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What to Do With Your Money in a Recession (The 2022 Recession is on!!)

The S&P 500 has dropped 8.8% in April. Down nearly 15% from the record highs just a few months ago. People are scared, the economy is slowing, there’s threat of a World War… Seems to me like the 2022 recession is beginning. So that leaves many of us with HUGE questions around what to do with your money in a recession!

  • What should you do with your money before the market crashes? 
  • What to do with your money in a recession
  • And, can you make money in a recession? How?

Let’s tackle all these questions and more in this post! 

Related: How You Can Prepare For The Next Recession (Even on a Low Income!)

What to Do With Your Money in a Recession (Dozens of ideas!!)What Is The Definition of a Recession?

Before we talk all about what to do with your money in a recession, we’d better take a second and pause to truly understand what we’re talking about here.

According to Investopedia

“A recession refers to a significant decline in general economic activity in a designated region. It had been typically recognized as two consecutive quarters of economic decline, as reflected by GDP in conjunction with monthly indicators such as a rise in unemployment.”

In laymen’s terms… you basically need to have a down economy for 6 months to qualify for a recession. So far, we’re roughly at the 5 month mark and it doesn’t look like the economy is ready to spike any time soon. Likely, we’ll see the depressed economy continue for at least the next few months.

So, are we in a recession now in 2022? Pretty close, but it seems like we’re not quite there.

What to Buy Before a Recession

What should you do with your money before we’re officially in a recession? Should you buy gold? Bitcoin? Should you just cash out all your stocks and keep your money in cash?

Where should you put your money before the market crashes?

How to hedge against a recession

If you’re looking to hedge against a recession, think about what people might need or want in the event of a long-term recession.

  • Many want money-of-old, ie. precious metals like gold, silver, etc. Or if you don’t want to hassle with heavy metals sitting in your basement, you could buy precious metal funds and ETFs
  • Invest in hedge funds – a way to passively hedge against a down economy (these funds are built to go up when the stock market goes down)
  • Invest in consumer cyclicals, ie. things that people will need to continue to spend money on like medical services, utilities, toiletries, etc.
  • Stock up on cash – this won’t lose any money while the market tumbles, and you’ll have cash ready for future opportunities as they arise.
  • Invest in US Treasury Bonds
  • Invest in yourself (a great time to improve yourself, take courses, or even get a college degree!)

Related: How to Buy US Treasury Bonds (…And Should You??)

Where to put your money before the market crashes

So what should you do with your money before a stock market crash? Should you really take money out of the stock market and move it to something like precious metals?

I’m not a big fan of extremes. Typically, the right answer in any given situation is to make slight shifts, and that’s what I recommend doing here as well. 

Does it seem like the stock market could take a further dive? Then maybe take 10%-20% out of the stock market and move it to something more basic, like treasury bonds, a money market fund, or cash. 

If you have experience with shorting the market and fully understand it, you could move your 10%-20% toward those efforts as well. 

BUT, should you absolutely take ALL of your money out of the stock market and buy up something completely different? Not likely. While sometimes the market moves fast and seems extreme, that doesn’t mean your response should be extreme as well. 

Related: The Worst Time to Buy a House (…Is It Now??)

What is the Interest on a Billion Dollars Per Year?How Can You Protect Your Money During a Recession?

What about protecting your money during a recession? What can you do to make sure you don’t lose MORE money these days?

Putting your money in cash is always an option, but then your cash actually loses money to rising inflation.

What else can you do to protect your money during a recession?

I personally like investing in an S&P 500 index fund like VOO. Sure, your money is still in the stock market, but it is spread across 500+ companies. And will every single one of those companies take a dive? Nope. Some of those stocks might actually go up! By investing in an index fund, you’re automatically diversifying your investment and protecting yourself from deep losses.

Another way to protect your money in a recession is through annuities. These are investments through insurance companies where they guarantee you a certain return on your money (something like 6% interest) and will also guarantee that you don’t lose money. Sure, you won’t cash in on those big market returns, but you also protect yourself from losing a bunch of money in those downswings!

