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How to Construct a Recession-Proof Portfolio

There may not be a guaranteed recession-proof investment portfolio, but there is a way to manage your investments so that you minimize loss and hopefully maximize gains. Some of the best options to consider when recession-proofing your investments are:

Invest in cash. For those who want to save their money and put it in a place where they earn interest but don’t risk much loss, putting funds into a Cash ISA is a good option. Though the Bank of England has reduced its interest rates dramatically and your return will be small, a little piece of mind sometimes goes a long way, especially during a recession. Invest in fixed-income bonds. Choosing to invest your money in fixed income assets like corporate or government bonds is another safe route to take during an economic downturn. You will have a consistent income stream from the bonds, and your investment is well-protected. Invest in healthcare companies. One area that remains relatively constant regardless of economics is healthcare. People continue to need medical services regardless of their income, so if you invest in healthcare, you are in a relatively safe investment situation. Buy a certificate of deposit (CD) at your bank. While CDs don’t earn high interest returns right now, they are still a way to invest your money that is safe and reliable. Take a few thousand pounds and put it in a certificate. The yield is definitely better than what you get in a simple savings account. Invest in products with National Savings & Investments. Whether you opt for solid bonds or index-linked savings accounts, you can feel confident that your investment is safe because NS&I investors are protected by the full backing of the HM Treasury. Whether you are rich or poor, NS&I’s products are diverse and reliable. Consider bottom picking IT. Even during a downturn, businesses and individuals need to use their PCs, and buying tech stocks at their bottoms will poise you in a good position to enjoy profits when the industry rebounds and enjoys exponential growth once again. Be sinful. Sin stocks, including those in tobacco and alcohol, are considered recession proof.  In the case of tobacco, addiction often proves to be a much stronger force than a dwindling paycheck. Put your money into your own health and peace of mind. The wisest place to invest your money during the recession is in yourself. If you put your health first and everything else second, you will survive these difficult times. You also need to take time to spend money on your mental health. Find ways to relax and release your mind from the stress and worry that tough times can bring. A healthy mind and body will see you through it all, and you will be better able to enjoy the good times when they return.

By investing in these stable and reliable sectors, you can ensure that you will get through the recession safely. You may not make double digit returns, but with some wisdom and caution, you can at least protect yourself and your investments.

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