{"id":21627,"date":"2024-03-21T13:36:30","date_gmt":"2024-03-21T13:36:30","guid":{"rendered":"https:\/\/www.wallstreetzen.com\/blog\/?p=21627"},"modified":"2025-07-09T18:08:34","modified_gmt":"2025-07-09T18:08:34","slug":"best-investments-during-a-recession","status":"publish","type":"post","link":"https:\/\/www.wallstreetzen.com\/blog\/best-investments-during-a-recession\/","title":{"rendered":"Best Investments During a Recession: 7 Historically Proven Ways to Invest During Recessions"},"content":{"rendered":"\n

Recessions are the boogie men of investing. They keep investors up at night wondering if or when they\u2019ll strike. Recessions are hard to predict, but it\u2019s relatively easy to weather the storm if you\u2019re ready. Choosing the right investments so that your portfolio is recession-resistant is the best approach.<\/p>\n\n\n\n

I\u2019d like to share the eight best investments during a recession. These are tried-and-true investments with historical data backing up their effectiveness.<\/p>\n\n\n\n

The best defense against a recession is to organize your investments before the recession hits. Let me show you how.<\/p>\n\n\n\n

1. Art + Collectibles <\/strong><\/h2>\n\n\n\n

One good way to attempt to beat a recession is to invest in an asset that is completely untethered from the stock market. Here\u2019s why. Stocks typically get hit hard during a recession, as consumer spending dips and brings the company\u2019s revenue with it.<\/p>\n\n\n\n

According to Fidelity<\/a>, the S&P 500 has bottomed out a few months before just about every recession. Investing in an alternative asset like artwork is one of the best ways to preserve your portfolio\u2019s value when the markets take a dive.<\/p>\n\n\n\n

Art is uncorrelated with stocks, which means that your art investments are not likely to decrease in value at the same time as your stock investments. That\u2019s good news during a recession because it means your total losses will most likely be lower than they would be if you just invested in stocks.<\/p>\n\n\n\n

As you can see from the below chart, art also tends to perform well during high inflation periods (like the one we\u2019re in right now)…<\/p>\n\n\n

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But let\u2019s be real. Buying fine art as an investment takes more capital than most people have. Luckily, Masterworks<\/a> makes investing in fine art about as simple as it possibly can be.<\/p>\n\n\n\n

Masterworks lets you buy shares of artwork, so you can own a small piece of a painting instead of having to buy the whole thing. The goal is to give investors access to fine art. <\/p>\n\n\n

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The platform is very user-friendly and has tons of different art investments to choose from. Just a few recent examples of the artists they have invested in recently include Banksy, George Condo, and Monet.<\/p>\n\n\n\n

Not only can you invest in art in the primary marketplace, but the platform also has a secondary market where you can trade shares of blue-chip art<\/a>. <\/p>\n\n\n\n

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Check out Masterworks<\/strong><\/a><\/div>\n<\/div>\n\n\n\n

2. Defensive Sector Stocks + Funds <\/strong><\/h2>\n\n\n\n

Even though stock indexes tend to fall during a recession, that doesn\u2019t mean that all sectors drop by the same amount. Sectors that provide valuable services or critical products often don\u2019t drop as much as less important sectors.<\/strong><\/p>\n\n\n\n

Healthcare is a good example of a sector that is better than the broad market at surviving a recession. During the Great Recession \u2014 which lasted from December 2007 to June 2009 \u2014 the S&P 500 lost 36% and fell as low as 54% at one point.<\/p>\n\n\n\n

Bristol Myer Squibb (NYSE: BMY<\/a>)<\/strong>, one of the top picks on WallStreetZen\u2019s Best Healthcare Stocks screener<\/a>, lost 32% but only fell as low as 42% at its lowest point. The point? It fell, but not as hard as the market at large.<\/p>\n\n\n\n

I made the following chart using my favorite online charting platform, TradingView<\/a>. The blue line is SPY, and the orange line is BMY:<\/p>\n\n\n

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Another good sector to invest in during a recession is consumer staples. This sector includes food manufacturers and food packagers, farm product stocks, education-related stock, and other companies that provide essential services.<\/p>\n\n\n\n

Some of the stocks on WallStreetZen\u2019s Best Consumer Staple Stocks screener<\/a> include Target Corp (NASDAQ: TGT<\/a>)<\/strong>, Coca-Cola (NYSE: KO<\/a>)<\/strong>, and J&J Snack Foods Corp (NASDAQ: JJSF<\/a>)<\/strong>.<\/p>\n\n\n

