Amazon founder and executive chairman Jeff Bezos is sounding the alarm.
In an interview with CNN, Bezos says the economy “doesn’t look good right now.”
“Things are slowing down. We are seeing layoffs in so many sectors of the economy.”
This means that you may want to tighten your budget.
“If you’re an individual considering buying a big screen TV, you might want to wait, hold your money, and see what happens,” recommends the billionaire. “The same goes for a new car, refrigerator or anything else. You remove just a little risk from the equation.
This is not a good sign for investors.
But not all businesses are the same. Some, like the three listed below, may be able to perform well even if the economy dips into a recession.
Not to be missed
The utility sector is made up of companies that provide electricity, water, natural gas, and other essential services to homes and businesses.
The industry isn’t glamorous, but it’s recession-resistant: whatever happens to the economy, people will still need to heat their homes in the winter and turn on the lights at night.
High barriers to entry protect the profits of existing service companies. Building the infrastructure needed to deliver gas, water, or electricity is quite expensive, and the industry is heavily regulated by the government.
Thanks to the recurring nature of the business, the industry is also known for paying reliable dividends.
If you’re looking for the best utilities stocks, the names in the Selected Sector SPDR Fund (XLU) of Utilities provide a good starting point for further research.
Healthcare is a classic example of a defensive sector due to its lack of correlation with the ups and downs of the economy.
At the same time, the sector offers significant long-term growth potential thanks to favorable demographic factors, especially an aging population, and an abundance of innovation.
Average investors may find it difficult to choose specific healthcare stocks. But healthcare ETFs can provide both a diversified and profitable way to gain exposure to the space.
Read more: Trade while the market is down: Here are the best investment apps to seize “once-in-a-lifetime” opportunities (even if you’re a beginner)
Vanguard Health Care ETF (VHT) offers investors broad exposure to the healthcare sector.
To tap into specific segments within healthcare, investors can look into names like iShares Biotechnology ETF (IBB) and iShares US Medical Devices ETF (IHI).
It may seem counterintuitive to have real estate on this list.
While it’s true that mortgage rates are on the rise, the real estate sector has indeed demonstrated its resilience in times of rising interest rates according to investment management firm Invesco.
“Between 1978 and 2021, there were 10 distinct years where the federal funds rate went up,” Invesco says. “In these 10 identified years, the US private real estate sector outperformed stocks and bonds seven times, and the US public real estate sector outperformed six times.”
Well-chosen properties can provide more than just price appreciation. Investors can also earn a steady stream of rental income.
But you don’t need to be a landlord to start investing in real estate. There are many real estate investment trusts (REITs) and crowdfunding platforms that can help you become a real estate mogul.
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This article provides information only and should not be construed as advice. Comes without warranty of any kind.