Personal Finance

Worried about a recession? Where to pick up the best returns outside of the stock market

By August 16, 2019 No Comments

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“Stock market gets ugly.”

“The next recession is going to be brutal.”

“Markets in turmoil.”

Headlines of late on the direction of the economy — or, perhaps closer to home, your 401(k) balance — might have you on edge.

Breathe. It’s O.K.

If you haven’t already done so, you can always shift some of your money away from equities — sent tumbling by President Donald Trump’s tweets one day and Germany’s finances the next — and into places where returns are not eye-popping but steadier.

Safe havens like bonds and certificates of deposit can protect the large gains investors have seen over the last decade should the market keep losing ground. And there’s a lot to lose: Since 2009, the S&P 500 is up more than 290%.

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“People are not saying ‘Gee the stock market has gone up for 10 years and I’ve had a good ride; maybe I should go somewhere else,'” said Richard Bernstein, a former chief investment strategist at Merrill Lynch who now runs his own firm.

They should be, Bernstein said. His firm recently reduced its equity holdings, he said, to around 55%, from 75%.

How much you should turn up the safety lever on your portfolio, though, should be less about the latest recession risks and more about your age and your financial goals. (See: Should you really do nothing amid market volatility? It depends on whether you’re 27 or 63.)

That said, here are some options to consider if you want decent returns and less anxiety.


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Bonds are a good option for investors interested in “capital preservation,” Bernstein said.

Over the last five years, the Fidelity U.S. Bond Index Fund has had an average annual return of 3%. And over the last decade, the fund lost value in just one year — a 2.19% dip in 2013. The Vanguard Total Bond Market Index fund, for its part, has had an average return of 3.69% over the last decade.

Municipal bonds have been doing particularly well recently. The average return this year, so far, is 4.5%, according to Morningstar. 

“Bonds can create that protection to offset the swings in comparatively risky investments such as stocks and derivatives,” said Laleh Samarbakhsh, a finance professor at Ryerson University.


An employee arranges one kilogram gold bars at the Perth Mint Refinery in Perth, Australia, on Aug. 9, 2018.

Carla Gottgens | Bloomberg | Getty Images

Unprecedented levels of uncertainty has caused gold to outperform both stocks and bonds over the last year.

“It’s performed great,” Bernstein said. Indeed, an ounce of gold is worth around $1,500 today, compared with $1,200 a year ago.

And putting just 5% of your portfolio in gold can do a lot to carry you through market plunges, said Joseph Foster, manager of the Van Eck International Investors Gold Fund. “A small portion hedges against a larger portion of your portfolio against financial risk,” Foster said.

And he said the good times for gold could continue: “We’ll see gold much higher than it’s today if we go into a global recession.”

Keep in mind that gold is a very volatile asset. Over the last three years, the VanEck International Investors Gold Class C lost an average of 4% a year. So far in 2019, it’s up 36%.

Savings accounts and CDs

You can pick up decent returns in certain savings accounts and CDs.

“It’s important to shop around because not everyone pays the same rates,” said Greg McBride, chief financial analyst at personal finance website

Bankrate ranks the most generous offers and you can search by zip code. CDs can also be worth a look. You can search for the best options at

Bank CDs and savings accounts are subject to protection from the FDIC of up to $250,000.

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