5 Best 401k Investments During a Recession


Warm Weather Wardrobe: What’s Your Cool Factor?

Summer has officially made its grand entrance, and it’s...

Unique & Thoughtful Gifts for Your Bestie’s New Baby 

Nothing says “adult” more than the announcement of your...

Towing Services in the US by Cities

Here's a list of Towing Services in the US...

Noble Fabrics and Golden Embroidery: Discover HAFTINAUSA Luxury

In today's world, where fashion often follows the principle...

5 Reasons to Choose Phuket as your Next Holiday Destination

The world sure is a big place, with almost...


If you’re feeling the squeeze of inflation and studying the shifting markets, you might be concerned about an approaching recession. You wouldn’t be alone. It’s natural to be nervous about your money, and it’s a good idea to review your personal finance plan, including your 401k investments, to ensure you’re prepared. 

Here are 5 of the best 401k investments during a recession that you can make.

1. Utilize Target-Date Mutual Funds

Target-date funds are user-friendly, and they’re some of the most passive investments you can make. Ideal for anyone who is not terribly interested in moving money around or day trading their retirement funds, these target-date vehicles are also excellent during periods of financial uncertainty and recession. They are long-term investment plans with a lot of diversity that are shaped around the date you plan to start withdrawing money for retirement. 

Sometimes called life-cycle funds, these are always options in any 401k retirement plan. Decide on the date you plan to retire, and have your investments allocated accordingly. You’ll have a good chance at weathering the dips and downturns of a recession market without losing too much of what you’ve already invested and continue to invest. 

2. Defensive Stock Funds Are A Good Bet

People are always going to need food and diapers and baby formula and medicines, even during a recession. These are the consumer habits that make defensive stock funds such a good investment option when you’re deciding where to put your money during a recession.

There’s a lot less fluctuation than you’ll find with cyclical stocks and discretionary stocks. To better analyze stocks, you may use a quantamental investing approach.

3. Federal Bond Funds Are Low-Risk

The U.S. government sells treasury bonds for a period of 20 or 30 years. A fixed rate of interest is paid every six months until those bonds mature, and you can hold it until that maturity date or sell it before then. Treasury bonds and other federal bonds are a great low-risk investment during a recession. 

There’s no risk of default, and historically, federal bonds didn’t have a large enough reward to make them popular among investors. However, an uncertain market can have those stable investment options looking better and better. With the rising interest rates, bonds are paying more interest now, and it’s worth your while to include them in your 401k investment planning. 

4. Keep What You Have And Avoid The Panic Sell

Keep what you have, unless it comes with a lot of risk. Investors tend to panic-sell their stocks and bonds when recessions approach, and that’s not absolutely necessary. There’s always this terrible fear that the stock market won’t recover if it plummets for a day or two or even a week or a month.

But, it always does. So while “experts” warn you to sell while you can, hold onto those stocks and bonds instead. As long as your portfolio of stocks and bonds is diversified, holding what you have will bring you better long-term gains. You’re likely not planning to retire in a year or two, so hold what you have and keep a good mix of stocks and bonds in your 401k.

This is especially true with your bonds. You don’t want to panic-sell those, because the yield is a lot higher now than it has been, and you can also use those bonds to hedge against any portfolio volatility that may match the markets as a recession settles in.

5. Max Out Employer Matches

This is hardly the time to pull back on what you’re contributing to your 401k. While it’s normal to get nervous, your money is still going to perform better in your retirement plan than it will in your bank account or your pocket. 

If you do find yourself pulling back at what you’re contributing to your 401k, make sure you’re not dipping below the sweet spot – your company match. The Bureau of Labor Statistics reports that the average 401k match from employers is 3.5 percent. Some companies match more; in fact, 10 percent of employers who do provide a company match offer more than 6 percent. 

That’s free money. You don’t want to pull out of the retirement plan to the point that you’re leaving employer contributions on the table. If your job matches 4 percent of your salary, make sure your 401k contributions are 4 percent or more. 

Don’t shake things up too much when it comes to moving money around in your 401k. Even if the recession puts a dent in your retirement savings, these best 401k investments during a recession will ensure you make the money back as soon as the market adjusts.