One more simple way to protect your money and keep it liquid is through a basic checking account that pays a decent amount of interest. We currently earn 3% on our checking account (for balances up to $15,000) through our local credit union. It’s a pretty sweet deal with basically no risk!

Related: How to Invest in VOO (…And What Is It Really??)

Is It Good to Have Cash During a Recession?

Let’s explore this cash method. Is it good to have cash during a recession? What do you do with it? And aren’t you losing money to inflation?

Related: Hyperinflation in the United States – Is Your Money At Risk??

Is it good to have cash in a recession?

In March 2020, the stock market went down by over 30%. It just so happened that Liz and I had nearly $100k in cash for an upcoming build project (an addition above the garage). Instead of using that money for the build right away, we decided to repurpose the money.

First, since the stock market was already down substantially, we decided to start buying into VFIAX, an S&P 500 index fund.

We bought roughly $2,000 of that fund every two weeks (for nearly an entire year!) and dollar-cost-averaged our way back into the market.

Second, we decided to buy things that we needed for cash, like our Chevy Silverado. The seller was motivated to get rid of it and the fact that we had cash meant we got it for much cheaper since it made the transaction super simple and more definite vs. someone that would need to find financing. 

Related: Where to Put Your Money in a Recession – Here’s What We’re Doing

What to do with 10k for investingCash is king during a recession

This is absolutely true. Cash is king during a recession.

People are out of work, there’s an excess of stuff for sale on the market, and there are many motivated sellers out there that are trying to stay afloat during tough times.

If you have cash during a recession, you can…

  • Buy cars for cheaper
  • Get home projects contracted for cheaper
  • And, if you have enough cash, you can buy an entire house at a healthy discount!

Related: The Housing Market is Still Hot! Should You Sell Your House to Cash In??

Should You Pay Off Debt During a Recession?

Could it be smart to pay off debt during a recession? All those payments could be tough to pay if the recession means you’ll lose your job. What’s the best answer here?

Like we just mentioned above, I would first focus on saving up cash. At least 6 month’s worth of expenses, just to be safe in case you experience job loss. 

Beyond that, if you want to pay off debt because you’re worried about all those payments that you’re tied to, then absolutely. Start to pay off those debts during the recession!

Want some good tools for your debt payoff efforts? I’ve got a ton. Check out my Etsy page here – it’s full of digital excel tools that you can download on the spot.

Other great articles/tools for paying off debt:

What to Do With Your Money in a Recession

Let’s say we’re in a recession right now. The stock market is down, jobs are hard to come by, and people’s savings accounts are slowly diminishing. 

What if you have money during this recession? What should you do with it?

Where to put your money in an economic collapseWhere to put your money in an economic collapse

We actually touched on this a bit before.

If you’re in the midst of a recession, it’s often a good idea to slowly reinvest money back into the market into an S&P 500 index fund. History has shown that the stock market will bounce back, and to a higher value than before the recession!

It’s also a good idea to buy things that you need anyway, because it’s a great time to get them at a discount!

(A note for the readers: If the market doesn’t bounce back and it keeps going down to nearly nothing, your paper money will likely be worthless anyway…and we all have bigger problems than simply investing in the wrong thing. This isn’t a doomsday post. Therefore, we’re assuming the market will bounce back within a year or two of when the economic collapse began.)

Related: Should I Invest in Stocks If I Have Debt? (Maybe!!)

Where else do you put your money in a recession?

What else should you do with your money in a recession?

If I were you, I’d start looking at other opportunities that are at a discount. Things like:

  • Large businesses that may be hurting, but will thrive again when the economy bounces back
    • Golf courses
    • Car washes
    • Storage businesses
    • Gyms
    • Restaurants
    • Travel related companies
    • Vacation rental properties
  • Small businesses that may have been growing, but have been recently ignored
    • Mainly, I’m thinking about web-based businesses like blogs and e-commerce sites
    • These could also include simple businesses with solid list of repeat clients – think lawn care, cleaning, hair care, etc.
  • Collectibles
    • Look for someone that has a collection of valuables and buy the entire lot (again, cash is king in these situations!)
  • Land – this is a quick way for people to earn money if they’re hard up for it…sell a few acres of their land. You could get a great bargain this way.

