Amazon founder and executive chairman Jeff Bezos is sounding the alarm.
In an interview with CNN, Bezos said that the economy “doesn’t look good right now.”
“Things are slowing down. You’re seeing layoffs in many, many sectors of the economy.”
And that means you might want to tighten your budget.
“If you are someone who is considering buying a big screen TV, you might want to wait, hold on to your money, and see what happens,” the billionaire recommended. “The same is true with a new automobile, refrigerator, or anything else. Just take some risk out of the equation.”
That’s not a good sign for investors.
But not all businesses are created equal. Some – like the three listed below – might be able to do well even if the economy falls into a recession.
The utility sector consists of companies that provide electricity, water, natural gas and other essential services to homes and businesses.
The sector isn’t glamorous, but it’s recession-proof: No matter what 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 utility companies. Building the infrastructure needed to deliver gas, water, or electricity is expensive, and the industry is highly regulated by the government.
Thanks to the recurring nature of business, the sector is also known to pay serious dividends.
If you’re looking for the best utilities stocks, names in the Utilities Sector SPDR Fund (XLU) provide a good starting point for further research.
Healthcare serves as a classic example of a defensive sector thanks to its lack of correlation with the ups and downs of the economy.
At the same time, the sector offers a lot of long-term growth potential due to favorable demographic headwinds – particularly an aging population – and a lot of innovation.
Average investors might find it difficult to pick specific healthcare stocks. But healthcare ETFs can provide both a diversified and profitable way to gain exposure to the space.
Read more: Trading while the market is down: Here are the best apps for investing in ‘once in a generation’ opportunities (even if you’re a beginner)
The Vanguard Health Care ETF (VHT) gives investors broad exposure to the health care sector.
To get into specific segments of healthcare, investors can look to names like the iShares Biotechnology ETF (IBB) and the iShares US Medical Devices ETF (IHI).
It may seem counterintuitive to have real estate on this list.
While it is true that mortgage rates have been on the rise, real estate has actually demonstrated its resilience in times of rising interest rates according to investment management company Invesco.
“Between 1978 and 2021, there were 10 different years in which the Federal Funds rate increased,” Invesco said. “In the 10 years identified, U.S. private real estate exceeded stocks and bonds seven times and U.S. public real estate exceeded six times.”
Well-chosen properties can provide more than just price appreciation. Investors also get to earn a steady stream of rental income.
But you don’t need to be a homeowner to start investing in real estate. There are many real estate investment companies (REITs) as well as crowdfunding platforms that can get you started as a real estate tycoon.
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This article provides information only and should not be construed as advice. It is provided without any warranty.