Amazon founder and executive chairman Jeff Bezos sounds the alarm.
In an interview with CNN, Bezos says the economy “doesn’t look good right now”.
“Business is slowing down. You see layoffs in many sectors of the economy.”
And that means you may want to tighten your budget.
“If you’re a private person considering buying a big screen TV, you might want to wait, hold on to your money and see what happens,” the billionaire recommends. “The same goes for a new car, refrigerator or whatever. Just take some risk out of the equation.
That is not a good sign for investors.
But not all businesses are created equal. Some, like the three listed below, may be able to perform well even if the economy goes into recession.
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The utilities sector consists of companies that provide electricity, water, natural gas and other essential services to homes and businesses.
The sector is not fascinating, but it is recession-proof: no matter what happens to the economy, people will still have to heat their homes in winter and turn on the lights at night.
High barriers to entry protect the profits of existing utilities. Building the infrastructure needed to provide gas, water or electricity is quite expensive and the industry is highly regulated by the government.
Thanks to the recurring nature of business, the industry is also known for paying reliable dividends.
If you’re looking for the best utility stocks, the names in the Utilities Select Sector SPDR Fund (XLU) provide a good starting point for further research.
Healthcare is a classic example of a defensive sector due to its lack of correlation with the ups and downs of the economy.
At the same time, the sector offers great long-term growth potential thanks to favorable demographic tailwinds – in particular an aging population – and high levels of innovation.
Average investors may find it difficult to choose specific healthcare stocks. But healthcare ETFs can be both a diversified and profitable way to gain exposure to the space.
Read more: Trade up while the market is low: Here are the best investing apps to seize once-in-a-generation opportunities (even if you’re a beginner)
Vanguard Health Care ETF (VHT) gives investors broad exposure to the healthcare sector.
To tap specific segments within the healthcare industry, investors can look to names like iShares Biotechnology ETF (IBB) and iShares US Medical Devices ETF (IHI).
It may seem counterintuitive to have real estate on this list.
While it is true that mortgage rates are rising, real estate has proven to be resilient in times of rising interest rates, according to asset manager Invesco.
“Between 1978 and 2021, there were 10 different years where the percentage of Federal Funds increased,” says Invesco. “Within these 10 years identified, U.S. private real estate outperformed stocks and bonds seven times and six times better U.S. public real estate.”
Well-chosen properties can cause more than just price increases. Investors can also earn a steady stream of rental income.
But you don’t have to be a landlord to start investing in real estate. There are plenty of real estate investment trusts (REITs) and crowdfunding platforms that can put you on the path to becoming a real estate mogul.
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This article provides information only and should not be taken as advice. It comes without any kind of warranty.