Recession Proof Investing: What to Invest During a Recession

The current global economic condition shows that we’re headed for a recession.

Such periods are characterized by low investments, high unemployment, and market instability. Thus, investors must be more careful about what to invest in during a recession.

Here are some recession-proof investment ideas.

What is a recession?

A recession in the economy is typically defined as two consecutive quarters of negative economic growth.

This normally reflects into an economic slowdown, resulting in a sharp drop in production, widespread job losses, and a substantial increase in unemployment.

In simple words, the following happens during a recession:

  • Production and economic activity declines
  • Unemployment increases
  • Consumer spending decreases
  • Investment spending by businesses decreases
  • Stock prices fall
  • Borrowing costs increase

Therefore, it is a difficult time for businesses and individuals. However, it is essential to remember that a recession (which is short-term) is not necessarily the same as a depression (which is long-term).

How does a recession impact investments?

There’s a lot of talk about recession these days. Investors should know how a recession could impact their investments.

In a recession, people lose their jobs, and income decreases. In addition, it can lead to defaults on loans and other debts, which can, in turn, lead to a decrease in the value of assets.

So, it’s essential to be extra careful with your investments. You may want to consider investing in less volatile assets, such as bonds, during a recession.

Of course, every recession is different, so staying up-to-date on the latest news and developments is essential. And, as always, consult with a financial advisor to get personalized advice for your unique situation.

The primary reason why investors lose money during a recession is that stock prices go down.

During a recession, companies earn less money. This is because people are spending less money. As a result, the value of stocks goes down.

This is why it’s important to be diversified. If you’re only invested in stocks, then you’re more likely to lose money during a recession.

Should you invest during a recession?

As an investor, you may be wondering if now is a good time to invest during a recession. After all, stock prices are generally lower during economic downturns.

Despite that, you can still make money by investing during a recession. In fact, some investments may do better during tough economic times than they would in good times.

The key is to choose the right investments.

Recession proof investing for investors

With the recession looming over our heads, it’s more important than ever to ensure investments are recession proof. Here are a few assets you can invest in during a recession.

Index funds

Index funds are a great way to get exposure to the stock market without picking individual stocks. They’re also much less volatile than individual stocks, making them an excellent investment during a recession.

Let’s say you have $10,000 to invest. You could put all of it into an index fund tracking the S&P 500. It would expose you to 500 different U.S. stocks, which would help diversify your risk.


Bonds are another asset class that tends to do well during a recession. Investors tend to flock to bonds as a safe haven when the economy is struggling. It drives up bond prices and drives down interest rates.

If you’re looking for a bond fund to invest in, consider the iShares Core U.S.

Real estate

Investing in real estate is a great way to diversify your portfolio and protect yourself from a recession. In addition, real estate tends to be much less volatile than stocks, making it a safe haven for investors.

There are a few different ways to invest in real estate. For example, you could buy a property and rent it out, or you could invest in a real estate investment trust (REIT).

A REIT is a company that owns and operates income-producing real estate. They must pay out 90% of their profits as dividends to shareholders. It makes them an excellent investment for income investors.

Which industries are recession proof?

Historically, some industries have been more resistant to economic downturns than others.

Some recession-resistant industries include health care, food and beverage, and utilities. These industries are considered essential, meaning that even when consumers are cutting back on spending, they still need to purchase these goods and services.


Health care is often cited as one of the most recession-resistant industries. No matter the economic conditions, people will always need health care services.

In fact, during a recession, the demand for some health care services may even increase as people lose their jobs and their health insurance.

Some good stocks to invest in the healthcare industry are:

  • Johnson & Johnson (NYSE: JNJ),
  • Pfizer Inc. (NYSE: PFE),
  • Merck & Co., Inc. (NYSE: MRK),
  • Abbott Laboratories (NYSE: ABT)

Food and beverage

Another industry that is essential to consumers is the food and beverage industry.

While people may cut back on spending in other areas, they still need to eat.

Consumer staples, such as food and beverage, are often considered recession-resistant. Some stocks to invest in the food and beverage industry are:

  • The Kraft Heinz Company (NYSE: KHC),
  • PepsiCo, Inc. (NYSE: PEP),
  • Coca-Cola Co (NYSE: K.O.),
  • Nestle SA (OTC: NSRGY)


Even during a recession, people still need to use utilities like electricity, water, and gas.

That’s why the utility industry is often considered one of the most recession-resistant. You can invest in the following stocks:

  • Duke Energy Corporation (NYSE: DUK)
  • The Southern Company (NYSE: SO)
  • Exelon Corporation (NYSE: EXC)
  • American Electric Power Company, Inc. (NYSE: AEP)
  • Brookfield Infrastructure Partners L.P. (NYSE: BIP)
  • American Water Works Company, Inc. (NYSE: AWK)


Cost-conscious retail stores, such as Costco, Dollar Tree, and Walmart, get more customers in a recession.

People are looking for ways to save money, and these retailers offer low-cost options on food, clothing, and other items. Therefore, these types of retail companies do well in a recession.

Here are some notable stocks to invest in:

  • Costco Wholesale Corporation (NASDAQ: COST)
  • Dollar Tree, Inc. (NASDAQ: DLTR)
  • Walmart Inc. (NYSE: WMT)
  • Target Corporation (NYSE: TGT)
  • Dollar General Corporation (NYSE: D.G.)

Tips for recession proof investing

If you’re looking to invest during an economic downturn, there are a few things you can do to insulate yourself from the volatility. Here are a few tips for recession-proof investing:

Diversity your portfolio

One of the best ways to weather a downturn is to diversify your investments. By investing in a mix of asset classes, you can minimize your risk and protect yourself from losses in any one particular area.

For instance, instead of investing solely in stocks, you could also add bonds, real estate, and other investments to your portfolio. This way, if the stock market takes a hit, your other investments can help offset any losses.

Likewise, you can also diversify within asset classes. For example, instead of investing only in U.S. stocks, you could also invest in international stocks. It can help reduce your overall risk and provide you with the potential for greater returns.

Invest in stable companies

Another way to protect yourself during a recession is to invest in stable companies with a history of weathering economic downturns. These companies tend to be large, well-established businesses with solid balance sheets.

Some examples of stable companies include Johnson & Johnson, Procter & Gamble, and Walmart. These companies have survived economic downturns before and are likely to do so again in the future.

Look for companies in the healthcare, retail, and utilities sectors since their products are a necessity even during a recession.

Consider defensive sectors

Some sectors of the economy tend to perform well during economic downturns. These are known as defensive sectors, and they include healthcare, consumer staples, and utilities.

Defensive sectors tend to be less volatile than the overall market, and they can provide a measure of stability during a recession.

Keep an eye on valuations

Keeping an eye on valuations when investing during a recession is essential. This is because stock prices can become depressed, making it tempting to buy up shares at bargain-basement prices.

However, just because a stock is cheap doesn’t mean it’s a good deal. You still need to consider the company’s fundamentals and make sure it’s a sound investment.

Don’t panic

Finally, it’s essential to keep a cool head when investing during a recession. It can be tempting to sell off your investments at the first sign of trouble, but this is often the worst thing you can do.

Recessions don’t last forever, and eventually, the market will rebound. If you sell off your investments during a downturn, you could miss out on the rebound and end up worse off than you were before.


While there are some ways to do recession proof investing, know that recession hits everyone. You can’t fully protect yourself, but if you diversify and invest in stable companies, you can minimize your risks.

Therefore, you should always keep an eye on valuations and don’t panic when the market takes a hit. And remember, eventually, the market will rebound.

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