What To Invest In During War

The prospect of war is not a pleasant one, but when it comes to investing, the reality is that war can financially benefit certain types of investments. 

What To Invest In During War?

This means that while it may feel uncomfortable to imagine benefiting from war, wartime is a pivotal moment when investors should evaluate their portfolios and consider the ways in which the economic conditions created by war could affect current and potential investments. 

In this guide, we will be discussing which assets and stocks are financially lucrative during times of war as well as investments to be wary of during such times. 

Please note that the information provided in this article is for educational purposes only and is not intended to be used as a substitute for professional investment advice.

Indications of potential financial lucrativity in certain areas of investment are, again, purely informational and should not be interpreted as recommendations. 

The Ethics Of Investing During War

Before we begin evaluating which stocks and assets might benefit from war and which might decline in value, there is a question all investors should ask themselves: is it right to profit off war? 

This is a question that you must answer for yourself since it’s a question of morality.

Ultimately, your answer will probably hinge on whether the practice of ethical investing is important to you. 

Ethical investing, also known as socially responsible investing, means using your moral principles and conscience as your primary guide when it comes to choosing which stocks and assets to invest in. 

Again, since moral codes vary from person to person, ethical investment will look different for different people.

However, one example which is closely related to the subject of war would be defense stocks and the global weapons trade.

For the majority of people who consider ethical investment to be important and who do not support war, this area of investment would be a clear no-go, for obvious reasons (although, as we will see, it also constitutes one of the most lucrative wartime investments).

Furthermore, for many investors, the idea of profiting from war in any capacity is morally objectionable. 

With that being said, despite research that suggests that the performance of ethical funds is typically equal to or even superior to the performance of less ethical funds, many investors remain concerned that ethical investments may lead to variable returns.

Similarly, some investors do not believe that ethical investing makes a positive difference to society and may view investing as a purely financial endeavor where returns should be the primary objective. 

Before you consider altering your existing portfolio based on wartime economic conditions, you should ask yourself whether ethical investing is important to you and what this would look like for you based on your principles.

Investing during war is something that requires a lot of careful consideration and research.

Investments That Benefit During War 

Certain stocks and assets become more valuable during times of war, which means that investors should study the economic impact of war on specific assets and stocks before investing or selling. 

Here are some examples of investments that benefit during wartime, including the reasons why: 

Defensive Stock 

One of the most financially lucrative areas of investment during war is defensive stock. 

Defensive stock refers to stocks that typically outperform the share market during periods of economic downturn.

In other words, defensive stocks are highly resistant to various economic conditions. 

For example, energy stocks usually continue to perform well in times of war, as do water and hospital stocks.

Oil prices rise significantly during war, and four-factor products such as medicine and food benefit as investments during these turbulent times. 

Despite the potential for high returns on such investments, investing in stocks related to human necessities such as food, water, and energy comes with sizable ethical implications, especially during wartime.

Defense Stock

Defensive stock and defense stock are terms that are often conflated when it comes to discussions of wartime investing, but it’s very important not to confuse the two. 

While defensive stock is a term used to describe stocks that are resistant to fluctuations in economic conditions, defense stock specifically refers to stock that is related to the defense and military industries. 

Significant ethical complications arise in the context of wartime when it comes to buying shares in the defense industry which, for obvious reasons, becomes more lucrative than ever when countries are at war with one another. 

When war is predicted or announced, many investors aim to purchase shares in weapons and aircraft companies because the returns on these investments are likely to be high. However, along with oil, defense stocks are widely considered to be ‘sin stocks’.

Sin stocks are stocks that are considered exploitative or immoral by at least a portion, if not most of society. These stocks range from the tobacco industry to the military. 

Exchange-Traded Funds (ETFs)

Exchange-Traded Funds (ETFs)

An ETF, or exchange-traded fund, is a fund that trades, as the name suggests, on exchanges.

It’s a basket of securities designed to track an underlying index and it basically provides a way for investors to invest in a diverse range of shares and bonds through a single package. 

Even outside of the context of war, ETFs are considered a good form of investment because they’re flexible and an easy way to diversify your portfolio.

Diversification is important at the best of times, but during war, when economies become more unstable, it becomes more important than ever to include diverse forms of investment in your portfolio as a way to manage the risks. 

ETFs typically come with lower initial costs and you can even derive some tax benefits from this form of investment.

In short, even during war, ETFs remain a reliable and low-risk form of investment, especially if you’re looking to diversify. 


This is an interesting one since some investment experts recommend investing in gold during wartime, whereas other sources caution against it. 

On balance, however, it seems that investing in a small amount of gold could be beneficial in the context of war. 

