How to put your money to work in a bear market

Ryan C. Collins
7 min readSep 19, 2022

This article is not financial advice and I am not a financial professional! Please consult a financial professional before making any financial decisions of your own.

2022 has been a rough year for the financial markets, but that doesn’t mean all hope is lost, it just means that we need to adapt to continue to earn passive income. With a recession on the horizon and persistent inflation, it might be time to dash the hopes of an end of the year stock market rally.

Cash is not the worst place to be, but it’s also not the best considering it’s losing upwards of 9% per year due to inflation. So where should we be putting our money to work in late 2022?

In this article, I am going to pretend that I have $50k in cash sitting idly in my bank account that I won’t need for the next year or two and discuss how I might put that to work to earn passive income during the bear market.

Market Outlook

First of all, let’s discuss what the market outlook is right now. It’s often said that the bond market has a PhD in economics. A lot can be learned from looking at the yield curve.

Despite the fancy name, the yield curve is pretty simple. It’s a graph of yields of debt securities versus their duration. It makes sense that longer duration bonds should have higher yields because they carry more risk. Historically when the yield curve has inverted, it’s often been a sign of an impending recession. Take a look at the graph of Treasury bond interest rates below and let me know if things seem normal to you.

As you can see, the treasury market is out of whack because the 1-year has a higher interest rate than the 30-year, which as we’ve discussed is an abnormal situation and usually means that investors are expecting a poor outlook in the long run.

The chart below shows a prediction (based on multiple sources of both market-derived and FOMC targets) of where rates are headed. This data is suggesting a drop off in expected rates in January or February ’23, which may suggest that a recession is expected to hit at that time.

Source: Term SOFR, USD LIBOR, and Treasury Forward Curves, Chatham Financial

To top that off, in early September, inflation came in hotter than expected and caused the start of a stock market sell-off. On top of that, FedEx announced poor earnings and their CEO warned of an impending recession.

All in all, it’s a scary time to be putting money into stocks when many indicators are flashing warnings at us that the stock market still has 20%+ to fall. With that in mind, what other ways can we use our money to earn passive income?

Fixed income

High-yield savings

First of all, let’s start by putting our cash in a high-yield savings account (HYSA). The rates for HYSAs are on the rise as the Fed continues to raise interest rates. We can put all of our cash in one to start earning interest while we figure out what to do next. Be wary of offers that sound too good to be true. Your best bet is to select a well-established bank with a decent yield.

Resources on HYSAs

Click the link to view a great list of HYSAs over on nerd wallet, along with their corresponding yields.

Treasury bills (T-bill)

As we’ve identified above, it’s a hard time to be a buyer of stocks but it is a great time to buy short duration debt securities. If you’re not aware, the Treasury provides debt securities using a whole bunch of confusing jargon: bonds, bills, notes, etc. They are all the same more or less, but have different names depending on their duration.

T-bills are short-term debt securities 1 year in duration that you buy directly via auction from the U.S. government. That sounds perfect! What better time than now to fill up on T-bills (not to be confused with T-bones).

Treasury Notes

The one year T-bill is paying roughly 4% per year right now. While this is not as high as inflation, it’s certainly better than nothing! Also, it’s very likely that yields will go up in the future, possibly as high as 5–6%. For that reason, it makes sense to ladder into T-bills with various time-frames and plan to roll them over into new bill when they mature. The 1-year bill seems to be the sweet spot right now, but we’ll also buy some shorter duration bills and set them up to replace them automatically when they mature. Overall, we’ll start by putting $20k into a variety of T-bills.

When you purchase a T-bill from a Treasury auction, you generally buy it at a discount to its face value. For example, a $1k T-bill with a yield of 4% would cost $960. When the bill matures, say after 1 year, you will get $1k deposited into your account. The government is paying you to borrow your unused money. Awesome, I love free money!

Resources on T-bills

Series I savings bonds (I-bonds)

I-bonds are another Treasury debt security that pay an interest rate inline with the inflation rate (plus a fixed rate, which is effectively 0 right now). The current yield on an I-bond is 9.62% as of mid-September 2022. Pretty cool, right!?

Treasury Savings Bonds

There are a couple downsides, however. For one, you can only buy $10k worth per year per individual. Also, you will not be able to withdraw your funds for the first year. After the first year, you can withdraw the funds, but you will forfeit the last 3 months of interest. I-bonds pay monthly interest and their rates are updated twice per year. Let’s go ahead and buy one of those right now! Also, if the bear market is still ongoing next year, we can move an additional $10k of the cash from our T-bills into I-bonds.

Resources on I-bonds

So far, we’ve put to work 60% of our cash and are earning roughly 6% per year. Not too shabby! What should we do with the rest of the cash?

Risk assets

At this point, we have $20k left to work with. The majority of our money is in Treasury debt securities, which are very low risk. With the rest of it, we’ll inch ourselves further along the risk curve.

Real estate income

As we discussed above, the outlook of the economy doesn’t look good right now and honestly real estate might not be the best place to put our cash.

With that said, the team at Fundrise are prepared to manage the situation and have cash ready to deploy when opportunities arise. In the first half of 2022, they beat the S&P 500 by more than 25% and averaged a 5% return. That’s worthy of a $10k flyer in my book.

Resources on Fundrise

Crypto staking yield

With our remaining money, we can go out further on the risk curve and buy some of our favorite cryptocurrencies, staking them for yield. Because this article is focused on low(er)-risk strategies, we’re going to focus mainly on yield from “stable coins”, but also note there plenty of “vol coins” that offer attractive yield and the potential for capital appreciation (Ethereum — $ETH, Solana — $SOL, Cosmos — $ATOM to name our favorites).

As we saw earlier this year with the collapse of Terra’s stable coin ($UST), stable coins are not without risk. Crypto platforms can go bankrupt in the blink of an eye. For that reason, it’s important to use a platform that you trust. There are ways to stake currencies on de-centralized exchanges and if you’re savvy, you can figure out how to earn higher yields by diving into DeFi yield-farming / algorithmic market-making (compound, yearnfinance, Uniswap, etc.)

For the purposes of this article, we’re going to put $10k into Gemini USD for its stable 7.15% yield and lack of fees (call me out in the comments if I hurt your feelings with this one).

What other options do we have?

Well options, of course! Let’s save that for another day though! Options strategies for a bear market sounds like a great idea for another article, doesn’t it? Let me know in the comments!


When there’s nothing but red in site in the stock market and global economy, fixed income can provide a safety net to weather the storm. Taking a laddered and diversified approach is a good way to mitigate risk. By focusing on holding short term debt securities to maturity, we can avoid market risks (bonds fall in price when yields are rising).

I do want to point out that despite this article, I am still buying stocks and crypto weekly using a dollar-cost averaging strategy. The right mixture of investments is different for everyone. If you’re not comfortable putting your money into stocks, maybe some of these fixed income strategies are right for you, but of course your financial advisor would be the one to ask!



Ryan C. Collins

Hey, I’m Ryan! I work in the Tech industry and post content about tech, leadership, and personal finance.