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Best Performing Assets for When a Recession Hits

When the market is soaring, it’s easy to forget that what goes up can also come down. But economic slowdowns tend to be cyclical, which means that another recession is in the future. Whether it’s fast-approaching or still a ways off, it’s wise to be prepared for its eventuality. This way, you won’t join the panicking stampede out of stocks and into cash. Instead, you’ll remember that certain assets can perform even during a recession – you just need to know which ones.

Core Sector Stocks

During a recession, you might be inclined to give up on stocks, but experts say it’s best not to flee equities completely. When the rest of the economy is on shaky ground, there are often a handful of sectors that continue to forge ahead and provide investors with steady returns.

So if you want to insulate yourself during a recession partly with stocks, consider investing in the healthcare, utilities and consumer goods sectors. People are still going to spend money on medical care, household items, electricity and food, regardless of the state of the economy. As a result, these stocks tend to do well during busts (and underperform during booms).

Precious Metals

When investing in IRA approved precious metals like gold or silver, they tend to perform well during market slowdowns. But since the demand for this type of asset often increases during times of recession, their prices usually go up, too. The reason that precious metals and other alternative assets are so sought-after during times of economic uncertainty is the diversification outside of the stock market, or other traditional assets. Having all of your eggs in the proverbial basket of traditional assets can be risky when economic down-turns come, so having your financial well-being tied to tangible assets can be reassuring to investors.

Reliable Dividend Stocks

Investing in dividend stocks can be a great way to generate passive income. When you’re comparing dividend stocks, some experts say it’s a good idea to look for companies with low debt-to-equity ratios and strong balance sheets. If you don’t know where to start, you may want to look into dividend aristocrats, which are companies that have increased their dividend payouts for at least 25 consecutive years.

Real Estate

The 2008 housing market collapse was a nightmare for homeowners, but it turned out to be a boon for some real estate investors. When a recession hits and home values drop, it may be a buying opportunity for investment properties. If you can rent out the property to a reliable tenant, you’ll have a steady stream of income while you ride out the recession. Once real estate values start to rise again, you can sell at a profit.