8 Recession Proof Stocks To Keep In Mind
Recession is one of the inevitable facts of life. There are two cycles involved in economics, a period of growth and a period of decline. A recession can be described as an extended period of a drastic decline in economic activity.
During recessions, many people lose their jobs, cars, and money.
A recession is as predictable as death itself. You know it is in the works but rarely can anyone tell you when exactly the market will take a plunge. That is the risk involved in the stock market.
While the volatile stocks such as penny stocks are guaranteed to give you losses, even the blue-chip stocks lose a lot of value.
You have to be smart about which stocks to keep, especially with all the chatter going around about an impending recession. Whatever you do, avoid the temptation to give up and stash your cash under your mattress.
Timing a stock never works, and hence you have to keep an eye on the bigger picture instead.
Some stocks always survive recessions. In fact, some even thrive under those circumstances. Here are some recession-proof stocks to consider investing in:
Not all commodities do well during recessions but some like food and precious metals are quite profitable.
Food for starters is a basic need and everyone needs to eat to survive. Hence, you can invest in food commodities like corn.
You need to get enough knowledge of the profitable precious metals and natural resources before taking any step. These include gold and silver.
Some of the best places to put your bet on are rental properties. People still need a roof over their heads and a place to call home when recession strikes. Sure the rent may go down during that time, but not by a large portion.
Utility Stocks And Funds
Utilities such as gas and electricity are among the hardest to ignore and live without.
In fact, most people would rather live without everything else except utilities. They are normally the last things people forgo when there is no cash flow. Because of this, it is a good place to buy stocks.
High-Quality Companies With Strong Balance Sheets
Strong companies tend to survive recessions. A company with hefty current and long-term assets and relatively few liabilities can typically withstand a recession.
Tobacco And Low-Cost Alcohol Stocks
As much as recessions bring with them cutbacks from consumers on various commodities, they do not necessarily affect the purchase of low-cost alcohol.
Everyone loves to kick back with a cold beer especially when things are going south. So when funds are tight, wholesalers enjoy some level of monopoly.
It is also the case because people look to smoking tobacco and drinking as stress relievers. Recessions are very stressful times for people so you can imagine the effect on sales.
Military & Defense Contractors
Ultimately, if there was ever a stock to take u or keep that is bound to survive a recession, it is one in the military department.
No matter how bad an economy gets, there is always a need for protection over the civilians. Because of this, these stocks remain steady.
Governments actually spend more on defense during recessions which translates to more money for you.
Health Care Stocks And Funds
Recession or not, healthcare is a necessity and people still get sick. Therefore, healthcare is one place that isn’t affected much by the recession.
Asthma and heart diseases, for example, won’t take a break because the economy has taken a nose-dive.
Some small businesses have proven to be profitable even during recessions and when looking at the bigger picture, these are definitely places you can bank your wealth on.
Some of the small businesses you can invest in include thrift stores, tattoo parlors, death care services, and movie theatres.