7 Recession-Proof Industries to Protect Your Money


Recessions are part of the economic cycle. However, that doesn’t mean they have to be painful or destructive to our finances. Many industries survive and even thrive during economic downturns. The secret is finding these recession-proof industries.



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It’s unfortunate, but there’s simply no way to avoid recessions. We all have to go through them. Read on as we look at some of the best options for safeguarding and growing your money during recessions, from everyday purchases to real estate.

How to invest with a recession on the horizon

When you think about it, a recession is always coming, even in the strongest economies.

However, at times like these, even average investors can recognize that the recession is coming sooner rather than later. The exact way to invest with a looming recession will depend on your age, risk tolerance, capital and other factors.

However, almost all investors can benefit from getting out of riskier industries and those that do best in thriving economies. Your money can wait out tough times in tried and true sectors of the economy that may not grow as fast in good times, but hold more value in bad.

This is crucial to understand as a vital part of planning for your financial future.

What makes an industry recession proof?

There is no simple definition for a recession-proof industry. But these economic sectors tend to share one main thing in common: their demand is not a function of business growth or consumers with lots of money to spend. Instead, they leave their mark because of their integral role in American life and our economy.

Their value simply comes from the fact that we all have to use them in good times and bad.

That stability might not be the most exciting thing when stocks are soaring and innovative new companies are hitting the market every week. But it’s invaluable when massive changes are shaking up many wallets.

On the other hand, some industries are more than recession-proof. They are practically in recession…friendly! When people experience financial difficulties, their behavior and purchasing patterns often change. They may opt for cheaper brands at the supermarket or shop in stores focusing on low price rather than quality.

They may also seek stress relief from entertainment or chemical sources. All of these types of industries can see remarkable growth during times of recession.

The best recession-proof industries to invest in

So now that you know what makes a good recession-proof industry, you might be wondering which sectors of the economy fit the bill. Listed below are the best options to help preserve and grow your capital during tough times, so you’ll be set up come retirement time.

Groceries and food

We all have to eat, whether the economy is booming or down.

While many people may change the exact type of food they buy, their overall spending at the supermarket or grocery store won’t change too much in most cases. However, some people may even increase their spending on groceries as they cut back on expensive meals and fast food.

Naturally, high-end supermarkets like Whole Foods may see more declines than budget-focused ones like Aldi. Still, grocery and food stores and suppliers in general are one of the most stable sectors of the economy as we return to good economic conditions.

Makeup and Cosmetics

This is so well known that there is even a term: the lipstick effect.

This pop economic concept refers to increased purchases of lipstick, makeup, and other cosmetics during times of economic and financial stress. The reasoning is that women who are worried about their finances, but still want to treat themselves to a low-cost purchase, often turn to makeup as a way to feel a little better about feeling held hostage by their finances. . Some say that buying makeup is to “scratch the shopping itch.”

Looking your best can often be a healthy way to feel good during stressful times.

But contrary to what you might expect, the research didn’t find that women were opting for discount or store-brand versions of products, sticking to popular brands.

Alcohol, tobacco and drugs

Obviously, this represents the darker side of recession-proof investing.

There’s no avoiding the fact that recessions lead to job losses, foreclosed homes, struggles to pay the bills, and other financial stresses. These can be difficult to deal with for many people who are already struggling to cope. Many turn to chemical aids to relax and cope.

Recessions often see comparatively small increases or decreases in demand for alcohol, tobacco, and legal drugs. Anyone who has had a beer after a hard day knows why. It can feel good to get away from trouble for a bit.

Regardless of your personal feelings about these industries, it’s clear that they maintain a strong economic position. This is true no matter if we are in a recession or a boom time. Unlike many previous recessions, legal marijuana is also available as an investment industry. Many states have legalized it for recreational or medical use since the last great recession in the late 2000s.

utilities

Your utilities might not be the sexiest or most exciting sector to think about investing in, but utilities are a great option to weather recessions.

However, they’re about as stable as things come, as we typically don’t adjust our uses of electricity, water, or other utilities too much, regardless of what the economy is doing. This means fewer surprises, which may be exactly what many investors are looking for.

Most offer solid dividends that can also provide income. Utilities can also benefit from tougher economic times because, with interest rates generally falling, they can borrow more cheaply to expand or maintain their systems. They also tend to be highly regulated, avoiding major new competition.

Health care

Healthcare is one of the most cited recession-proof industries.

People are thought to always get sick and will rarely avoid necessary treatment. When it comes down to it, health is one of, if not the most important thing for many people.

Part of the reason health care is so recession-proof has to do with the way most Americans pay for it, with insurance footing most of the bill. So they are insulated from the real global cost, whether the economy is booming or busting.

Real estate wholesale

Real estate wholesaling may not seem like a recession-proof industry. But in reality, it may be one of the best! This is due to its low-risk, high-reward nature.

A real estate wholesaler helps connect motivated buyers and interested sellers.

First, wholesalers reach out to homeowners who often don’t even have their home on the market, who are looking to buy homes that are typically older or in need of renovation. Then, once they’ve found a willing seller, they contact a pre-assembled list of buyers who are interested in that type of property, usually real estate investors.

To connect these two sides of the transaction, wholesalers usually have a small difference. This can range from a few thousand dollars to tens of thousands. In many states, they are never required to take possession of the home themselves.

Wholesaling real estate can thrive in good times (when people still need to sell old, run-down homes) and in bad times, where struggling homeowners may need a quick, no-questions-asked way to get cash in return of a house that might not sell quickly in the traditional market. Therefore, wholesalers and those who invest in them can be sure that they can make money in all economic conditions with hard work and good systems.

insurance

Insurance can be a good investment in times of recession in two ways.

First, like many other industries mentioned above, demand for insurance does not fall as sharply during bad economic times. Some insurances are legally required, such as car insurance.

Products like life insurance may seem more important than ever with the troubled economy. Like utilities, regulations also prevent start-ups from moving in quickly to disrupt the industry.

From another perspective, you can also invest in insurance products that are customized directly for you and your investments. Experienced companies like Hamilton Insurance Agency can work with you to size your financial situation and manage your risk. Not only will you improve your wallet, but you’ll also sleep better at night.

Recession-proof industries: The best places for your money in rocky economic times

We cannot avoid recessions. But with a little planning and a little knowledge, you can weather the storm and even come out stronger than ever.

It’s all thanks to the magic of recession-proof and recession-resistant industries. It could be consumer staples like food and cosmetics or more outside-the-box options like real estate or wholesale insurance. Regardless, there are plenty of options for portfolios and risk tolerances of all varieties.

It pays to spend some time figuring out your plan for the next recession. That way, you’ll be prepared no matter what the economy throws at you.

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