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Sat, November 29, 2025
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Worried About the Stock Market? Here Are Two Sound Investments to Keep Your Portfolio Steady
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Published in Stocks and Investing on Saturday, November 29th 2025 at 7:34 GMT by The Motley Fool- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
Worried About the Stock Market? Here Are Two Sound Investments to Keep Your Portfolio Steady
In the wake of the latest bout of market turbulence—characterized by volatile swings in the S&P 500, rising interest‑rate expectations, and renewed concerns about a possible recession—many investors are looking for safe havens that can still deliver attractive returns. The Motley Fool’s November 29, 2025 piece, “Worried about the stock market? Invest in these 2,” offers a concise, practical solution: diversify into a broad‑market equity index fund and a high‑quality bond index fund. Below is a comprehensive summary of the article, including the key points, supporting data, and related resources the Fool recommends.
1. The Core Problem: Volatility and Uncertainty
The article opens by framing the current environment. Over the past year, the S&P 500 has fluctuated over 15 %, driven in part by:
- Interest‑rate hikes by the Federal Reserve, which have dampened corporate earnings expectations.
- Geopolitical tensions that increase risk‑aversion in equity markets.
- Inflationary pressures that erode real returns on cash‑equivalent holdings.
The author stresses that a “long‑term, buy‑and‑hold mindset” remains the best defense against these short‑term shocks. Nonetheless, for investors who want a buffer against downside risk, the article recommends a two‑fund strategy that balances growth potential with stability.
2. Fund #1: Vanguard Total Stock Market Index Fund (VTSAX)
What It Is
VTSAX is a low‑cost, passively managed fund that tracks the CRSP US Total Market Index. It offers exposure to more than 3,500 U.S. stocks, spanning large‑cap, mid‑cap, small‑cap, and even micro‑cap companies.
Why It Works
- Diversification: With thousands of holdings, a single stock’s poor performance is offset by the rest of the portfolio.
- Low Expense Ratio: The 0.04 % fee is among the lowest for U.S. equity funds, preserving more of your gains.
- Historical Performance: Over the past 10 years, VTSAX delivered an average annual return of ~13 %, outperforming the S&P 500’s ~12 % during the same period.
How to Invest
The article recommends buying VTSAX through a tax‑advantaged account (IRA or 401(k) if available) to maximize growth. For those without such accounts, a brokerage account works fine. Dollar‑cost averaging (DCA) is encouraged: invest a fixed amount each month regardless of market levels to smooth entry points.
Risks and Mitigations
- Equity Risk: Naturally susceptible to market downturns. The article advises that investors keep at least 60 % of their portfolio in equities if they’re 30–45 years from retirement; otherwise, a more conservative mix may be appropriate.
- Market Timing Illusion: The article warns against trying to time the market; instead, focus on the long‑term trend and use DCA to avoid “buy‑high, sell‑low” impulses.
3. Fund #2: Vanguard Total Bond Market Index Fund (VBTLX)
What It Is
VBTLX tracks the Bloomberg U.S. Aggregate Float‑Adjusted Bond Index, providing exposure to the broad U.S. investment‑grade bond market—including Treasury, corporate, mortgage‑backed, and asset‑backed securities.
Why It Works
- Stability: Bonds traditionally act as a counterbalance to equities during downturns, reducing portfolio volatility.
- Income Generation: The fund yields approximately 2–3 % annually, offering a steady stream of income for cash‑needs or reinvestment.
- Low Expense Ratio: At 0.05 %, it’s inexpensive to hold.
How to Invest
The article recommends pairing VBTLX with VTSAX in a “core‑satellite” allocation: invest 70–80 % in VTSAX and 20–30 % in VBTLX. This mix delivers growth with a cushion against market swings. For investors concerned about rising rates, the article notes that a 20 % bond allocation helps reduce overall portfolio volatility.
Risks and Mitigations
- Interest‑Rate Risk: Bond prices fall as rates rise. However, the diversified mix of maturities in VBTLX mitigates extreme moves.
- Credit Risk: Because the fund focuses on investment‑grade bonds, credit risk is low. Nonetheless, the article recommends monitoring economic indicators that could affect corporate default rates.
4. Complementary Resources and Further Reading
The Fool’s article links to several ancillary pieces that deepen understanding:
- “The Importance of Asset Allocation in Volatile Times” – Explains how blending stocks and bonds protects against downside while maintaining upside potential.
- “Dollar‑Cost Averaging: A Simple Strategy That Works” – Offers step‑by‑step guidance on implementing DCA.
- “How to Read the Bond Market” – Breaks down the mechanics of bond pricing, yield curves, and duration.
The author also references a Bloomberg chart that shows the long‑term correlation between the S&P 500 and the U.S. Treasury index, underscoring the historical benefit of pairing these asset classes.
5. Bottom Line: A Balanced, Low‑Cost Approach
In a nutshell, the article’s thesis is straightforward: Invest in VTSAX for growth and VBTLX for stability. By allocating 70–80 % to the total stock market and 20–30 % to the total bond market, investors can achieve a balanced risk‑return profile that is resilient to short‑term market shocks. The article emphasizes that costs matter, so choosing low‑expense index funds is critical to preserving long‑term wealth.
Finally, the author reminds readers that the goal is to stay invested for the long haul. Market volatility is a normal part of the economic cycle; disciplined, diversified investing is the most reliable way to weather those storms and emerge with a portfolio that continues to grow over time.
Read the Full The Motley Fool Article at:
[ https://www.fool.com/investing/2025/11/29/worried-about-the-stock-market-invest-in-these-2/ ]
