If the recent stock market rollercoaster has you feeling nauseated, you're not alone. Investor sentiment has been swinging wildly in recent months, with 43% of investors feeling optimistic about the market in January to only 19% in March to around 38% most recently, according to weekly surveys from the American Association of Individual Investors.
Recession probabilities have also shifted substantially. In March, analysts at J.P. Morgan estimated a 40% chance of a recession beginning in 2025. That number then increased to 60% in April, and as of May 19, it's now down to "below 50%."
Much of the volatility centers around tariff policies, which, as we've seen in recent months, can change on a dime. Rather than trying to invest at just the right moment, it's often safer to stay in the market for the long haul, regardless of what happens in the coming weeks or months.
If you're looking for a few Vanguard ETFs that can provide some stability while still supercharging your savings, these are three that I'm planning to buy and hold for as long as I can -- even if a recession is looming.
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1. Vanguard S&P 500 ETF
During periods of volatility, one of the safer funds you can own is an S&P 500 ETF. The Vanguard S&P 500 ETF (VOO 0.39%) tracks the S&P 500 (^GSPC 0.40%), meaning it includes stocks from all 500 companies within the index.
Companies within the S&P 500 are industry leaders and among the largest stocks in the world, which can reduce your risk substantially. Many of these businesses have been around for decades, surviving several recessions and bear markets along the way. If any stocks are likely to survive future volatility, it's those in the S&P 500.
The Vanguard S&P 500 ETF, specifically, can be a smart buy due to its low fees. Its expense ratio is just 0.03%, meaning you'll pay $3 per year in fees for every $10,000 in your account. With some funds charging expense ratios of 1% or more, the Vanguard S&P 500 ETF could help save you thousands of dollars in fees over time.
2. Vanguard Growth ETF
The Vanguard Growth ETF (VUG 0.28%) is a broadly diversified fund that spans multiple market sectors, with a focus on stocks that have the potential for above-average returns. It contains 166 stocks, with around 57% of them coming from the tech industry. (For context, only around 30% of the Vanguard S&P 500 ETF is dedicated to the tech sector.)
One of the advantages of this fund is that it's diverse enough to help limit risk, but the heavy focus on tech stocks can still set you up for substantial returns.
With over 100 stocks from 11 different sectors, you won't be hit quite as hard if one industry or stock takes a substantial blow. At the same time, though, if tech stocks continue to thrive like they have in recent decades, you could earn significantly higher-than-average returns.
Over the past 10 years alone, the Vanguard Growth ETF has earned total returns of close to 279% -- compared to just 181% for the Vanguard S&P 500 ETF. If you had invested $10,000 back then, you'd have around $38,000 or $28,000, respectively, by today.
3. Vanguard Information Technology ETF
The Vanguard Information Technology ETF (VGT 0.38%) goes all-in on tech, with 307 stocks from all corners of the technology industry. This ETF is the riskiest of the three, but it also has the most potential for higher earnings.
Over the last 10 years, it's more than doubled the total returns of the S&P 500 while also significantly outperforming the Vanguard Growth ETF. If you'd invested $10,000 in this ETF a decade ago, you'd have close to $56,000 by today.
The caveat with this ETF, though, is its risk level. Investing solely in one industry -- especially the tech sector -- raises your risk substantially. Tech stocks are often hit hardest during market downturns, so if you invest in this ETF, be prepared for greater short-term volatility.
That said, it can be a smart addition to an already well-balanced portfolio. Investing in the Vanguard Information Technology ETF along with the S&P 500 ETF, for example, can provide greater protection against recessions as well as potential for above-average returns.
There's no way to know for sure whether a recession or bear market is looming later this year, but it doesn't hurt to prepare your portfolio just in case. By balancing risk and reward while keeping a long-term outlook, you're more likely to pull through anything the market throws at you.
