To economists, a recession is two quarters of negative growth in gross domestic product. To the rest of us, it means rising job losses, home repossessions and financial pain as stock markets fluctuate wildly.

Here Times Money explains how to look after your money in turbulent times.

Rule 1: cash is king

In a recession the price of shares and other assets, such as property, tends to fall, so putting a substantial chunk of your money in cash makes a lot of sense. Not only will your money be sheltered from crashes in the share and property markets, you will have ready funds available to go bargain-hunting when prospects look brighter.

You may want to open several savings accounts in which you can stash your money, bearing in mind that you are covered only for the first £50,000 of deposits in a UK bank. Although some of the rates paid by offshore banks are attractive, the collapse of several such institutions in recent months may lead you to steer clear of them until they offer greater security and transparency.

If you want a copper-bottomed investment, you could select a product from National Savings & Investments, because every pound of deposits is backed by the Government. The same applies to deposits in Northern Rock.

Rule 2: avoid areas that will be hit hard by a downturn

As the economy weakens, the number of unemployed people moves remorselessly upwards, so avoid investment ideas that depend on a buoyant economy. For example, it may not be a good time to launch into a buy-to-let investment because recessions are normally bad news for property prices.

Some of the popular alternative investments, such as art and fine wines, tend to look much less attractive during a recession - even the super rich cut back on spending.

Rule 3: consider traditional safe havens

Gold is the classic bolthole for investors in turbulent times. The price of gold rose by 32 per cent in 2007 - the biggest annual gain in the past 28 years - as investors saw the storm clouds gathering over the economy and financial markets.

The gold price has risen by almost 10 per cent since the start of the credit crunch in August 2007. In contrast, share prices have slumped and property prices have also moved sharply downwards. So, too, has the price of a number of commodities, such as oil, silver and platinum, so gold has proved a much more stable safe haven.

If you want to buy gold, you can purchase bullion bars (if you have the money) or coins, such as krugerrands, but one of the simplest ways to gain exposure to the precious metal is through an exchange-traded fund (ETF), which tracks the price of gold. You will, of course, have to accept that gold pays no interest or dividends - so if the gold price falls, there is no compensating cushion of income.

Rule 4: bonds boom

After the recent heavy fall in bond prices, some experts believe that many bonds are now discounting the possibility of a more severe recession than we are actually likely to experience. This means that many bonds are now attractively priced. Most investors buy through bond funds.

One of the funds tipped to perform well in 2009 by Brian Dennehy, of Dennehy Weller & Co, the independent financial adviser, is the Jupiter Corporate Bond fund. Mick Gilligan, of Killik & Co, the stockbroker, likes the Invesco Perpetual Corporate Bond fund and M&G Corporate Bond.

Rule 5: consider wealth preservation

When buying equity funds, go for the steady performers rather than those that aim to shoot the lights out. This means that balanced-managed funds, which contain a blend of shares, bonds and property, look a good bet, as do equity income funds, which benefit from the underpinning of a steady income stream.

Mr Gilligan says that one way to ride out the recession is to go for funds that place wealth preservation at the top of their list of priorities. One very successful example is the Trojan Income fund, run by Troy Asset Management. By adopting a very defensive approach, this fund has produced a positive return over the past three years - something that very few rival funds have managed. Mr Gilligan also likes Invesco Perpetual's Income fund.

Rule 6: choose recession-proof shares

Those investing directly in shares should seek out sectors with the most recession-proof earnings, says Steve Waddington, manager of Insight Investment’s Diversified Target Return fund. He favours water companies, along with agricultural and environmental stocks.

Mr Gilligan favours oil stocks, such as BP and Royal Dutch Shell. “They are not as sensitive to the oil price as you may think," he says, "and their substantial dividends are priced in dollars, which is good news for sterling investors.”

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Five websites

National Savings & Investments

Moneyfacts

Killik & Co

Dennehy Weller & Co

ETF Securities