The best strategy during a recession is to prioritize security and liquidity by building a robust emergency fund (3–6 months of expenses), paying down high-interest debt, and avoiding panic-selling investments. For growth, look to invest in high-quality, dividend-paying stocks or defensive sectors like health care and consumer staples.
Here's a look at some of those investments, along with some others that could mitigate the effects of a recession:
Be wary of investment pitches, job offers, or “side hustles” that promise fast, guaranteed money. Always do your homework. Credit might feel like a safety net, but it's a trap if used recklessly. Racking up big balances during a recession can bury you under high-interest payments.
Here is a summary of how you can prepare for a recession:
Some popular methods include starting a business, investing in stocks or mutual funds, or working from home. Starting a business can be a great way to make money in a recession, as long as you have a good idea and the ability to execute it well.
Consumer staples
If the United States were to enter a recession, the funds you have saved at a bank aren't at risk of becoming lost or inaccessible the same way they were during the Great Depression. There are many more laws and pieces of legislation that protect your money than in the 1930s.
Consultancy firm Deloitte predicts Canada will make it out of 2025 without hitting a technical recession.
Key takeaways
A few industries for potentially recession-proof jobs are health care, education, finance, law, and utilities. Some top industries that have fewer layoffs and reductions in force include the health care, legal, and essential services like public safety.
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.
For example, demand for luxury goods and services tends to fall sharply during economic downturns, as consumers focus on essential items and reign in discretionary spending. Similarly, businesses that cater to big-ticket items such as cars or holidays may also see a drop in demand as consumers tighten their belts.
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.
During the first half of a recession stage, core bond returns (i.e., Treasuries and investment-grade securities) are historically positive, while returns for high yield bonds, equities, and commodities are negative.
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.
This momentum looks to continue into 2026. RBC Economics identified six themes they will be exploring over the upcoming year: trade risks, demographic shifts, regional fragmentation, affordability challenges, monetary-fiscal dynamics and future economic opportunities.
Cash-rich households and savers.
If people hold cash or low-risk assets, they can buy shares, property, or businesses at discounted prices. Recessions often push asset prices down, creating buying opportunities. As Warren Buffet says. “Be fearful when others are greedy, and greedy when others are fearful.”
While the FDIC insures deposits up to $250,000, meaning your money is generally safe if a bank fails in a crisis, a legal mechanism called "bail-in" authority exists under U.S. law (Dodd-Frank Act) that could allow failing banks to convert large deposits into equity (essentially seizing funds to recapitalize the bank). Although not implemented in the U.S. yet, this "bail-in" concept has been used elsewhere, creating concern, though many experts believe regulators would prevent the system collapse it would cause. For typical accounts, deposits are protected, but large, uninsured amounts carry more risk in extreme scenarios, making diversification across banks a wise precaution.
During a recession, finances can be unpredictable, so it's important to spend wisely, avoid debt, continue saving and avoid making panic-driven decisions. With news of a possible recession coming, now is a good time to revisit your financial habits.
Millionaires are made during recessions because fear causes asset prices (stocks, real estate) to drop, creating "fire sale" buying opportunities for those with cash and financial knowledge, while innovative entrepreneurs launch businesses that solve new problems, leading to fortunes built on discounted assets and emerging trends, like Uber and Airbnb after 2008. Recessions clear out weaker businesses, allowing stronger, adaptable companies and investors to grow as the economy eventually recovers and prices rebound.
Northern Great Plains States Remain Most Stable.
North Dakota (1st) tops our list as the most recession-resistant state for a second time, thanks to a combination of high GDP relative to population size, ample government reserves, low unemployment, lower cost of living, and decent safety net coverage.