Worried about a potential downturn? With looming economic uncertainty, it’s more important than ever to build a resilient portfolio. From defensive sectors to safe-haven assets, here are the top recession-proof investments to help safeguard your wealth.
Is a recession coming in 2025? Given the ongoing trade war that has affected supply chains and manufacturing costs, many investors are concerned that an impending recession is under way. The Monetary Authority of Singapore has also stated that Singapore’s growth forecast has been downgraded to a more cautious 0-2% as a result of US tariffs, with manufacturing and financial services sectors expected to be hurt most.
However, economists say that the risk of a full recession—where full-year GDP shrinks—would depend on how trade talks go during the 90-day tariff suspension.
In any case, what can you do to prepare for the possibility of a recession? Long-term investors know the merits of keeping calm, staying invested, and dollar-cost averaging into the market. Now may also be a good time to take a closer look at your investment portfolio to ensure that it can hold up in a recession or hedge against potential inflation.
While no investment is 100% immune to an economic downturn, there are a few types that can hedge against recession and inflation.
Table of Contents
- Practical Tips to Weather a Recession
- Recession-Proof Assets to Consider
- High-Quality Stocks
- Investment grade bonds
- Gold
- A Caveat On Recession
- Bottom Line
Practical Tips to Weather a Recession
Economies naturally go through periods of expansion and contraction, reflecting changes in a country’s overall output and consumer spending over time.
A recession refers to a sustained slowdown in economic activity that can stretch over several months or even years. It is usually characterised by declining productivity, reduced business investment and profits, and rising unemployment rates.
But while economic downturns are tough to avoid, the impact on your investments doesn’t have to be. With the right moves, you can protect your savings, stay focused on your long-term goals, and even take advantage of market dips.
Here are five ways to strengthen your portfolio during uncertain times:
- Build a Safety Net First
Before doing anything else, ensure you have enough cash on hand to cover essential expenses. This prevents forced selling when markets dip and gives your investments time to recover.
- Stick With the Plan
Trying to time the market often does more harm than good. Staying invested and rebalancing regularly helps you stay on track and positions you to benefit from the eventual recovery.
- Invest When Others Retreat
Market downturns often present buying opportunities. If you have extra funds and a long time horizon, consider topping up your investments while prices are lower—just don’t dip into your emergency savings.
- Fine-Tune Your Portfolio
Use recessions to make strategic adjustments—not drastic changes. Focus on resilient assets like high-quality stocks, defensive sectors, and longer-term bonds that can better weather economic stress.
Recession Proof Assets to Consider
Global geopolitical tensions and trade conflicts will potentially lead to rising manufacturing costs, renewed inflationary pressures, and overall slowdown in consumption. It is therefore important to shore up on assets that are recession- and inflation-proof.
High-Quality Stocks
When the economy slows, not all stocks suffer equally. High-quality stocks—those of companies with strong balance sheets, consistent profitability, and steady cash flow—tend to weather recessions better than others. These companies typically have low debt levels, operate in essential industries, and exhibit lower volatility, making them a defensive anchor in uncertain times.
These businesses have the financial strength to maintain operations, preserve dividends, and even grow market share while weaker competitors struggle. Over time, this stability can translate into more consistent long-term returns with less dramatic swings in performance.
One way to gain exposure to high-quality companies is through Syfe’s Core Equity100 portfolio, which includes a quality tilt as part of its smart beta strategy. This means the portfolio strategically emphasises stocks with strong fundamentals—like high return on equity and stable earnings—alongside broad market exposure. It’s an efficient way to build long-term resilience into your portfolio without sacrificing growth potential.
By incorporating high-quality stocks into your investment mix, you can position yourself to better withstand market turbulence while staying aligned with your long-term financial goals.
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Investment Grade Bonds
Investment grade bonds are considered some of the safest investments during a recession. When economic conditions deteriorate, investors typically move their money from riskier assets like stocks into safe havens such as high-quality bonds. This “flight to safety” drives up bond prices, offering capital preservation and even potential gains.
Short-term and high-grade bonds are especially attractive in uncertain times because they carry lower default risk. They provide modest but steady, predictable returns, making them ideal for anchoring a recession-proof portfolio. They can also help smooth out volatility and provide liquidity when other assets are underperforming.
