Where do you invest?

It is now "common knowledge" that we are in a recession. But this does not mean you should stop saving for your retirement (or financial independence in modern parlance). But where should you put your money?

If your goal is to get the best return possible on your investment, then good luck. The only ways to do that are to either get lucky or own a crystal ball. There are a few strategies that should net a positive return yet are most likely not spectacular.

Bonds are tried, tested, and true. I'm not talking about Canada Savings Bonds, which are actually a form of cash, but in Government of Canada bonds and provincials. The danger here is that yields are already low. So if you decide to sell your holdings when yields rise, you will probably take a loss. The solution to this is to hold until maturity.

Another strategy is to buy equities in areas that traditionally do better than the market during an economic downturn. Discount retailers become more attractive when people need to save pennies. Grocery stores (consumer staples in general) should do fine as people still need to eat. Auto sales have stalled, causing the average age of cars on the road to increase, meaning auto repair should be making more money than in the past.

Lastly, you could just use the same strategy I'm using: Buy the market. Yep, I'm talking about buying index funds to spread your money around. I'm still youngish and can take a bit of volatility. No need to withdraw anytime soon, so I can afford to take a loss now if it means I will win in the end. No sense in trying to time the market bottom, use dollar cost averaging.

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