What is A Recession Proof Industry?
In a quest to diversify your income streams, you may focus on a recession proof industry. In this case, a recession proof industry does not necessarily mean being bullet-proof by the entirety. Instead, it is an industry more resilient and stable than an average industry would react to a recession.
In this guide, we take a look at some industries where you could invest your money to future-proof your income.
Recession Proof Industry Examples
Communication is a pivotal aspect of human life to share ideas and acquire knowledge. In the modern digital age, communication is done virtually more than ever. Telecommunication is sharing ideas and information using cables or other wireless means within a secluded environment or remotely.
Demand and consumption of telecommunication remains consistent for government parastatals, businesses, and even individuals. The demand for communication is essentially among the core drivers of human livelihood. Since communication is a psychological need, its demand is there even during a recession.
If you have invested in this industry, rest assured of your dues during economically troubled times. If you invest in a telecommunication company, the face value of your stock will remain relatively constant, and the market value will not plummet as much.
Conversely, if you have a company providing actual telecommunication services, you are less likely to lose your subscribers or experience abnormal fluctuations in market prices.
2. Consumer staples
Consumers staples are things you buy regardless of prevailing economic conditions. They are necessities for human survival and hence a recession proof industry.
Let me put this into perspective: think of a time when you said you would not buy groceries until such a time when the rate of inflation stabilizes. Well, such a decision is not realistic, and neither is my prompt. The reason is simple: your body needs food for survival, even during economic turmoil.
Consumers staples are not just food. These necessities include but are not limited to personal care products, alcohol, tobacco, household goods, baby products, pet products, and grocery store items, among others.
The quality of your health determines the quality of your life. You may have all the wealth you ever desire at your disposal but have poor health. This alone could make you feel you have a poor quality of life. You may have neither wealth nor health altogether, and the quality of your life feels like it is falling apart.
So, despite the haves and have-nots, having good health is one of the core tenets of a quality life. In a quest for quality health, you seek medication regardless of whether the economy is in expansion or recession. This explains why over-the-counter medicine will be sold even when the economy is at its lowest.
Service providers and healthcare-related product manufacturers thus do not feel the pinch of economic recession in this recession proof industry. If you invested in this industry before the recession, rest assured your investment will remain fairly stable through an economic recession and later during recovery.
There are many utilities to think of, and probably, you are paying substantial amount towards some of them. Even if you know a utility squeezes your pockets dry, you’d probably not stop paying them. They necessitate your livelihood in many ways.
For instance, it’s not practically possible to live without water. Even if the water bill costs 15% of your monthly salary, you either get over it or find a way to increase your monthly income. The same scenario may apply to waste management and electricity or gas utilities.
Instead of being just a consumer of these utility services, you can invest in them. As a recession proof industry, your investment would still earn you good income even when the economy shrinks. You can invest in many ways, and the most common is stock. Additionally, you can also pool your money with friends and invest in a mutual fund. You can also buy utility bonds from utility providers who support such.
5. Funeral services
This is a sad point to discuss and the reality of human life. The only way to exit life is through death. People die when they are at the peak of their economic productivity, during a decline of their economic productivity, and even when they are not economically active. In simple terms, death may come regardless of economic performance and productivity of a person. Since people are dying daily, it makes funeral services a recession proof industry.
6. Waste management
The modern age is full of recycling campaigns. Most of your waste is getting into these recyclers’ hands and being reused for packaging or other economic purposes. Since you’ll, in one way or another, have waste from your day-to-day activities, you need the services of waste management providers occasionally. This demand makes waste management a relatively recession proof industry.
You can pretty much spend most of your annual income on necessities. If you can find a way to invest in these necessities other than being a consumer, you would be in a better position during a recession. You may make money in these recession period industries, and your economic stability may not be disrupted.