One reason you may wish to invest in gold during times of war is to diversify your portfolio.

There tends to be a lot of emphasis on tech stocks during war, but it’s never a good idea to put all your eggs in one basket.

If you have a lot of your money tied up in stocks, investing in a tangible asset like gold, which has been proven to increase in value over time, is a good way to diversify your portfolio and make it less volatile in the long term. 

Coming back to the idea of ethical investment, however, not everyone will see gold investment as ethically sound due to the impact of gold mining on the environment, so bear this in mind while doing your research. 

Investments To Avoid During War 

Just as there are certain investments that benefit from the economic conditions created by war, there are also some forms of investment that become more high-risk and less lucrative during wartime. 

Some examples of investments to avoid during war include:


Although artwork in its many forms is often presented as a good option for diversifying your portfolio with tangible assets, similar to gold. 

However, the crucial difference between artwork and gold is that while gold is always increasing in value, especially during times of economic crisis, the same cannot be said for artwork. 

Artwork is a tricky form of investment because while it can be used to diversify a stock-based portfolio, it’s also quite vulnerable.

Not only can art be physically destroyed (think natural disasters or fires), but art can quickly decrease in value during times of recession.

Recession is common in the aftermath of war, and since art is a long-term investment, you also need to consider the possible economic consequences after a war when investing in this type of asset, not just the economic status during the war.

Even when art is not decreasing in value, the increase in the average art piece’s value over time tends to be quite modest.

For instance, research has concluded that between the years 1957 and 2007, artwork’s value appreciated by less than 4% per year. 

Government Bonds 

Government Bonds 

Government bonds are generally considered a low-risk form of investment.

The reason government bonds are considered a low-risk option and, therefore, a safe choice when it comes to being sure of your returns is that the government guarantees the repayment of your principal sum (the amount you put into your investment account) plus interest. 

However, interestingly, government bonds and other types of bonds have a trend of underperforming.

There are a few reasons for this, but the main one is that bonds do not fare well during inflation, and war is positively correlated with inflation.

Moreover, governments often borrow more money during wartime, meaning that bond prices tend to drop. 

Tips For Investing During War 

  • Avoid drastic changes to your portfolio. This is a tip that is backed by a significant portion of investment experts. Generally speaking, investment advisors will caution against completely changing up your existing portfolio based on global events. A few minor financial relocations or a couple of additional investments should be enough to maximize your potential returns without deviating too far from your original investment plan, which is a much safer option in the long term. 
  • Don’t panic. At the onset of war, a mistake that many investors fall into is panic-selling. This is something investors do when they fear that their investment may start to decrease in value. To avoid losing money on their investment, it’s not uncommon for investors to begin panic selling in an effort to retain some returns on their investments. The problem with this is that markets often surprise investors by bouncing back quickly, resulting in the sinking realization that they have missed out on the recovery tally and could have benefited more from their investment.
  • Diversify your investments. We’ve discussed the importance of portfolio diversification during wartime as it relates to the usefulness of tangible assets like gold. However, this point is so important that it warrants reiterating. At a time of financial uncertainty, you should never limit your investment portfolio to one type of stock or asset. Always try to spread your investments over multiple areas to decrease the volatility of your portfolio and increase the potential for returns. 

Frequently Asked Questions 

Does The Stock Market Do Well During War?

There is a widespread fear that the stock market may crash as a result of war, but in reality, stocks are not often impacted too significantly during wartime – or, at least, the impact tends not to be sustained. 

While it’s true that some types of stocks (think travel and leisure) understandably underperform during war, other stocks go up quite dramatically, so it all comes down to the types of stocks you invest in. 

What Are Safe Haven Investments?

Safe haven investments or assets are investments that can withstand economic downturn in order to maintain their value or even appreciate in value.

Interestingly, some typical safe haven investments (for example, government bonds) usually underperform during times of global conflict, whereas others remain viable investment options. 

Why Do Gold Prices Go Up During War?

Fears of inflation mean that investors tend to seek shares in safe haven investments during times of conflict.

Gold is a safe haven investment, and it’s known to be a good way to diversify a portfolio, so it’s a popular choice for investors. This pushes prices up. 

Final Thoughts 

Choosing which assets and stocks to invest in, both during and outside of wartime, is a personal decision that should be guided by your principles as they relate to the role of ethics in investing. 

Financially lucrative investments during wartime can take many forms, ranging from defensive stocks to some specific tangible assets that are sure to increase in value, like gold.

On the other hand, some stocks, bonds, and assets depreciate in value as a result of war, such as government bonds and artwork. 

Again, please bear in mind that the content of this article is for informational purposes only and is not intended to promote any form of investment over another.

Luke Baldwin