What Are the Safest Investments During A Recession?

The US is not currently in a recession, but there’s a potential chance in the middle of 2024. Of course, uncertain times can be scary for many of us.

Stock markets tend to plummet, the economy slows down, and investing may seem like the last thing on most people’s minds.

But not everything is lost. Several options remain available to build a recession-proof portfolio and keep your money safe.

Today, we’re exploring a few of the safest assets that can help protect your finances during an economic downturn. With the right investments, you can get through the most challenging financial times!

4 Safe Assets To Invest In During A Recession

Few critical assets thrive during recessions, but let’s look at some of the most common ones:

1. Precious Metals

When the stock market went south during the Great Depression, gold shot up from $20.67 an ounce in 1929 to $35 an ounce in 1935. Americans were buying it along with other precious metals en-masse to have a chance at getting through the worst economic downturn up to that point.

And the Great Depression is one of many examples across human history. Precious metals like gold and silver have long been considered safe havens during recessions.

Unlike cash or other speculative stocks, there’s a finite limit on how much of each metal we have. This essential quality makes them a solid addition to your portfolio!

2. Real Estate

Everybody needs to live somewhere, right?

When you invest in real estate, it’s a great way to keep your money safe. This is especially true if your property is located in a stable renters’ market where people are constantly moving.

Renting out your property gives you a steady stream of passive income to help weather the recession.

Even if houses aren’t immune to boom and bust cycles, the average home price has steadily increased by 5.4% each year since 1968. Once the market bounces back, you could also quickly sell your property for a profit.

3. Commodity Stocks

No matter how bad the recession is, you still need to buy things like food, gas, and other household essentials. With this in mind, companies that produce, manufacture, or distribute these have massive potential to perform well.

Given the stable demand for these resources, companies in these core industries tend to bounce back faster during recessions. So, commodity stocks could be your best bet if you’re looking for stable industries with consistent demand.

4. High-Yield Savings Account

Sometimes, all you want to do is keep your hard-earned money in your bank account in case of an emergency.

But why keep it safe and earn some extra interest on it?

High-yield savings accounts are a low-risk way of earning some passive investment income without the risk of losing anything. Compared to the near-zero interest returns of traditional bank accounts, a high-yield one could make you significantly more.

As of this year, many institutions offer up to 5% APY rates when you become a member! Even if your returns may be lower than investing in a high-risk asset, you can build a stable nest egg during an uncertain financial market.

The Bottom Line

As we learned from 2008, recessions are not fun for most everyday investors. But you always need to remember that opportunities are everywhere.

From precious metals to a high-yield savings account, you can keep your money safe or profit from a handful of stable assets. As long as you do your research, nothing stops you from building a diversified portfolio that helps you easily weather a financial storm!

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