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5 Key Investments to Consider During a Recession
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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, so it’s important to always be prepared.
Working with a financial advisor can not only help you prepare and make sound investment choices when markets behave unfavorably, but also better manage your investment portfolio and identify tax-saving strategies.
A 2019 Northwestern Mutual study found that U.S. adults who work with a financial advisor report “substantially greater financial security, confidence and clarity than those who go it alone.”
The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research suggests average additional investment returns can range from 1.5% to 4% more each year.
SmartAsset’s new tool makes it easy to find the right financial advisor near you in just a few minutes. Our exclusive, no-cost tool matches you with up to three local fiduciary financial advisors that have passed a rigorous screening process. We confirm each is registered with the U.S. Securities and Exchange Commission (SEC) or the appropriate state regulator, possess the proper licenses and have no pending or valid regulatory disclosures within the past 10 years.
It’s wise to remember that stocks can perform even in a recession. Here are five investments to consider when a recession hits.
1. Core Sector Stocks
During a recession, experts say it’s best not to flee equities completely. 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 economy.
2. Reliable Dividend Stocks
When 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. You may also want to look into dividend aristocrats, which are companies that have increased their dividend payouts for at least 25 consecutive years.
It’s always smart to consult a financial advisor before taking investment risks.
3. Real Estate
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.
This is another scenario where expert financial advice is key.
4. Precious Metals
Precious metals like gold or silver tend to perform well during market slowdowns. But since the demand for these kinds of commodities often increases during recessions, their prices usually go up, too.
5. Invest in Professional Financial Advice
It's imperative to ensure your investment portfolio is sound as the market ebbs and flows, especially if you're planning for retirement.
A fiduciary financial advisor can help assess and optimize your portfolio and retirement plan. They can also help determine if there are additional steps you can take to reduce taxes and potentially increase your returns.
Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one.
Our no-cost tool makes it easy to find the right financial advisor for you. Now you can get matched with up to three local fiduciary investment advisors that have been rigorously screened for regulatory disclosures and to confirm their licenses. The entire matching process takes just a few minutes.
Follow These Steps to Get Matched With the Right Advisor for You
1. Simply enter your ZIP code below.
2. After you enter your ZIP code and answer questions about your financial goals, you can compare up to three advisors local to you and decide which to work with.
3. Enjoy a better financial future!