Let your imagination take you away here. Think about what might be on sale during a recession and then keep your eyes and ears open!

Related: What To Do With 1 Million Dollars (Invest it? Pay off your house??)

Best place to put your money during a recession

We listed a ton of places where you could invest your money. But, where is the BEST place to put your money during a recession?

The easy answer — invest in the opportunity that you’re most interested in, with the lowest risk and the largest return.

It’s hard to say exactly what business or item it’s going to be, but if you will enjoy it, if the risk is low, and the potential return is high, then that’s the one for you!

What to do with your money during a recessionHow to take advantage of a recession

What if we’re in the heart of a down economy? How do you take advantage of a recession?

The key is to be ready in the first place.

Before a recession hits, you’re going to want to do the following:

  • Get out of consumer debt (everything except your home mortgage)
  • Build up a heft emergency fund (at least 6 months’ worth)
  • Have money put away for your kids’ private schooling and college
  • Invest heavily for your retirement
  • If it makes sense for you, pay off your mortgage
  • And finally, have cash set aside for unknown future opportunities

Once you’re in this spot, you’ll be looking forward to the next recession and the opportunities it brings!

Related: How to Invest 1 Million (…To Make Another Million!!)

Can You Make Money in a Recession?

The stock market goes down in a recession. Many people claim they lose their shirts when a recession hits! So how are there some that seem to make money? Can you actually make money in a recession?

How to make money in a recession

Absolutely you can make money in a recession. There are so many ways to do it! I’ll just be listing a few, but the possibilities are probably endless!

Here are the high-level ways for how to make money in a recession:

  • Invest in the stock market when they’re at their recession lows (I often invest in VOO, a Vanguard S&P 500 Index Fund), wait for the market to come back over time
  • Consider what caused the market to go down and invest in certain stocks that will benefit from the recession (like tech stocks in the 2020 stock market dip, since nearly everyone was suddenly working from home!)
  • Invest in a business that is failing, but you’re sure you can turn around once the recession is over
  • Invest in collectibles, artwork…physical pieces that will hold their value and rise again once the recession is over and the demand is there
  • Consider real estate and land. People sometimes get tired of these holdings and want to get rid of them. If you have the money, you might even be able to buy an entire lot of properties from a single investor that’s just looking for cash instead of physical assets.

Related: How to Become a Millionaire by 40 (It’s Easier Than You Think!!)

What to invest in during a recessionWhat to Invest in During a Recession

We answered this a bit in the sections above, so let’s touch on a few new investments here.

What investments do well in a recession?

So what investments typically do well in a recession? Let’s get more specific here and talk about actual companies and their stock values.

What specific stocks do well during a recession?

  • Lowes
  • Target
  • Kroger
  • Walmart
  • Dollar Tree
  • McDonald’s
  • Home Depot
  • NextEra Energy

These all make total sense. When a recession hits, people become more cost conscious. 

  • They spend less on what they eat
  • They spend less on what they wear
  • And, they even start doing a few DIY projects to save some money!

Businesses related to these personal behaviors will almost certainly benefit from the recession!

Related: How to Retire in 10 Years With a Million Dollars (It’s Possible!!)

Best investments during a depression

The best investments during a depression are the ones that are worth more than you paid for them at the purchase. (Investors call this “making money at the buy”)

In other words, if you find a bargain investment that’s worth $100,000 that you can pay just $80,000 for AND there’s a great chance that it will go up in value as the recession eases, then THAT’s a great investment!

If you’re looking for specifics on what to buy during a recession, look for deals on:

  • Real estate
  • Land
  • Businesses
  • High-value products (that the owners may need to sell to make ends meet)
  • Stocks that have large cash reserves that will likely rebound when the economy improves again

Related: What to Do With 50k (Some of These Can Make You a Millionaire!!)

