Last Updated on November 5, 2026 by TMB
When most of us think of recessions, we don’t imagine positive financial outcomes. After all, recessions are associated with job loss, loss of homes, and then a world of despair. The key thing to remember is that there is always an opportunity to make money even in the worst of times.
During recessions, hiring, starting businesses, and economic development slow down, if not cease entirely. This might have you thinking that there’s nothing worthwhile to invest in during recessions.
Technically, this is not the case. During recessions, certain investment categories are actually doing very well and would be a good option to invest in. On top of this, certain investments are essentially recession-proof, meaning they are largely unaffected by recessions. We’ll explore some of these as well as how to make the most of them in this article.
Consumer Staples:
Broadly speaking, consumers have certain products that are considered staples of the household. These are products that are needed to function in everyday life and beyond personal preferences. For example, humans need salt to have a healthy diet and recession or not, this is virtually non-negotiable. Drinking water, fruit, staple foods like potatoes and bread, and so on are needed at all times.
So, if you’re looking for investments to make during the recession, you might want to look into some of these. Businesses that sell these products usually continue to thrive in a recession, or if not, at least remain profitable. There is a caveat to this, however, as luxury versions of staple goods might see a decline during recessions. Your fancy luxury toilet paper might see a dip in purchases, but your standard two-ply roll will continue to see patronage.
Bonds and Treasuries:
During any recession, one of the biggest concerns among consumers is which stocks to invest in. This is very tricky, as during a recession, the stocks of even some of the most dependable companies can see a significant decline. What does tend to retain value, however, are government bonds and treasury bills.
Government treasury bills have always been recommended as a great option for investors with a low risk appetite. Generally speaking, they have lower returns than stocks and shares, but are very dependable. Because they are backed up by the government, there is less concern about a corporation going under. In the case of a recession, government treasuries often see an increase in value as investors move their money into them to avoid the volatility of the market. If you’re trying to invest in a recession, you might want to do the same.
Gold and Precious Metals:
There’s a reason gold and other precious metals have remained stores of value for centuries. Stocks, bonds, and other investment vehicles might see changes in their value, but that of precious metals has held from one generation to the next.
From pirates keeping gold on their person in the case of an emergency to women receiving gold as dowries when they marry, and wealthy individuals buying gold bars as a store of value, it has been dependable for generations. During the recession, precious metals continue to hold their value, and so, if you’re concerned about the potential impact of inflation, you might want to look into some of these precious metals.
It’s also worth noting that you can invest in them in many ways. Some people buy physical gold bars to keep in secure storage; some people buy large wearable jewellery pieces and have those double as both personal style and financial investment. Some even invest in gold indirectly using services like digital papers. Using them, you don’t have to physically hold any gold or have ownership in bars. Should a recession occur, your wealth will largely retain its value.
Healthcare:
Healthcare, just like consumer goods, is one of those things that humans need regardless of the state of the economy. People might not be able to buy homes, but they have to keep themselves alive and healthy one way or the other. This means that the healthcare sector is largely unaffected by recessions. Anyone looking to find recession-proof investments, this is generally a good idea. Investing in pharmaceutical companies, medical tech, hospitals, and so on is almost always going to yield some return on investment.
This is doubly true as medical innovations continue to evolve, and now, consumers spend more on their health than ever before. Whether before, during, or after a recession, investing in healthcare is generally highly advised.
Utilities:
Once again, people can’t live without large homes or fancy luxuries, but utilities will be the last thing they cut from their budget if they can help it. Think of things like electricity, water, gas, and so on. Utilities are at the baseline of our needs to live comfortably as humans, and so, they will continue to turn a profit. During a recession, energy companies, water companies, and so on continue to stay above board and so would be a good option to invest in.
Micro-Luxuries
This is a rather interesting category because it has to do with something called the lipstick effect. This is a term coined by Leonard Lauder, the former chairman of Estée Lauder. According to him, the early 2000s recessions saw an increase in sales of the company’s luxury lipsticks. Usually, you would expect that people would buy fewer luxury items during a recession. But what he observed was that when people were going through times of financial hardship, they often clung to their small, ultimately inexpensive luxuries.
A person might be dealing with a foreclosure and might take comfort in their slightly overpriced coffee every Sunday. They might be dealing with uncertain job security moving forward, but crave the comfort of their $30 lipstick.
Humans’ and their need for comfort often through their material possessions, continues even during the recession and offers an investment opportunity for you. You might want to invest in a few smaller luxuries, as these may continue to turn a profit. The trick, however, is to find the right type of luxury to invest in. It’s a balancing act between something that is nice enough to feel like a treat, inexpensive enough to not break the bank, and accessible enough that the consumer can buy it on impulse. But if you can crack the code and find these things, you can take advantage of this.
Caution When Investing During a Recession
While they are certainly investment opportunities, even during recessions, you still have to take many precautions.
Invest a Reasonable Amount
It goes without saying, but you should never invest any amount of money you cannot comfortably lose. Even in the best of times, you should not be investing the money you need for your housing, upkeep, or medical care. This is doubly important during a recession, as it will be harder to recoup the funds if you lose them.
Pay Yourself First
A recession for many consumers essentially means going into a financial hibernation, where only the most important things will stay. Even as you want to explore your investment opportunities, make sure your basic bills are taken care of and that you have 3 to 6 months of living expenses saved up. Once your financial boat is steady without any leaks, you can then look into taking some investment risks.
Watch Your Timing
Making money or losing money in the recession can often boil down to timing. Exiting the market before it starts to recover means you might lose out on a lot of money. Similarly, not leaving at the right time means you might compound losses. Ultimately, you’ll have to do a ton of market research to make sure you are on the right track.
Apply Caution
Of all the categories we’ve listed, healthcare, consumer staples, and utilities are perhaps the safest bets you can invest in. It’s a roll of the dice for small luxuries, but as we’ve said, people will always need their basic utilities and healthcare. Similarly, it’s best to go for bonds and treasury bills if you don’t want to have a lot of risk. Being cautious as you invest is generally advised, but even more so during recession times.
Conclusion
A recession does not have to mean the end of all your investment activities. As we’ve explained in this article, there are several investment categories that actually thrive during a recession or at least remain stable. From investing in consumer staples to healthcare to offering micro luxuries, you can make sure that your money is tied up in products and services that consumers will buy recession or not. Of course, all of these should be done cautiously, to avoid losing money you cannot recover from and limiting the financial impact of a recession
