Investing Strategies for a Recession

Consider dividend-producing stocks

In addition to dialing up your retirement contributions, a recession is also a great time to leverage different investing strategies. If guaranteed income is a priority, and for many it is, look to dividend-producing stocks. Some companies pay out periodic earnings to shareholders called dividends. This is on top of regular earnings. During a down market, these types of stocks could position you to continue to earn money, despite volatility. (And if you can reinvest them, all the better.) According to Siblis Research Ltd, the average dividend payment for U.S. stocks at the end of 2019 was 1.8 percent of the original investment.

Research which sectors are poised to grow

Another thing to think about are the sectors that are poised to stay active during and after the recovery. While this is impossible to predict with certainty, data shows some sectors have grown in this stay-at-home economy like e-commerce, food delivery, telecommuting services and the like. Healthcare services, particularly ones with remote capabilities like telemedicine, could be another sector that sees growth during the economic turnaround.

Invest in a diverse mix of stocks

Investing in a variety of industries should serve you when it comes to keeping your portfolio diversified, which helps mitigate risk. Going with exchange-traded funds (ETFs) and low-cost index funds, which can include hundreds of different stocks, also provide the opportunity to diversify and balance risk so you’re more likely to benefit from the eventual market recovery.

(This article written by: Marianne Hayes)

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