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Vanguard ETFs: Low-Cost Growth and Safety Strategy

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  Published in Stocks and Investing on Monday, December 1st 2025 at 2:45 GMT by The Motley Fool

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Investing for Peace of Mind: Two Vanguard ETFs That Offer Long‑Term Growth and Safety

When the stock market starts to wobble, many investors feel a mix of anxiety and indecision. You might wonder whether to hold onto your current holdings, sell them in a panic, or dig deeper into your portfolio for a more resilient strategy. A recent article on MSN Money—“Worried About the Stock Market? Invest in These 2 Vanguard ETFs for Long‑Term Growth and Safety” (link: https://www.msn.com/en-us/money/other/worried-about-the-stock-market-invest-in-these-2-vanguard-etfs-for-long-term-growth-and-safety/ar-AA1Ro4eb)—offers a practical, low‑cost approach that blends broad equity exposure with a safety net. The piece highlights two Vanguard ETFs that many financial planners recommend for investors seeking a mix of growth potential and risk mitigation: Vanguard Total Stock Market ETF (VTI) and Vanguard Total Bond Market ETF (BND). Below is a concise summary of the key points from the article, plus a few additional insights gathered from Vanguard’s own documentation.

1. Vanguard Total Stock Market ETF (VTI)

What It Covers

• Scope: VTI tracks the CRSP U.S. Total Market Index, which includes virtually every publicly traded U.S. company, from large‑cap giants to small‑cap minnows.
• Holdings: More than 3,600 stocks. The largest sectors by weight are Information Technology, Health Care, Consumer Discretionary, Financials, and Communication Services.

Why It’s a Growth Driver

• Broad Exposure: By covering the entire U.S. equity universe, VTI captures the upside potential of every industry and company size class.
• Low Expense Ratio: At around 0.03%, VTI is one of the cheapest ways to gain exposure to the U.S. market.
• Liquidity and Transparency: Its daily trading volume is high, which keeps bid‑ask spreads tight and makes entry/exit straightforward.

Practical Takeaway

• Ideal for Growth‑Seeking Investors who want to stay invested in the U.S. market without picking individual stocks or managing a large number of funds.

2. Vanguard Total Bond Market ETF (BND)

What It Covers

• Scope: BND tracks the Bloomberg U.S. Aggregate Float‑Adjusted Index, a benchmark that includes U.S. Treasury bonds, investment‑grade corporate bonds, mortgage‑backed securities, and other asset‑backed securities.
• Holdings: Roughly 11,000 securities with varying maturities and credit qualities.

Why It Provides Safety

• Diversification Across Asset Classes: Bonds typically move inversely to equities, so adding a bond ETF can smooth portfolio volatility during equity market downturns.
• Stable Income Stream: With a weighted average duration of about 6–7 years, BND delivers regular coupon payments, contributing to a steadier cash flow.
• Low Expense Ratio: At about 0.035%, BND keeps costs low while covering the entire U.S. bond market.

Practical Takeaway

• Ideal for Risk‑Tolerant Investors who still want a defensive layer that protects against sharp equity declines while still earning a yield that outpaces most savings accounts.

Combining VTI and BND: A Simple, Balanced Strategy

The article recommends pairing VTI and BND to create a two‑tier portfolio that captures growth and safety simultaneously. A commonly cited allocation is 80% VTI and 20% BND for a moderately aggressive stance, though the exact mix can be tweaked based on your age, risk tolerance, and financial goals.

How the Blend Works

1. Growth Component (VTI)
   - Provides the bulk of portfolio upside over the long run, as equity markets tend to outperform bonds over multi‑decade horizons.

2. Safety Component (BND)
   - Dampens volatility and helps preserve capital when stocks suffer a correction or bear market. Bonds often perform well in periods of rising interest rates or economic uncertainty.

Rebalancing Tips

• Annual Rebalancing: Periodically adjust back to your target mix. For example, if equities rally and the portfolio tilts to 85% VTI, a small sale of VTI and purchase of BND will bring you back to 80/20.
• Tax‑Efficient Harvesting: Use tax‑loss harvesting to offset gains when selling over‑performing bonds, especially if you’re in a high‑tax bracket.

Additional Resources and Context

The MSN Money article links to Vanguard’s own website pages for VTI and BND. Those pages provide the latest holdings, performance charts, and detailed expense breakdowns—useful for confirming the numbers and getting a deeper understanding of the index composition.

The piece also references other Vanguard ETFs, such as the Vanguard Total International Stock ETF (VXUS), noting it as a potential add‑on if you want global diversification beyond U.S. borders. While the core recommendation remains VTI + BND, an international component can further reduce country‑specific risk.

A sidebar in the article quotes financial expert opinions that support the “core‑safety” approach: “Investing in broad‑market equities for growth, coupled with a diversified bond allocation for safety, is a tried‑and‑true strategy for many long‑term investors,” one advisor says. The article stresses that the real advantage of Vanguard ETFs lies in their low costs, which preserve returns over time.

Bottom Line

If market volatility has you uneasy, consider building a portfolio around Vanguard’s low‑cost, broad‑market ETFs. VTI gives you exposure to the entire U.S. equity market, while BND anchors your portfolio with a diversified bond mix. The combination offers a balanced approach that can grow your wealth over the long haul while providing a safety cushion during downturns.

To get started: 1. Open a brokerage account (many platforms offer zero‑commission trades for Vanguard ETFs). 2. Buy the target allocation—e.g., $8,000 in VTI and $2,000 in BND for an 80/20 split. 3. Rebalance annually and stay disciplined during market swings.

By keeping your strategy simple, focusing on broad exposure, and maintaining low costs, you’ll be better positioned to ride out short‑term market turbulence and stay on track toward your long‑term financial goals.