As we approach the end of 2022, it's never too early to begin thinking about the stocks investors can lean on for 2023. There's no way to predict what will happen in the stock market or overall economy next year, but investors can do themselves a favor and begin preparing accordingly to avoid being caught off guard. Here are two names to buy no matter what happens in 2023 -- one household-name stock and one exchange-traded fund.

Procter & Gamble

Even if you're not familiar with the Procter & Gamble (PG 0.11%) name, you've undoubtedly used one of their products before. In fact, it's virtually impossible to go into any major retailer or convenience store and not see at least one Procter & Gamble product. To say that its portfolio of products is filled with household staples would be an understatement.

The key characteristics that make a company a "defensive stock" are a great balance sheet, consistent and stable earnings, and products that will sell steadily regardless of economic conditions. In that category, Procter & Gamble is in a league of its own. With inflation high and most forecasters predicting a recession, investors looking for stability can lean on Procter & Gamble.

When people are strapped for cash, they adjust their spending habits accordingly. They generally cut back on shopping, eating out, and entertainment, but some things can't be removed from budgets -- and those things include most household goods. With brands that include Bounty paper towels, Crest toothpaste, Gain dishwashing detergent, Gillette shaving tools, Pampers diapers, Tampax tampons, and many more, Procter & Gamble is essentially a one-stop shop for popular consumer goods.

No matter what happens in 2023, one thing is for sure: Procter & Gamble's products will sell. If you're looking for a company that can thrive despite less-than-ideal economic conditions, Procter & Gamble is it.

Vanguard S&P 500 ETF

If there is one investment that should be a staple in every retail investor's portfolio, it's an S&P 500 index fund. That index tracks 500 of the largest public U.S. companies by market cap. Because of the size of those companies, how many industries they span, and the share of the U.S. economy they account for, the S&P 500's performance is often used as a proxy for the stock market as a whole.

Regarding which index fund to go with, you can't go wrong with the Vanguard S&P 500 ETF (VOO -0.27%). It isn't a sexy or glamorous investment option. Still, the 0.03% expense ratio means it's an extremely low-cost fund, and it delivers a trifecta of benefits: risk reduction, diversification, and exposure to blue chip stocks.

We can expect uncertainty to be the defining characteristic of the economy in 2023, so many investors will want to reduce the level of risk in their portfolios where possible. There's no such thing as a risk-free investment, but investing in the Vanguard S&P 500 ETF will lessen your risk because its performance isn't reliant on just a few companies or sectors. You won't reap the larger gains you might accrue by putting those funds into individual companies, but you also won't be at risk of the steeper losses that could come from putting that money to work by picking stocks.

The Vanguard S&P 500 ETF doesn't offer complete stock market diversification -- it would need to contain smaller-cap companies for that -- but it comes close, as it includes companies from all the major sectors:

  • Information technology (26.3%)
  • Health care (15.3%)
  • Financials (11.4%)
  • Consumer discretionary (10.9%)
  • Industrials (8.3%)
  • Communication services (7.4%)
  • Consumer staples (6.9%)
  • Energy (5.4%)
  • Utilities (3.0%)
  • Real estate (2.6%)
  • Materials (2.5%)

Within those sectors are many blue chip companies -- well-established, stable names that have stood the test of time and proven they can be great long-term investments despite short-term economic conditions. Regardless of what happens in 2023, investors can be confident that the S&P 500 can carry them through. Even if it finishes 2023 in the red, adding shares of a low-cost index fund offers investors a chance to set themselves up for the long run by possibly accumulating a position at a relative discount.