4 Timeless Investment Tips That Can Weather Any Storm

It’s been more than a decade since 2008’s Great Recession, but those who were invested in the stock market still remember how their funds plummeted in the immediate aftermath. Now, some economists predict that we could see another recession between 2023 and 2025—and turbulence from the COVID-19 pandemic isn’t exactly instilling confidence. For investors, this begs the question: How can you effectively protect your funds from a potential market downturn?

As with most investment issues, the answer is diversification. By making sure that you don’t put all your eggs in one basket — and looking into a variety of investment options — you can mitigate the impact of a recession while still having your money work for you.

1. Consider Low Risk Investments

While the stock market may offer higher returns in the long run, it is also vulnerable to things like politics, international disputes, and the state of the economy. As part of a sound investment strategy, you should consider putting some of your funds into low risk opportunities with a guaranteed rate of return. Such investment channels include money market accounts, high yield savings accounts, savings bonds, and certificates of deposit (CD). With the exception of savings bonds, these assets give you immediate access to your funds when you need them. However, selling a certificate before it matures—based on the period you chose when opening the account—means you will earn less interest. The primary benefit of these investment options is that you don’t risk losing any part of your initial capital.

2. Explore Fixed Index Annuities

Retirees are especially vulnerable when the stock market declines. One way to protect your cash flow in retirement is by purchasing fixed index annuities. These are tax-deferred, long-term saving options, and their returns are based on the performance of a stock market index. However, if the index performs negatively, your original deposit and any interest you make on it does not decline, which means that your funds are protected in the case of a market downturn or recession. On the flipside, growth on these accounts is capped, so they don’t offer high returns. They remain appealing to retirees since account owners can set up optional riders to provide guaranteed annuity payments for life.