10 Best Investments in a Down Market

Several popular and profitable stock market alternatives are available.

The sudden and dramatic downward shifts in the stock market in the fall of 2008 resulted in a massive stock-selling frenzy as investors scrambled to save whatever money they could before they lost everything. A push toward alternative investment vehicles ensued, and much of the money that once purchased stock shares is now being held elsewhere. Expert opinions often vary widely on what vehicles are the best alternatives in a down market, but nearly every list contains, references, or suggests the same ten.

Real Estate

As the world population grows, the need for housing also increases, making real estate a prime candidate for long-term investments. Despite the depressed real estate market of 2009 onward, prices will not remain deflated forever, and today's subpar sale prices are ideal for buyers.

Precious Metals

Precious metals have consistently performed well during negative stock market periods, demonstrating an apparent resilience to the factors effecting the rest of the financial industry. The tangible aspect of metals is the most relevant element of their continued increases in value, as worldwide supply is obviously limited.

Gold, silver and platinum are the most common and well-known precious metals, all of which have experienced returns ranging from 200 to over 400 percent in the first decade of the 2000s, but they are not the only valuable precious metals; rhodium and palladium are being used in an increasing number of industries for their malleability and conductivity, and can also be purchased in investment grades.

Index Funds

Despite dramatic declines in stock market values that started in 2008, historical analysis clearly demonstrates that prices always rise and people always continue to invest. While individual stocks may become worthless, and companies may go bankrupt, the market itself has never crashed and not recovered. Index funds allow you to invest money in the stock market as a whole, rather than attempting to choose individual securities, and benefit from the seemingly inevitable continuation of investment cycles.

Whole Loans

Distressed whole loans are debt notes for undeveloped land and new construction thereon, under which the borrower has defaulted on the payments. Some whole loans consist of still undeveloped acreage, while others may contain full or partial structures. Investors can purchase these loans from lenders for amounts far below par value, then proceed to take possession of the land and any existing structures. The assets can then be flipped, or held and sold at a future date when real estate prices are even higher.

Money Markets

Money market accounts continue to be a popular investment vehicle during down markets. Minimal, almost nonexistent, potential for loss of principal makes money markets attractive to investors during volatile economic times. While increases in value are a mere pittance, often only minute fractions of one percent, investors may be willing to sacrifice potential gains for peace of mind and protection of their principal.

Bank CDs

Certificates of Deposit can be purchased from nearly any bank in any location, regardless of actual geographic proximity. The Internet has made it possible for consumers to research and buy CDs from any bank accessible online. Deposits are insured by the FDIC, which further increases the comfort level of consumers. Although interest rates on CDs may almost be insultingly small, the investor can take solace in the fact that his CD will never decrease in value.

Fixed Annuities

Intended for retirement money only, fixed annuities represent a popular choice for investing during a down market. Issued and guaranteed by the insurance carriers that offer them, annuities present a safe and secure vehicle for retirement money. Fixed accounts earn a predetermined interest rate, but can be further enhanced with a multitude of riders designed to increase account values, provide money to heirs, pay for certain medical expenses, and countless other options.


Bonds can be simply described as complex IOUs, and are available in multiple types and formats. In exchange for a small loan, the bond issuer agrees to repay the money on a certain future date along with predetermined interest. Most corporate bonds pay the interest monthly or quarterly, while the majority of government (Treasury) bonds simply add the interest to the amount collected at maturity. An inverse correlation exists between the stock market and the bond market; when stock values decrease, bond values increase, and vice versa.

Life Insurance

Two permanent life insurance products, whole life and universal life, are an extremely effective and safe place to invest money in a down market. Every dollar over the required minimum premium is deposited into the policy's cash value account, where it accumulates on a tax-free basis. Many permanent life insurance policy contracts have minimum cash value interest rates above 4 percent, which is outstanding compared to other currently available fixed interest options.

Your Own Home

Your own home has always been listed as one of the best investments in a down market. By sending additional money to your mortgage lender, your outstanding balance is reduced and equity is created, thereby shortening the duration of your loan. The bulk of the extra payments should also be accessible in the form of a home equity loan or line of credit if it is needed in the future. Conversely, you can invest in your home by completing various home improvement projects that will ultimately increase the resale value of the property.

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