7 Best Investments During a Recession: Expert Advice on Navigating Uncertain Markets
As recession fears intensify and concerns grow around the stability of U.S. Treasurys, investors are urged to reassess their portfolios to better weather economic downturns. According to financial experts and advisors, certain asset classes tend to hold their value or even outperform during recessions, providing crucial stability and potential income when markets become volatile. Here’s a rundown of seven of the best investments to consider during a recession, based on insights from certified financial planners and market analysts.
1. Gold: A Time-Tested Hedge Against Economic Uncertainty
Gold remains a popular refuge during market turbulence. The SPDR Gold Shares ETF (GLD) has gained 10.3% year-to-date as of early April 2026, compared to a slight decline in the S&P 500. This performance follows a strong 61% rally in 2025, fueled by record gold purchases from central banks worldwide and geopolitical tensions driving demand. Unlike stocks, gold’s value is not tied to corporate earnings or economic growth, making it resilient in recessions.
However, financial advisors caution that gold prices may be elevated, so investors should exercise judicious timing when adding precious metals to their portfolios.
2. Short-Duration U.S. Treasurys: Safety and Liquidity in the Storm
Short-duration Treasury securities, with maturities from one month up to two years, offer investors low credit risk backed by the U.S. government. These bonds are less sensitive to interest rate changes than their long-term counterparts, reducing duration risk. While not the most exciting investment, short Treasurys provide stability, liquidity, and modest returns — qualities prized during economic uncertainty.
Trevor Gunter, CFP, notes that these instruments serve as a "plan B" hedge, allowing investors to weather the volatility without taking on undue risk.
3. Defensive Sector ETFs: Steady Performers in Downturns
Certain sectors are considered "defensive" because their products and services maintain steady demand regardless of the economic cycle. Exchange-traded funds (ETFs) focusing on utilities, consumer staples, and healthcare are examples. Consumers continue to eat, use electricity, and require medical care regardless of recessions, helping these sectors experience less severe drawdowns compared to broader markets.
Dan O’Rourke, CFP, highlights that these defensive ETFs can help investors avoid panic selling by smoothing portfolio volatility.
4. Cash and Money Market Funds: Yield and Flexibility
While cash was once considered "dead money," rising money market rates close to 4% have revived its appeal as a safe, liquid asset. Parking funds in money market accounts or high-yield savings accounts offers investors both peace of mind and competitive returns, providing flexibility during rapid market shifts.
Holding cash also allows investors to seize opportunities when market conditions improve.
5. Investment-Grade Corporate Bonds: Reliable Income and Reduced Risk
High-quality bonds, such as investment-grade corporate debt, remain vital portfolio anchors even amid market fluctuations. Despite elevated Treasury yields, expert Larry Adam of Raymond James continues to recommend prioritizing Treasurys, municipals, and investment-grade corporates over riskier bonds.
Lucas Fender advises against chasing higher yields through junk bonds, which tend to see widening credit spreads and higher default risks in recessions. Credit quality is paramount when economic growth slows.
6. Income-Producing Real Estate and REITs: Stability and Inflation Protection
Real estate investment trusts (REITs) have outperformed the broader stock market, with the Vanguard Real Estate Index Fund ETF (VNQ) returning 6.2% year-to-date compared to a slight loss for the Vanguard S&P 500 ETF (VOO). REITs offer a reliable income stream, inflation hedge, and can be tax-efficient in retirement accounts.
The sector also benefits from strong rental demand driven by high home prices and elevated mortgage rates, causing many potential buyers to remain renters longer.
7. Dividend Aristocrats™: Consistent Income from Resilient Companies
Dividend Aristocrats™—companies known for consistently raising dividends for 25+ consecutive years—are favored during recessions for their financial strength and stable cash flow. These dividend-paying stocks tend to exhibit less volatility and offer income that can help offset portfolio losses during downturns.
Final Considerations
While market forecasts predict an increased chance of recession, panic trading is not advised. Rather, regular portfolio reviews can help balance risk and opportunity. Building a recession-resilient portfolio typically involves diversifying across assets that offer safety, income, and stability.
Investors should also remain mindful that no investment is entirely risk-free, and professional guidance tailored to individual circumstances is invaluable.
This article was written by Kate Stalter, CFP, and reviewed by Rachel McVearry, with information current as of April 13, 2026.