Syfe’s Income+ portfolio offers consistent, diversified income for capital preservation or appreciation. SRS-eligible, it requires no lock-in and no minimum balance. It provides a monthly payout of 5.0-6.0%, and a yield-to-maturity of at least 6.8%.
Gold
Gold has long been viewed as a hedge against economic turmoil—for good reason. It tends to hold its value, or even appreciate, when confidence in financial markets weakens. During recessions or periods of high inflation, investors often turn to gold as a store of wealth that isn’t directly tied to the performance of companies or interest rates.
Unlike stocks or bonds, gold is a tangible asset with intrinsic value. While it doesn’t generate income, it plays a strategic role in diversifying your portfolio. A small allocation to gold—typically 5–10%—can reduce overall volatility and act as insurance against extreme market events.
Investors can access gold through Syfe Brokerage or Syfe Core portfolios that include gold in their composition. Both offer liquidity and ease of access without any lock-in period or fees.
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A Caveat On Recession
While it’s natural to feel anxious when recession risks loom, history offers a reassuring perspective for long-term investors. Recessions may seem alarming, but their impact on the markets is often less predictable—and less permanent—than many fear.
Here are three things to bear in mind about a recession:
Recessions are usually short-lived
Since the 1950s, the average U.S. recession has lasted just over 10 months. Even the 2008 Global Financial Crisis—the longest in recent memory—lasted 18 months. Some, like the COVID-19 downturn in 2020, were as brief as two months. This underscores the importance of not making emotional investment decisions based on short-term economic turbulence.
Market reactions aren’t always negative
It’s a common misconception that markets always plummet during recessions. But S&P 500 returns during past 11 U.S. recessions have been split almost evenly—five showed positive returns, six posted losses. The average return during recession periods? A modest -1%. This variability highlights how difficult it is to accurately predict both the timing and impact of economic slowdowns on the market.
| Recession | S&P 500 | Gold | Oil | (DXY) | USD/JPY | GBP/USD |
| Nov 1973–Mar 1975 | -13.1% | 77.3% | 158.9% | -5.5% | – | 2.7% |
| Jan 1980–Jul 1980 | 5.7% | -9.1% | 21.5% | -0.1% | -4.7% | 3.3% |
| Jul 1981–Nov 1982 | 5.8% | 9.7% | -5.1% | 8.3% | 4.0% | -11.3% |
| Jul 1990–Mar 1991 | 5.4% | -3.5% | -5.1% | 5.6% | -3.2% | -6.6% |
| Mar 2001–Nov 2001 | -1.8% | 6.4% | -26.4% | -1.6% | -2.2% | 0.6% |
| Dec 2007–Jun 2009 | -37.4% | 11.1% | -26.6% | 4.5% | -13.7% | -17.1% |
| Feb 2020–Apr 2020 | -1.4% | 6.3% | -57.9% | 0.9% | -0.9% | 1.7% |
| Average | -5.3% | 14.0% | 8.5% | 1.7% | -3.5% | -4.3% |
| Best | 5.8% | 77.3% | 158.9% | 8.3% | 4.0% | 3.3% |
| Worst | -37.4% | -9.1% | -57.9% | -5.5% | -13.7% | -17.1% |
Downturns often pave the way for recoveries
For patient investors, recessions can actually be an opportunity. Historically, markets have tended to rebound strongly in the months following a recession. For example, during the Global Financial Crisis (2008–2009), the S&P 500 dropped over 50%—but fully recovered within five years and continued climbing to new highs. Similarly, after the COVID-19 crash in March 2020, the market rebounded sharply, with many indices hitting record levels within months.
This is why diversification and discipline are the best defenses against volatility. Investors who stay invested, keep emotions in check, and stick to a well-constructed portfolio typically fare better than those who panic-sell during market lows. Selling in a downturn locks in losses, whereas staying the course allows you to benefit from the recovery that eventually follows.
In short, recessions are part of the market cycle, not a reason to abandon your investment plan. With a diversified portfolio and a long-term mindset, you can ride out the volatility and position yourself to benefit from the rebound.
Bottom Line
Nobody knows what the future will bring, but now may be a good time to revisit your portfolio and include assets that can hold up in a recession or hedge against inflation.
Most importantly, remember that this too shall pass. Markets have recovered following every recession. In the meantime, lower asset prices could open up opportunities for long-term investors to invest more in quality companies with strong financial fundamentals.
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