Products in demand during a recession

What specific products are in demand during a recession? Learn this and it might lead to toward a great future investment!

work hard to have success in lifeTop products during a recession:

According to, these products sell well, especially during a recession!

  • Beauty, hair, and skincare products
  • Nutrition products, meal replacements, and protein powders
  • Sports and fitness
  • Home and cleaning essentials
  • Inexpensive entertainment
  • Pet care essentials
  • Food and beverages
  • Diapers and baby products

Want to make money during a recession? Pay attention to these products and industries!

Related: What Is The Interest on 1 Million Dollars? (…Is It Enough to Retire??)

Safest 401k investments during a recession

Alright, you want to know what to do with your money in a recession, but you don’t necessarily need to earn millions of dollars. You’re just looking to keep your money safe.

What are the safest 401k investments during a recession?

Investments within a 401k are often limited to just a few funds. 

The 401k investment options are usually:

  • An S&P 500 index fund
  • An International fund
  • Target Date funds
  • Bond funds
  • Stock funds (large cap and small cap — ie. big and small companies)
  • And, cash

If you’re super risk averse during the recession, you could invest your money into the cash option. However, realize that the stock market will likely skyrocket again, and you’ll earn nothing because your money is sitting in cash.


Bond funds are fairly risk-averse. These are simply debt-repayments from companies that have borrowed money and have issued bonds, promising repayment with interest. They’re more risky than government bonds, but with higher risk, you might also earn a higher yield.

Investing your moneyTarget Date Funds

These are funds that automatically lower your risk exposure as you get older. Often, they shift your investments from stocks to bonds as you get closer to retirement. While these funds help reduce your risk over time, they don’t do much for you during recessions (ie. they’re not shifting your money to reduce your exposure during the recessionary timeframe).

Stock Funds and International Funds

These funds are often a bit more risky and you often get charged a higher management fee as well. With the stock fund option, you’re typically invested in a dozen or so stocks, which still leaves you quite exposed in the market. The same is true for many International funds.

During a recession, these funds might bounce back with the economy, but sometimes they are lack-luster and earn you far less than you may have assumed.

Have caution when choosing these options. Be sure you know what you’re investing in…especially during a recession.

S&P 500 Index Fund

Still wondering what to do with your money in a recession? This is my go-to. 

  • The fees are low
  • You’re highly diversified, so it’s low risk
  • And, the track record on the S&P 500 is fantastic! Especially coming out of a recession!

Now don’t get me wrong, you still might lose money, but if you’re investing money for the long term (and that’s exactly what you should be doing in your 401k by the way), then the S&P 500 index fund is a pretty safe place to park your money while receiving excellent returns.

Want proof? 

Check this out. 

According to, the history of the S&P 500 index shows that the chances of losing money over a 10 year term are slim. And, the S&P 500 has never lost money over a 20 year term!

S&P 500: Average Annualized Total Returns:

  • 1-year: From -37% to 53.2%
  • 5-year: From -11.7% to 28.5%
  • 10-year: From -4.1% to 17.6%
  • 20-year: From 0.5% to 13.2%

Turns out that this investment could earn you 10% per year, and the chances of losing money over the long are basically non-existent! 

Related: How to Buy S&P 500 (…and Instantly Diversify Your Investments!)

Where to invest your money in a recessionWhat to Do With Your Money in a Recession: In Summary…

The message is simple. 

If you’re in debt, stash some cash into an emergency fund so you can protect yourself against job loss and financial disaster. 

If, however, you’re well off and have a pile of money in the bank, then you can really do two things:

  1. Take the passive approach and dollar-cost-average your way into the depressed market via an S&P 500 index fund. The index will likely rise and earn you a bunch of money as the economy firms up again.
  2. Take the active approach and start looking for below-market prices on real estate, land, collectibles, artwork, and businesses.

Recessions = Opportunity

When I was young, I didn’t understand that recessions were an investment opportunity and I therefore earned absolutely no money during those years. 

However, now that I’m older and wiser, I just can’t wait to capitalize on that next recession!

What will you do with your money in a recession? Will you be ready??

Grow Rich Investing Make Money Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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