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If you want to buy and sell stocks, you need a brokerage account. One of our top picks? eToro<\/a>, which supports stock investing as well as ETFs, crypto, and more.<\/p>\n<\/div>\n <\/div>\n\n\n\n

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Check out eToro<\/strong><\/a><\/div>\n<\/div>\n\n\n\n

<\/p>\n\n\n

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eToro securities trading is offered by eToro USA Securities, Inc. (\u201cthe BD\u201d), member of FINRA and SIPC. Cryptocurrency is offered by eToro USA LLC (\u201cthe MSB\u201d) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. https:\/\/www.wallstreetzen.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB and\/or the BD.<\/p>\r\n<\/div><\/div>\n\n\n

3. Dividend Paying Large Cap Stocks<\/strong><\/h2>\n\n\n\n

Another one of the best investments during a recession is dividend-paying large-cap stocks or blue-chip stocks. These stocks are some of the most valuable publicly traded companies you can own. (BTW \u2014 WallStreetZen\u2019s list of <\/em>the best dividend stocks<\/a><\/em> is a who\u2019s who list of the top household names in the world.)<\/em><\/p>\n\n\n\n

Besides being some of the largest companies in the world, the fact that they pay dividends means you\u2019ll still see decent returns even if the share price drops.<\/p>\n\n\n\n

Dividend stocks pay out a predetermined amount of money to shareholders on (usually) a quarterly basis. That means that you\u2019ll still make money if you invest in these stocks, even if the stock drops.<\/p>\n\n\n\n

Some of the large-cap dividend stocks you can invest in today are Microsoft (<\/strong>NASDAQ: MSFT<\/a><\/strong>), Apple (<\/strong>NASDAQ: AAPL<\/a><\/strong>), Nvidia (<\/strong>NASDAQ: NVDA<\/a><\/strong>), and Meta (<\/strong>NASDAQ: META<\/a><\/strong>)<\/strong>.<\/p>\n\n\n\n

In the following chart, Nvidia is teal, Meta is yellow, Microsoft is blue, and Apple is orange:<\/p>\n\n\n

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(Chart courtesy TradingView<\/a>)<\/em><\/figcaption><\/figure><\/div>\n\n\n

Once again, you\u2019ll need a broker to invest in these stocks. If you need a broker, I think eToro is an excellent choice<\/a>.<\/p>\n\n\n\n

It\u2019s easy to get started, has a convenient mobile app, and gives you access to all the stocks and ETFs you need to construct a recession-ready portfolio.<\/p>\n\n\n\n

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Check out eToro<\/strong><\/a><\/div>\n<\/div>\n\n\n
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eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.<\/p>\r\n<\/div><\/div>\n\n\n

4. Bonds <\/strong><\/h2>\n\n\n\n

Bonds are another one of the best investments during a recession because they\u2019re good at holding value. Historically, people invest in treasury bonds when they\u2019re worried about the future since investing in the U.S. government is one of the safest investments you can make.<\/p>\n\n\n\n

Bonds sometimes decrease in value when stocks drop, but they often hold their value or even increase in value, making them a good hedge for tumultuous economic conditions.<\/p>\n\n\n\n

You can only buy treasury bonds directly from the U.S. Treasury on its website. If you want to purchase corporate bonds or invest in a bond ETF, M1 Finance offers top-of-the-line bond investing tools<\/a>.<\/p>\n\n\n

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Check out M1 Finance<\/strong><\/a><\/div>\n<\/div>\n\n\n\n

5. Treasury Bills <\/strong><\/h2>\n\n\n\n

Treasury Bills are similar to bonds in that they hold up well during a recession, but they\u2019re different from bonds in a few important ways.<\/p>\n\n\n\n

First, Treasury Bills (sometimes called T-Bills) have shorter terms to maturity than T-Bonds. T-Bills can mature in just a few days, but usually mature in six months to one year. Having shorter term lengths makes T-Bills more flexible than T-Bonds, so you can repurpose your money sooner if the recession ends earlier than you expected.<\/p>\n\n\n\n

Second, T-Bills don\u2019t pay periodic interest. Instead, you purchase the bills at a discount compared to their full value. You receive the full value at the maturation date.<\/p>\n\n\n\n

The difference in price between the discounted price you pay to purchase the bill and the full amount you receive when it matures is how much you make.<\/p>\n\n\n

