7 Best Investments During a Recession: Insights from Financial Advisors
As concerns about a looming recession grow and uncertainties around U.S. Treasury securities increase, investors are urged to reexamine their portfolios to manage risk effectively. Wall Street’s prediction of a potential economic downturn has intensified, with Goldman Sachs raising the probability of a recession to 30%, marking a 5% increase. At the same time, BlackRock has cautioned that long-term U.S. Treasurys may no longer serve as the safe haven they once were, suggesting investors consider alternative strategies to hedge their portfolios.
Financial experts emphasize that panic selling or drastic portfolio shifts based solely on recession forecasts are not sound investment strategies. Instead, regular portfolio reviews to assess risk exposure are advisable. Below are seven investment options identified by experts as resilient during recessionary periods:
1. Gold
Gold remains a favored asset during economic downturns due to its historical role as a hedge against stock market declines. The SPDR Gold Shares ETF (GLD) has delivered a 10.3% return year-to-date as of April 10, outperforming the S&P 500, which declined by 0.42% in the same period. Central banks’ record-level purchases of gold and geopolitical tensions have bolstered its price, making it a strong defensive asset. Kate Stalter, CFP, advises caution, however, noting that precious metals may currently be priced at a premium.
2. Short-Duration Treasurys
Short-term U.S. Treasury securities, typically maturing within one month to two years, offer safety and liquidity. Unlike longer-term bonds, they exhibit minimal sensitivity to rising interest rates, limiting duration risk. Their backing by the U.S. government effectively eliminates credit risk. Trevor Gunter, CFP, highlights these short Treasurys as reliable vehicles for stability and modest returns during uncertain economic times.
3. Defensive Sector ETFs
Certain industries are more resilient during recessions, primarily because their products or services remain in demand regardless of economic conditions. Utilities, consumer staples, and healthcare sectors are classic examples. ETFs focused on these defensive sectors provide diversified exposure that can soften portfolio volatility. Dan O’Rourke, CFP, notes that essentials like food, medicine, and electricity maintain steady demand, helping these sectors withstand downturns better than the broader market.
4. Cash and Money Market Funds
Holding cash or investing in money market funds has gained renewed appeal, especially with current yields approaching 4%. This offers investors both flexibility and income, without the risk of principal loss typical in volatile markets. O’Rourke explains that cash, once considered “dead money,” now plays a valuable role in portfolios by providing liquidity and a defensive position when markets are correcting.
5. Investment-Grade Corporate Bonds
High-quality corporate bonds provide a dependable income stream and can act as a stabilizing force during market volatility. Raymond James CIO Larry Adam expresses confidence in bonds as a portfolio anchor, favoring investment-grade corporates, Treasurys, and municipal bonds, particularly while yields remain above historical averages. Lucas Fender advises investors to avoid high-yield “junk” bonds in recessionary periods since credit quality becomes increasingly critical as economic conditions worsen.
6. Income-Producing Real Estate and REITs
Real estate investment trusts (REITs) and income-producing real estate assets have shown strong performance compared to broader equity markets. For example, the Vanguard Real Estate Index Fund ETF (VNQ) posted a 6.2% return year-to-date, outpacing the Vanguard S&P 500 ETF (VOO), which was down 0.1%. REITs provide regular income through dividends and can help protect against inflation. Additionally, elevated mortgage rates and high home prices have sustained rental demand, even amid economic softness, supporting the real estate sector.
7. Dividend Aristocrats™
Dividend Aristocrats are stocks of companies that have consistently increased dividend payouts for at least 25 consecutive years. These stocks often belong to financially stable companies with a history of weathering economic cycles. Their reliable dividend income and defensive characteristics make them attractive during recessions.
Final Thoughts
While no investment is entirely risk-free, incorporating these assets can help build a recession-resilient portfolio. Defensive strategies that prioritize stability, liquidity, and income tend to perform better when economic conditions deteriorate. Investors should maintain a balanced approach, regularly review their portfolios, and consult financial advisors to tailor strategies aligned with their risk tolerance and long-term goals.
For up-to-date advice and personalized portfolio reviews, consulting a certified financial planner or trusted advisor is recommended.
Article by Kate Stalter, CFP | Reviewed by Rachel McVearry | Published April 13, 2026