or proposing. We may occasionally support legislation that we believe would be beneficial to our members, and will make sure to call it out when we do. Our reporting otherwise is for informational purposes only, and shouldn’t be construed as an endorsement.

Editor’s note: this article has been updated from its original publish date of July 29, to include new information.

In July 2019, The Federal Reserve cut rates for the first time since the financial crisis. Now, it has cut rates again—for the fifth time in eight months. This time, it is directly tied to the spread of COVID-19—more widely known as the coronavirus.

“The coronavirus poses evolving risks to economic activity,” the Fed said in a statement. “In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate.”

Americans may want to prepare now for some changes to their finances—especially given the macroeconomics around this particular cut. This action has the potential to affect savings, credit cards, student loans, mortgages, and investment portfolios.

Curious about how the process of cutting and hiking rates works? Wondering how the rate announcement by the Federal Reserve may affect you? Read on for a high-level overview of information that may be helpful as you plan for the near future and beyond.

Earlier today, we announced that we’ve added crypto trading to our fast-growing SoFi Invest platform, as a response to demand from you! SoFi Invest is now the first platform to offer automated and active investing with stocks, ETFs, and crypto through a single app.

You can easily buy and sell several cryptocurrencies with straightforward, competitive commissions and no account minimums, as well as track the price movements of the world’s most widely-traded digital assets, with more cryptocurrencies to be added in the coming months. and rest assured, we secure all crypto holdings from fraud and theft.

“Feedback from our members has made it clear that a significant percentage are not only interested in learning more about cryptocurrencies but are also already buying and selling crypto,” said SoFi CEO Anthony Noto. “We’re very pleased to be adding this new product to SoFi Invest, as access, education, and keeping costs low for our members is at the heart of what we do.”

To understand Bitcoin, there are a few other definitions to clarify first, including that of digital currency .

This type of currency does not have a physical form, so it can’t be seen or touched, but theoretically, it can be used in the same ways as traditional money, including buying and selling goods and services. Digital currency can be used around the globe, as long as parties accept this type of payment, being exchanged among digital wallets.

Cryptocurrency is a type of digital currency, one that’s based on cryptography, using complex mathematical principles to create and analyze algorithms. Bitcoin is the most widely recognized form of cryptocurrency, but it isn’t the only option.

Bitcoin uses blockchain technology and a decentralized ledger to operate. In hypothetical terms, blockchain technology is like a spreadsheet duplicated across networks of computers with the technology creating the ability for people to regularly update the spreadsheet with transactions.

Records are public and easily verified, creating a sense of openness. Bitcoin has no primary regulating authority—and no centralized version of its record exists. Regulators are increasingly getting involved, but the regulatory structure is currently nowhere near the same degree as those imposed on securities or banking products.