What Does a Recession Proof Portfolio Look Like?

What does a recession proof portfolio look like? Most economists agree that we are officially in a recession. Your portfolio, if heavily exposed to stocks, has probably taken a hit. So, how can you recession proof your portfolio?

Recession Defined

What is a recession? A recession is most commonly defined as two consecutive quarters of declining GDP growth. Recessions are widespread and significant downturns in economic activity that usually are accompanied by declines in economic output, consumer demand, and employment.

Some Recession Proofing Tips

Diversification is good practice in any climate, but having your investments spread across multiple sectors and asset classes can help lessen the blow of a market downturn.

Real estate can offer some shelter from a recession if you are able to buy right. If you have enough cash to buy a property free and clear, then it could be a good cash flowing asset for you even if the market is falling. Use caution, however. Real estate isn’t for everyone, and you have to know what you’re doing. Buying in bad areas or in areas with high unemployment rates could mean extended periods of vacancy.

Not all companies are created equal. During a recession, companies in utilities, healthcare, and consumer staples often outperform the rest of the market. Adding companies such as grocers, dollar stores, and utility companies can help you weather an economic storm.

Stick to larger blue-chip companies that are established and have the capital to weather a downturn. These companies can be particularly attractive because many of them pay dividends and their share prices tend to be sable.

Weather the Storm

If your portfolio has any market exposure at all, then it will most likely take a hit during a recession. Even if you are diversified and invested in bell weather stocks you will still probably see some decline in your returns. Many people panic and sell low. If you follow suit you could miss the market rebound.

As tempting as it may be to sell when times are tough, the best advice is to keep investing and ride it out.


What does a recession proof portfolio look like? A portfolio designed to weather an economic storm will be diversified, include investments in recession proof industries, may include real estate, and will include blue chip stocks.

Beyond the types of investments to hold, the best advice is to ride it out and don’t sell when the market falls. Keep investing, weather the storm, and reap the rewards when the market rebounds.

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