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Is a recession looming just over the horizon?
But sooner or later, the next recession will come, because the economy is cyclical.
Some investors, such as young adults, can ride out recessions and bear markets.
They can leave their money in higher-risk, higher-returninvestmentsand let the market dive and soar.
Other investors, such as those entering retirement, have less risk tolerance.
Utility stocks have a reputation for stability and strong dividends.
In the worst recession in living memory, utility stocks did fall in value.
As awful as that sounds, the S&P 500 fell by over 50%.
And thats leaving in all the defensive stock sectors that didnt fall as hard as others.
Many smokers buy cigarettes for stress relief which can drive sales up during recessions, not down.
Healthcare Facilities
Some investors come at healthcare from another angle: Real estate.
While REITs have the advantage of being more liquid, that liquidity comes hand-in-hand with volatility.
Private equity real estate investments come with little or no liquidity, and often with a long-term commitment.
But that often lets them ride outrecessions and market fluctuationswith no long-term losses.
Self-Storage Facilities
The Great Recession didnt just see stock markets collapse.
Real estate markets also fell face first, from residential to commercial to industrial.
All property types fell in value except one.
Because when residents and businesses downsize during recessions, they often want to keep their belongings.
Again, you’re free to invest in self-storage through either publicly-traded REITs orprivate equity syndications or funds.
They specialize in mobile home parks, and Ive invested with them myself through a real estate investment club.
Plus, avoiding ownership of the homes cuts down on maintenance and repair costs.
Even in an economy with alow unemployment rate, theres a waitlist for those units.
What would happen in a recession, when below-market rents become even more coveted?
Some investors also like properties accepting government rent money, as a protection against recessions.
Renters dont want to lose their vouchers by defaulting, creating extra incentive to stay current.
Or you might buy properties directly, although most investors have little interest in becoming a landlord.
Beware however that many multifamily investments do struggle during downturns.
Look for some kind ofadditional rent protectionif you want a buffer against recessions.
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