Think Stocks, Not Mutual Funds

• Many people steer clear of investing when a recession hits. But in reality, recessions are the right time to buy, if you have money and know what you are doing. If you really want to capitalize on the recession, the place to put your money is in stocks, rather than mutual funds. Do your homework: Read articles and do research on companies that are likely to rebound, or even come out ahead, after the recession. This is where you want to put your money. The risks are high, though, because if you invest in a company that ultimately files bankruptcy, you will come out a big loser. You should try to diversify your portfolio to protect against any significant fallout.
  
  

Secure Your Other Financial Obligations

• Credit card bills, mortgage payments, job instability--all need to be taken into account before you start throwing money into the stock exchange. It doesn't make sense to invest in the market when you've got debts hanging over your head. You also need to look at your current employment. Is your job safe? Is there talk of a pay cut? Do you have the financial means to weather a crisis, such as the loss of a job, without credit assistance? Remember that recessions result in credit crunches. Investing in the stock market without money in the bank is gambling more than investing. Secure your financial situation and be sure of your job status before investing in the stock market.
  
  

Play it Safe

• Recessions aren't the time to get aggressive. While bonds are often a safe, secure investment strategy for lean economic times, the most recent recession can be blamed partly on the bond market. Steer clear of any sector that played a hand in the economy's troubles. A recession is not the time for bold moves, but rather smart, calculated moves that adhere to a strategy and avoid risk like it's the plague.