Real estate
It may seem counterintuitive to have real estate on this list. When the Fed raises its benchmark interest rates, mortgage rates tend to go up as well, so shouldn’t that be bad for the real estate market?
While it’s true that mortgage payments have been on the rise, real estate has actually demonstrated its resilience in times of rising interest rates according to investment management company Invesco.
“Between 1978 and 2021 there were 10 distinct years where the Federal Funds rate increased,” Invesco says. “Within these 10 identified years, US private real estate outperformed equities and bonds seven times and US public real estate outperformed six times.”
It also helps that real estate is a well-known hedge against inflation.
Why? Because as the price of raw materials and labor goes up, new properties are more expensive to build. And that drives up the price of existing real estate.
Well-chosen properties can provide more than just price appreciation. Investors also get to earn a steady stream of rental income.
But you don’t need to be a landlord to start investing in real estate. There are plenty of real estate investment trusts (REITs) as well as crowdfunding platforms that can get you started on becoming a real estate mogul.
More: Best REITs to invest in commercial real estate
Invest in real estate without the headache of being a landlord
Imagine owning a portfolio of thousands of well-managed single family rentals or a collection of cutting-edge industrial warehouses. You can now gain access to a $1B portfolio of income-producing real estate assets designed to deliver long-term growth from the comforts of your couch.
The best part? You don’t have to be a millionaire and can start investing in minutes.
Learn MoreConsumer staples
Higher interest rates can cool down the economy when it’s running too hot. But the economy is not running too hot, and BlackRock sees rate hikes pushing the economy into a recession.
That’s why investors may want to check out recession-proof sectors — like consumer staples.
Consumer staples are essential products such as food and drinks, household goods, and hygiene products.
We need these things regardless of how the economy is doing or what the federal funds rates are.
When inflation drives up input costs, consumer staples companies — particularly those with entrenched market positions — are able to pass those higher costs onto consumers.
Even if a recession hits the U.S. economy, we’ll probably still see Quaker Oats and Tropicana orange juice — made by PepsiCo (PEP) — on families’ breakfast tables. Meanwhile, Tide and Bounty — well-known brands from Procter & Gamble (PG) — will likely remain on shopping lists across the nation.
You can gain access to the group through ETFs like the Consumer Staples Select Sector SPDR Fund (XLP) and the Vanguard Consumer Staples ETF (VDC).
Wine
People have been consuming wine for thousands of years. While most collect wine for enjoyment rather than investment, bottles of fine wine become rarer and potentially more valuable as time goes by.
Since 2005, Sotheby’s Fine Wine Index has gone up 316%.
As a real asset, fine wine can also provide the diversification you need to protect your portfolio against the volatile effects of inflation and recession.
You can invest in wine by purchasing individual bottles — but you’ll need a place to store them properly. Residential wine cellars often cost tens of thousands of dollars. If not stored at the right temperature or humidity, the bottle could be compromised.
That’s one of the reasons why investing in fine wine used to be an option only for the ultra-rich. But with a new investing platform, you can invest in investment-grade wine too, just like Bill Koch and LeBron James.
More: Protect your portfolio with fine wine investments from Vinovest
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