Depression-proof (or recession-proof) assets are investments that tend to hold their value or perform well during economic downturns, often characterized by low volatility and essential demand. Top assets include U.S. Treasury bonds, gold and precious metals, cash equivalents (money market funds), and defensive stocks in sectors like healthcare, utilities, and consumer staples.
"High-quality, investment-grade corporate bonds generally hold up well during a recession, because they are considered a safer asset in comparison to stocks, and their prices can actually increase while investors seek safety," says Farrell Liger, CEO of New York-based financial education firm Farrell Liger Inc.
5 Ways to Protect Your Money From a Recession
Best Investments to Recession-Proof Your Investment Portfolio
Many people who owned stocks that went down a lot would have been OK eventually, except they bought on margin and were ruined. The best performing investments during the Depression were government bonds (many corporations stopped paying interest on their bonds) and annuities.
During a recession, consider putting your money in a high-yield savings account, CD, money market account or bonds. A recession is usually defined as at least two consecutive quarters of negative gross domestic product (GDP) growth.
Diversification can protect you from the stock market crash, allocating your funds to multiple assets instead of investing all your savings in a single asset class. By investing in bonds, you lend money to the government or a company that agrees to repay the invested amount with interest.
The 10-5-3 rule is a simple guideline for long-term investment returns, suggesting 10% average annual returns for equities (stocks), 5% for debt instruments (bonds), and 3% for cash (savings accounts), helping investors set realistic expectations and build diversified portfolios balancing risk and stability, though these are historical averages, not guarantees.
To make $3,000 a month ($36,000/year) from investments, you need a significant lump sum or consistent, high-yield income streams, with estimates ranging from roughly $300,000 at a 12% yield to over $700,000 for stable Dividend Aristocrats, depending on your investment type, dividend yield, risk tolerance, and strategy. A simple formula is: Investment Needed = ($3,000 x 12) / Annual Dividend Yield.
How to Prepare for a Depression: Essential Food Items to Stock Up
The most popular safe-haven assets include gold, government bonds and defensive stocks, as they more consistently retain value in various economic conditions.
While everything else plunged in 2008, U.S. Treasury bonds did what they were supposed to do — maintain their value — and they even delivered handsome returns because investors' flight to quality increased the demand for (and thus prices) of Treasury bonds.
The "27.39 rule" (often rounded to $27.40) is a simple financial strategy to save $10,000 in one year by consistently setting aside $27.40 every single day, making it an achievable micro-saving habit to build wealth or an emergency fund. It turns the daunting goal of saving $10,000 into a manageable daily action, emphasizing consistency over large lump sums.
Recession-proof foods should have nutritional value—experts don't recommend you stock up on junk food just because it's affordable and shelf stable. Lentils, canned meats, oats, and pasta are not only long-lasting, they also provide whole grains and key vitamins and minerals.
That's the potential danger of withdrawing money early in retirement during market downturns. By selling low, you risk undermining your portfolio's longevity. However, with cash reserves, retirees can withdraw less money from their 401(k) during a market decline and instead use cash to cover living expenses.
Precious metals, like gold and silver, tend to perform well during market slowdowns. But since the demand for these kinds of commodities often increases during recessions, their prices usually go up, too. You can invest in precious metals in a few different ways.
Here are the best low-risk investments in 2025: