Elon Musk: 'A Recession Is Inevitable' - Here Are 3 Investments To Keep You Afloat If He's Right

During a video appearance at the Qatar Economic Forum, Billionaire Elon Musk shared his views and thoughts regarding Dogecoin DOGE/USD, Tesla Inc TSLA and public panic over pending economic doom.

The full quote from Elon’s June 21, 2022 appearance, as reported in a recent article on Bloomberg, is as follows: “A recession is inevitable at some point, as to whether there is a recession in the near term, that is more likely than not.”

Musk, who has been the driving force behind Tesla’s meteoric rise and whose other endeavors have included an underground magnetic railway system, developing a reusable rocket to travel to space and other seemingly incomprehensible ventures, have resulted in him being labeled as a genius and one of the guiding voices for our future.

When a man of that caliber has such an alarming quote about our future, what course of action should you take? Finding a smart way to invest your money is one place to start. Here are three investments that tend to perform well during a recession:

1. Dividend Stocks: The beauty of dividend-paying stocks is that you get paid to own them, regardless of how the market is performing in terms of stock prices. In fact, the majority of the stocks that Warren Buffett owns through Berkshire Hathaway (BRK.B) are dividend stocks.

Of course, some stocks pay a much higher dividend than others. One of the most popular high-dividend stocks is Exxon Mobil Corp XOM. At its current price, the stock has a yield of nearly 4%.

2. Real Estate: Often viewed as one of the most stable investments, regardless of the economic climate, real estate makes a great addition to an investment portfolio. Land is finite, and rising interest rates mean it may be hard to acquire your own piece of property. Most real estate investments also provide income, which can be especially helpful in a down economy.

Consider crowdfunding opportunities and REITs. REITs can be sector-focused, and each carries its own earnings potential. Consider farmland REITs as an option, as Farmland Partners Inc. FPI has seen positive movement lately.

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3. Fine Wine: Wine has traditionally been resistant to inflation and recessions. The Liv-ex Fine Wine 1000 index is currently up 10.3% year-to-date, performing much better than the overall stock market.

The most common way to invest in wine is through an Alcohol or Beverage Exchange Traded Fund (ETF). These ETFs can be a great way to gain exposure to the wine industry without needing to bet on any specific bottle or specific company. So, if you’re not passionate about wine or not willing to risk your finances on your expertise, you can check out wine-related funds like B.A.D. ETF BAD which specializes in Betting, Alcohol and Gambling.

You can also consider a more direct approach, like buying shares of a valuable wine collection through an investment platform like Vint. 

Most Importantly: Choose your investments carefully. Do your homework and choose investments that best suit your specific goals, timeline and risk tolerance. While the above investment options have done well in past economic downturns, there’s no way to say for certain how they will perform in the future.

Photo: Courtesy of Heisenberg Media via Wikimedia