A whopping 80% of Americans are worried to some degree about a potential recession, according to a 2025 survey from financial association MDRT.
While nobody can predict the future, downturns are a natural part of the market cycle. It's uncertain when the next slump will begin, but it's inevitable that we'll face one at some point. And when that happens, there are two powerhouse Vanguard ETFs I'll personally be stocking up on.
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1. Vanguard Total Stock Market ETF
Proper diversification is key during a bear market or recession, as many stocks will struggle to survive economic volatility. By owning a wider variety of stocks from multiple industries, you'll be more protected if a few of your holdings struggle.
The Vanguard Total Stock Market ETF (VTI 1.15%) aims to cover the entire stock market, offering unbeatable diversification.
This ETF contains a staggering 3,512 stocks from companies of all sizes across all industries. While it is fairly heavily tilted toward tech stocks, reflecting the composition of the overall market, it also contains a wide variety of established stocks from recession-proof industries that can help limit volatility.
The stock market itself has a flawless track record of surviving even the most severe downturns, and because the Vanguard Total Stock Market ETF aims to mirror the market itself, it's highly likely it will pull through any recession or bear market that could be looming.
Not only is this ETF one of the safer options available, but it's also a powerful wealth-building machine. Since its inception in 2001, it has delivered total returns of nearly 500%, despite record-breaking downturns such as the dot-com bubble and the Great Recession.
In other words, if you'd invested $10,000 in 2001 and made no additional contributions, you'd have nearly $60,000 in spite of all of the volatility the market has faced in the last 25 years.
2. Vanguard Information Technology ETF
The Vanguard Information Technology ETF (VGT 1.64%) holds 320 stocks, all of which are from the technology sector. When the market takes a turn for the worse, tech stocks are often the first to sink and experience the steepest drops. While it may seem counterintuitive, that can make them smart buys during downturns.
Many tech stocks are incredibly expensive right now, and the silver lining of market downturns is that they provide an opportunity to buy high-priced stocks at steep discounts.
A tech ETF can be a particularly good choice, as it adds an element of diversification. There's a chance some tech stocks may not survive a downturn, so by investing in over 300 stocks at once, you can increase your odds of buying into successful stocks that thrive over the long term.
Tech stocks have been incredibly lucrative in the past, with the Vanguard Information Technology ETF soaring by nearly 1,500% since its inception in 2004.
While past performance doesn't predict future returns -- and there are no guarantees that the tech industry will continue on the same trajectory -- the rise of artificial intelligence (AI) could position the industry for further long-term growth.
Nobody knows what the coming months hold for the stock market, but the right investment is key to building long-term wealth.
