The onset of a recession often incites a shift in conventional investment strategies. It’s a time where you may want to consider unconventional investments to balance the volatility and uncertainty in the market. Here are a few such strategies that are designed to perform well across all economic conditions:
- Gold: This precious metal is often viewed as a safe haven during periods of economic distress. Gold tends to retain its value over time and can act as a hedge against inflation and currency devaluation.
- Defensive Stocks such as Healthcare and Consumer Staples: These sectors tend to be less impacted by economic downturns as people continue to require healthcare and basic goods, making them potentially resilient investment options.
- Inflation-Protected Securities: These are bonds that increase in value with inflation. In India, these are issued by the government and provide a hedge against inflation risk.
- Real Estate: In times of low-interest rates, which often occur during a recession, real estate can provide decent returns through rental income and potential capital appreciation. However keep your allocations in check since over longer periods, stocks tend to outperform real estate.
- Sovereign Gold Bonds (SGBs): These are government securities denominated in grams of gold. They provide an alternative to holding gold in physical form and offer an interest rate on the invested amount.
The principle behind these strategies is to balance risk and reward, making them an “All Weather Portfolio”, by spreading investments across assets that perform well in different economic conditions.
There could be other unconventional and ‘risker ideas’ such as commodities or cryptocurrencies but these are not for all; one is cautioned not to invest more than what they are willing to lose.
Please note that every investment comes with its own set of risks and it’s crucial to thoroughly research and consult a financial advisor before making such decisions.
