How to Invest your 401k in a Bad Economy

If you need to invest your 401k funds in a bad economy, there are certain types of investments that you should avoid. In most cases, you will need to invest in safer investments that can withstand a poor economy. Here are the basics of investing your 401k in a bad economy.

Fixed Income Investing

In this situation, you may want to focus on fixed income investing. Fixed income investing typically involves a portfolio full of different types of bonds and bond funds. Bonds are a type of debt that can be issued by corporations or governments. This type of investment is safer than investing in stocks because they are secured with collateral. They will pay you a fixed rate of return in most cases which can keep paying even if the economy is down.


Many people also turn to investing in commodities when the economy is down. By doing this, you will essentially be creating a hedge against inflation. For example, you could invest a portion of your portfolio into precious metals such as gold and silver. Gold and silver tend to act independently of the rest of the economy and they also always tend to increase in value.