Could a market slowdown be ahead? Vanguard’s latest outlook is rattling retirees — and these are straightforward ways to protect your portfolio.

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Vanguard helped popularize index fund investing and now oversees about $12 trillion in assets, making it one of the biggest players in the U.S. stock market.

That means any market outlook from the firm deserves attention. The company recently released a 10-year forecast covering a broad mix of asset classes, from municipal bonds to mortgage-backed securities.

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For many U.S. retirees, though, the stock-market portion of that forecast is the part worth worrying about. Here’s what the report suggests seniors may be facing in the years ahead.

Muted U.S. stock gains

Vanguard expects U.S. stocks to produce annualized returns of 4.8% to 6.8% over the next decade. That is notably below the returns investors have seen over the past 10 years. Since 2015, the S&P 500 has posted an annualized return of 15.4%.

In short, Vanguard’s analysts do not think future stock performance will resemble the very strong gains investors have enjoyed in recent years, aside from the sharp decline during the pandemic.

If you are retired or nearing retirement and your portfolio leans heavily toward U.S. stocks, this outlook may be a reason to reconsider your allocation. The good news is that the report also points to other asset classes that could do better.

Other areas that may hold up better

Not every corner of the market looks weak. Vanguard’s forecast says U.S. Treasury bonds could return 3.8% to 4.8% annually over the next 10 years. That is lower than the upside investors may seek in growth stocks, but it also comes with less volatility and risk.

The firm also sees developed markets outside the U.S. outperforming American stocks. Excluding the U.S., developed-market equities are projected to return 5.3% to 7.3% annualized by 2035.

There are already signs of that shift. Canada’s benchmark S&P/TSX Composite has returned 17.72% over the past year, compared with 12.12% for the S&P 500 over the same stretch.

Likewise, UBS Group expects $1.2 trillion in capital to move from U.S. equities into European stocks over the next five years.

For investors looking to beat broad-market averages, stock picking may become more appealing. It generally takes more effort than buying an index fund, but there are tools that can make the process easier.

Platforms such as Moby aim to simplify that work by presenting investment ideas in plain language rather than jargon.

Each week, Moby sends one to three curated stock picks. Its reports are prepared by former hedge fund analysts and financial professionals who spend hundreds of hours each week reviewing the latest market news and data.

The company says its picks have outperformed the S&P 500 by nearly 12% on average.

What investors can consider

Any market forecast, even one from a giant fund manager, should be treated cautiously. No one can know for sure whether U.S. stocks will end up above or below Vanguard’s expectations.

Still, it may make sense to rely less on domestic stocks and diversify more broadly.

Alliance Bernstein’s review of Morningstar data found that U.S. investors keep only 15% of their portfolios in international stocks, leaving many exposed to “home bias.” If your holdings are too concentrated in the U.S., adding international stocks and bonds could help balance risk.

You could also consider alternative assets such as gold.

Gold is widely used as a hedge against stock-market swings and can help protect retirement savings during a downturn.

Open a gold IRA

One way to invest in gold while also gaining tax advantages is through a gold IRA with Goldco.

Gold IRAs let investors hold physical gold or gold-linked assets inside a retirement account, combining IRA tax benefits with the defensive qualities of gold for those looking to hedge against uncertainty.

With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. The company also matches up to 10% of qualified purchases in free silver.

If you want to see whether this fits your diversification goals, you can download a free gold and silver information guide.

Put idle cash to work

Investing can build long-term wealth, but not every dollar needs to face the stock market’s ups and downs.

Savings accounts carry much less risk than investments, so earning a strong return on cash can be a steadier way to grow money.

A high-yield account such as a Wealthfront Cash Account can be a useful place for uninvested cash, offering competitive interest and easy access when needed.

The Wealthfront Cash Account currently offers a base APY of 3.55% through program banks. With a new-client bonus and direct deposit incentive, referred clients can earn up to 4.55% APY.

That is 10 times the national deposit savings rate, according to the FDIC’s latest report.

With no minimum balance or account fees, plus 24/7 withdrawals and free domestic wire transfers, funds remain accessible at all times. The account also offers up to $8 million in FDIC insurance eligibility through program banks.

Financial advisors often recommend becoming more conservative as you age and move closer to retirement. If you are already retired and concerned about the market, adding more stable fixed-income assets, such as U.S. government bonds, may be worth considering. It can also help to speak with a financial advisor about your personal retirement goals and financial situation.

Vanguard is known not only as a leading asset manager, but also for a range of financial services.

For investors who want a more hands-off, technology-driven approach, Vanguard’s Digital Advisor offers professionally guided investing through one of the world’s largest asset managers.

The service builds a personalized portfolio using Vanguard’s low-cost ETFs and mutual funds, then keeps it on track through automatic rebalancing.

It also provides retirement-saving guidance and allows you to set additional goals as your needs change.

In addition, it can help with debt-repayment planning, potentially freeing up more money for long-term investing.

With a minimum investment of just $100, it can be an accessible way to begin with professional guidance.

For every $10,000 in an all-index portfolio, the annual cost is about $15 to $16.

You can also try the Vanguard experience with no advisory fees for the first 90 days.

All investing is subject to risk, including the possible loss of the money you invest.

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Article Sources

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Federal Deposit Insurance Corporation; Vanguard; Yahoo Finance; Yahoo Finance Canada; MarketWatch; AllianceBernstein