19 areas to invest in during a financial crisis

The United States is officially in recession after a long period of growth. The coronavirus pandemic has shut down millions of businesses and cost millions of Americans their jobs, plunging the economy into a rapid and severe downturn. But just because we are in the middle of a financial crisis, that doesn’t necessarily mean you need to stop investing.

I’ve spoken to a number of financial experts and business leaders to find out the best places to invest your money right now. If you have long-term goals and can hang in there until the next recovery, consider investing in these areas.

Last updated: September 15, 2020

Technology

Michael Gleason, CEO of ATM.com, recommends investing in technology right now.

“Personally, I’m betting more on technology than ever before, and I think a good percentage of new customers acquired by companies based on COVID cocooning will remain,” he said. “Products like Slack and Twilio, for example, benefit from a work-from-home environment, as do Amazon and Netflix. “

Distressed credit

“Opportunities may exist with well-resourced and experienced distressed credit investment managers,” said Alex Hart, Managing Director of Pathstone. “These managers will have a greater set of opportunities as over-indebtedness or weaker companies have to restructure to survive.”

Travel

Don’t expect to see immediate returns on travel investments, but it could pay off in the long run.

“If you have a higher risk tolerance and a longer investment timeframe, the potential benefits of hard-hit stocks can be significant,” said William Richards, Founder and CEO of EasyRedir Inc. “In the case of the recent COVID crisis, travel – related businesses have been hammered – and rightly so. If you think these industries will come back and you have time to wait, you can buy these businesses at big discounts. “

Areas

“Domains, especially .com, are always a solid investment during a financial crisis,” said Adam Torkildson, founder of Small Business Sense. “Historically, the secondary market for domains has always been strong during every recession since domains were first available.”

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Real estate

“Real estate continues to be a strong investment strategy,” said Jason Powell, real estate and securities lawyer at EstateInvesting.com. “The market has remained strong with prices continuing to rise, making it a good place to invest your money for the long haul.”

Start-up crowdfunds

Invest in companies that help us adapt to pandemic life, said John Rampton, founder of Calendar.

“Crowdfunding programs are a good way to help startups that develop innovative products and services to work and live in this new ‘normal’,” he said. “You get a glimpse of what’s to come and who can become a candidate for an IPO by doing so. Additionally, if you invest in equity crowdfunding programs, you can get a financial return by supporting those startups as an investment.

Small local businesses

“While this might not be the traditional investment you think of, the best thing you can do is keep investing in local small businesses,” said Chalmers Brown, CTO at Due. “In doing so, you may be keeping their doors open and putting money back into your local economy, giving it more life even in the aftermath of a financial crisis. Your return is to strengthen your local economy, which can help you maintain your other investments, like the value of your home.

Hard raw materials

“For these doomsday preparers, hard commodities like gold, silver and platinum become a sanctuary for many investors in times of crisis,” said Anthony Denier, CEO of Webull Investment.

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Basic consumer products

Denier also recommends investing in companies that produce basic consumer goods.

“Consumer staples have proven to be a safe haven during times of uncertainty as people still buy soap and toilet paper,” he said.

Health and biotechnology

“Healthcare and biotech companies tend to perform better in times of economic downturn given the nature of their inelastic business,” said Doug Heske, CEO of Newday Investing. “We have already seen significant capital flows into biotech, research and healthcare companies, and we expect the flow of capital to continue for the foreseeable future. As the human population grows from 7.5 billion to 11 billion by 2100, additional pressures will be placed on our ecosystems. We will need to develop new technologies that have a positive impact on people and the planet, and healthcare and biotechnology will be an important sector during and after the recession. “

Agriculture

“Farm investments are not correlated to the stock market, so even during market corrections, they can perform well,” said Chris Rawley, CEO of Harvest Returns, an agriculture investment platform. “Plus, during a recession, food consumption continues, so businesses that produce and process food can maintain cash flow. “

Oil and energy

If you’re willing to take risks, investing in oil and energy could be a successful investment, said Barbara A. Friedberg, investment expert and owner of Robo-Advisor Pros.

“The recommendation assumes that over time the global and US economies will return to normal and that driving and oil consumption will resume,” she said. “When that happens, oil and energy companies should rebound. To play out this scenario, you can invest in an oil and energy ETF like iShares Global Energy ETF (IXC). Although down 35% year-to-date when the economy recovers, I expect investors to benefit from this investment. One caveat is that there may be more pain before a rollover.

Self-service storage

“I think one of the best things to invest in right now is self-storage,” said Alina Trigub, Managing Partner at SAMO Financial. “As the recession hits, people usually start to lose their jobs and downsize, but rarely want to get rid of their belongings. This is when warehouse occupancy rates increase. With unemployment being incredibly high these days, downsizing will have an impact on many people. And the spillover effect will in turn create additional opportunities to serve people looking to store their possessions for many years to come. “

Income generating assets

“While not completely immune to inflation, investing in industries and assets that will continue to generate income – that is, rentals – is a good way to receive some amount of predictable income stream, especially during times when many assets will suffer, ”said James Richman, CEO and CIO at JJ Richman. “While appreciation in value may be delayed during a recession, it is not necessarily as volatile as other asset classes.”

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Industries that fall within your “circle of competence”

Richman advises against investing in sectors that you don’t know much about, especially in times of volatility.

“It is much easier to understand the industries you have been exposed to rather than trying to decipher new and upcoming industries in which you may not have exposure or expertise,” a- he declared. “If your retirement is at stake, it’s best to leave the ‘speculation’ to the experts and focus on the areas you understand best so you can easily follow the progress of your investments. “

Low-debt or manageable businesses

“Since the market liquidation, the best performing stocks are companies that have an AAA rating for their debt, followed by stocks with an AA rating, an A rating, a BBB rating and so on,” Matt said. Fox, CMT, Founder and Wealth Advisor at Ithaca Wealth Management. “The worst performing stocks are those that are indebted and whose activities have been negatively affected by the virus. “

“Focus on executives who can adapt quickly to the virus and who haven’t seen their business or their track record wiped out by COVID-19,” he continued. “The companies that come to mind are primarily in the tech and healthcare industries and include Microsoft, Apple, Adobe, Nvidia, Stryker, and Merck. “

Dividend stocks or index funds

“For now, I think investors should consider reducing their exposure to day-to-day trading volatility and focus on longer-term stocks like dividend stocks or index funds,” said Milind Mehere. , founder and CEO of Yieldstreet.

Your retirement and savings

Remember to invest in yourself and your future before you put money elsewhere.

“It’s important to keep investing by putting money into retirement accounts, emergency funds and savings accounts,” said Jayson DeMers, founder of EmailAnalytics. “This money continues to pay off on these paid accounts. It might be small amounts during a financial crisis, but it’s better than spending it or not investing.

Always diversify

No matter where you choose to invest during this recession, it is important to spread your investments across a number of different assets and areas.

“Continue to diversify stocks and other investment vehicles so that you can manage your risk during what can be a volatile time in the midst of a financial crisis,” said Steve Gickling, founder of ETLrobot. “It will help you balance volatility. Even if you take losses, some of the more conservative investments in your portfolio can absorb this downturn. “

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Gabrielle Olya contributed reporting for this article.

This article originally appeared on GOBankingRates.com: 19 Areas To Invest In During A Financial Crisis

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