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Public is one of the best online platforms<\/a> for investing in T-Bills. The company offers a Treasury account where you can invest in Treasury Bills.<\/p>\n\n\n\n

The bills you purchase are safely stored in the Bank of New York Mellon and the money you make is automatically reinvested upon maturity if you don\u2019t explicitly sell the bill, which makes it easy to roll your investment over.<\/p>\n\n\n\n

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Check out Public<\/strong><\/a><\/div>\n<\/div>\n\n\n\n

6. Gold <\/strong><\/h2>\n\n\n\n

Gold is the traditional recession hedge. Even though crypto enthusiasts will tell you that Bitcoin is the new gold when it comes to insulating your investments from a market downturn, gold still has its place.<\/p>\n\n\n\n

You could invest in a gold ETF if you don\u2019t want the hassle of buying and storing physical gold. Or you could purchase actual gold from a reputable online retailer. But be vigilant: the risks of buying gold online<\/a> are something you need to be aware of if you decide to purchase physical gold.<\/p>\n\n\n

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If you understand the risks and buy from a reputable dealer, gold can potentially be one of the best investments during a recession.<\/p>\n\n\n\n

We like Augusta Precious Metals, which has a long track record and a good reputation as a gold IRA provider.<\/p>\n\n\n\n

The platform also offers direct gold and silver sales, and is known for its excellent customer support. If you click the link below, you could be eligible for zero gold IRA fees for up to 10 years!<\/p>\n\n\n\n

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Check out Augusta Precious Metals<\/strong><\/a><\/div>\n<\/div>\n\n\n\n

7. Real Estate <\/strong><\/h2>\n\n\n\n

Real estate is another classic hedge if you think a recession is coming. Recessions can affect the housing market, but the real estate market doesn\u2019t move in lockstep with the stock market. There are a few reasons for this, but one compelling one is that real estate is viewed as a safer investment.<\/p>\n\n\n\n

People looking to shelter their money during a recession sometimes turn to real estate as a safe bet. Having some money in real estate offers diversification and is part of an effective all-weather portfolio.<\/p>\n\n\n\n

Understanding how real estate investing works<\/a> is essential before you get started. There\u2019s a lot that goes into real estate investing. You need to understand how to find and value properties, learn about property management, make competitive offers, and much more.<\/p>\n\n\n\n

If that sounds like too much work, using a platform like Fundrise<\/a> might be an easier way to get started. Fundrise allows you to invest in real estate funds so you can get exposure to real estate without buying a property all by yourself. <\/p>\n\n\n

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It\u2019s easy to get started on Fundrise, and the experience is user-friendly, including an easy-to-use mobile app that lets you invest in real estate right from your phone.<\/p>\n\n\n\n

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Check out Fundrise<\/strong><\/a><\/div>\n<\/div>\n\n\n
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Note: We earn a commission for this endorsement of Fundrise. <\/p>\r\n<\/div><\/div>\n\n\n

8. Cash + Cash Equivalents <\/strong><\/h2>\n\n\n\n

I know this isn\u2019t as exciting as the other investments. But it is a valid way to hunker down during a recession and protect your money. Cash and cash equivalents are safe ways to preserve your capital when the economy grinds to a halt.<\/p>\n\n\n\n

They won\u2019t lead to the biggest returns and won\u2019t make you rich, but they\u2019ll leave you with more money than you started with to reinvest in other assets when the recession is over.<\/p>\n\n\n\n

CDs and money market accounts are perfect vehicles to use during a recession. They come with FDIC backing, which means your money is protected up to $250,000. Most CDs and money market accounts return between anywhere from 1% to 5% in the current interest rate environment.<\/p>\n\n\n

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Cit Bank has a great selection of CDs<\/a> to choose from. You can park your money for anywhere from six months up to five years and enjoy peace of mind knowing that your money is safe and will grow.<\/p>\n\n\n\n

Short-term CDs offer higher rates than long-term CDs, and Cit\u2019s rates are among the best I\u2019ve seen.<\/p>\n\n\n\n

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Check out CIT Bank<\/strong><\/a><\/div>\n<\/div>\n\n\n\n

Investing During a Recession: Pro Tips<\/strong><\/h2>\n\n\n\n

Investing during a recession doesn\u2019t have to be stressful. Getting the most out of your money when the economy is in the tank is a skill. Here are a few of my favorite tips to help guide your investing during a recession:<\/p>\n\n\n\n