Investing always requires vigilance and self-education, but investment strategies during an economic downturn may require additional adaptation on your part.

While investment goals and strategies are highly individualized, certain general strategies may make sense for many during an economic downturn. The following are some top investment strategies to help you weather tough economic times.

Invest in Evergreen Industries

Which industries will outlive an economic downturn? Which products will still be needed by consumers during or after a recession or downturn? Evergreen industries show consistent success in the past, present, and future.

Examples of evergreen industries that might prove to be stable investments during a downturn include:

• Pharmaceuticals
• Household staples, such as grocery items
• Energy

Picking an evergreen industry or sector is only the first step. Once you have identified a particular stock, look at its performance during previous economic downturns, particularly for a record of success in performance over time.

Increase Your Emergency Fund

Attending to your emergency fund is critical, and some financial planners suggest that it precede any other kind of investing. Without an emergency fund, you are at risk of derailing the rest of your portfolio. One emergency, without a liquid fund, could cause you to have to sell other investments at a bad time. Advisors recommend three to six months’ expenses in a liquid fund, such as a savings or money market account.

Additionally, you may want to save more than six months’ expenses if:

• You have sporadic or irregular income
• The economy is in a bad downturn
• You know your job or health is at risk

Many good sources outline how to start an emergency fund, including this article at http://www.getrichslowly.org.

Pay off Your Debt

Paying off your debt is at least as important as establishing your emergency fund. If you have debt in your financial picture, pay it off before you worry about investing in stocks, bonds, real estate, or other assets. Particularly during economic hard times, you want your debt paid off so you have some flexibility if you suffer income loss within your household.

An article at http://www.consumerismcommentary.com outlines one approach to prioritizing and paying down multiple debts, and this article at http://www.nodebtplan.net shows the return you yield when you pay down debt.

Consider Investing in Entertainment Stocks and Alcohol and Tobacco Stocks

While many consumers may curtail spending on large luxury items during a downturn, they may also increase spending on less expensive entertainment options. These options might include:

• Movie rentals, both online (such as Netflix) and in-store
• Online entertainment retailers, such as Amazon.com
• Budget Travel

During an economic downturn, a good investment may be in entertainment or “vice” company stocks, such as companies producing alcohol and tobacco. Use research to determine which stocks within these sectors best suit your investment goals. Web sites like http://www.morningstar.com give details on specific stocks and their historic performance.

Invest in Your Health

While you are unable to change the circumstances of an economic downturn, you can change your response to those circumstances. Taking care of your health proactively is one way to respond well to good or bad circumstances. Additional reasons to take care of your health during an economic crisis include:

• You may make better decisions during stressful times
• You may save on the cost of health insurance premiums if you are in improved health. Check with your carrier for applicable discounts.
• You may save money on doctor visits by taking preventative care of yourself.
• You may increase the overall quality of your life.

Additional Resources

• http://www.moneymorning.com details good strategies for investing in a bear market.
• http://fitnessblog.dallasnews.com looks at investing in yourself and your health as a strategy during hard times.
• http://www.apahelpcenter.org/articles/article.php?id=171  gives another take on investing in your mental health during economic downturns and dealing with the mental implications of financial stress.
• http://www.newsweek.com outlines good financial strategies for weathering an economic downturn.
• http://www.wealthdaily.com suggests recession-proof stocks.
• http://www.fintrend.com discusses investing in Treasury bills (T-bills) and gold during a recession.