7 Best Investments During a Recession: Strategies from Financial Advisors
As concerns about a potential recession rise, investors are advised to carefully assess their portfolios to mitigate risk. Goldman Sachs recently increased its recession probability to 30%, while BlackRock has raised cautions about long-term U.S. Treasurys losing their traditional role as portfolio stabilizers. In this environment, experts recommend looking at specific asset classes that historically perform well or maintain stability during economic downturns.
Here are seven recommended investment types to consider during a recession, as provided by certified financial planners (CFPs) and financial advisors:
1. Gold
Gold has long been a safe haven asset during market turbulence. Year to date, the SPDR Gold Shares ETF (GLD) has delivered a 10.3% return compared to the S&P 500’s slight loss as of early April 2026. This resilient performance builds on gold’s remarkable 61% gain in 2025, driven by central banks stocking up on reserves and ongoing geopolitical tensions. Unlike corporate stocks, gold is not dependent on earnings or economic growth, making it a reliable store of value when recessions hit. However, some advisors note that gold’s current high prices warrant caution.
2. Short-Duration Treasurys
Short-duration U.S. Treasury securities, maturing within one month to two years, provide stability and liquidity with almost no credit risk. Their short maturity limits exposure to rising interest rates, making them less volatile than longer-term bonds. Although not flashy, short Treasurys offer a dependable option for investors aiming to preserve capital while awaiting clearer market conditions.
3. Defensive Sector ETFs
Certain sectors traditionally fare better in economic downturns because their products and services remain essential regardless of market cycles. Defensive sectors include utilities, consumer staples, and healthcare. These sectors typically experience smaller declines during recessions because demand for necessities like food, medicine, and electricity remains consistent. Investing through sector-specific ETFs enables diversification within these less-cyclical industries.
4. Cash and Money Market Funds
With money market yields near 4%, cash is regaining its appeal as a safe, liquid asset. While "cash is not king," elevated interest rates mean holding money in online savings or money market accounts can generate reasonable returns with minimal risk. Cash also provides flexibility to deploy capital opportunistically during market downturns without being forced to sell investments at depressed prices.
5. Investment-Grade Corporate Bonds
High-quality bonds, including investment-grade corporate bonds, are favored in uncertain markets for their reliability. With Treasury yields rising but remaining attractive by historical standards, top-rated corporate bonds offer a stable income stream while generally weathering economic slowdowns better than riskier debt categories. Experts advise avoiding high-yield or "junk" bonds in a recession, as credit risk escalates and spreads widen.
6. Income-Producing Real Estate and REITs
Real estate investment trusts (REITs) can offer inflation protection and steady income, as demonstrated by the Vanguard Real Estate Index Fund ETF (VNQ), which returned 6.2% year to date, outpacing the S&P 500. Elevated mortgage rates and high home prices encourage more households to rent longer, supporting demand and rents even during recessions. REITs can particularly benefit portfolios held in tax-advantaged accounts due to their income distribution characteristics.
7. Dividend Aristocratsâ„¢
Dividend Aristocrats are companies with a track record of consistently increasing dividend payments for 25 years or more. These firms tend to be well-established, financially resilient, and generate dependable cash flow, traits that help them maintain stock price stability and provide income during downturns. Investing in Dividend Aristocrats can add both income and defensive qualities to a portfolio.
Conclusion
While recessions pose challenges to investors, diversifying into assets that historically hold value or provide steady income can help manage portfolio risk. Gold, short-duration Treasurys, defensive sectors, cash equivalents, investment-grade bonds, real estate, and dividend-paying companies each offer distinct advantages when market volatility intensifies.
Advisors recommend regular portfolio reviews to ensure asset allocations align with individual risk tolerance and economic outlooks, rather than making impulsive, reactionary moves based solely on forecasts. By understanding the characteristics and roles of these recession-resilient investments, investors can better position themselves to weather economic downturns and pursue long-term growth.
About the Author:
Kate Stalter, CFP, specializes in personal finance and investing strategies. This article was reviewed by Rachel McVearry and published by U.S. News on April 13, 2026. —
For more personalized investment advice, consider consulting a certified financial planner or investment professional.