Why “VOO and Chill” Isn’t as Simple as It Sounds

With market volatility, endless fund choices, and the lure of “hot stock” bets filling social media, it’s no surprise many investors now default to “VOO and chill”—buying a low-cost S&P 500 ETF (like Vanguard’s VOO), shutting out the noise, and letting time do the work. As I shared with Money for their piece, “VOO and chill—letting time do the work—is iconic for its simplicity and efficiency.” For savers with their basics covered (emergency fund, retirement contributions), this “entirely rational, hands-off” approach is an excellent way to get started or to automate your investing journey.

But as I cautioned in my comments, the real-world risk profile of VOO (and the S&P 500 itself) has changed in recent years. Investors may be lulled by the idea of diversification, but the top 36% of the index is now dominated by just a handful of tech giants—the Magnificent Seven. “Your ‘diversified’ index is far more exposed to the fates of Apple, Microsoft and Nvidia than it appears.” That means even passively managed ETFs like VOO are increasingly concentrated in the outcomes of just a few companies, especially as big bets on artificial intelligence and technology fuel both gains and the risk of abrupt reversals.

So what should “VOO and chill” investors actually do? My message is stay disciplined, understand your real exposure, and diversify intentionally. “My question is always: Can you really chill?” I tell clients to be mentally and financially prepared for the reality that “VOO has fallen as much as 30% during steep sell-offs in the past. Staying disciplined is the true key, not simply choosing a set-it-and-forget-it product.” To that end, adding international stocks, small-cap, or sector-spanning ETFs—and even short-term Treasurys—can further balance risk and reduce overconcentration in U.S. mega-cap tech.

Bottom line:

VOO-and-chill is a smart, low-cost investing approach for many—but only if you understand that “chill” doesn’t mean “risk-free.” As I emphasized to Money, successful long-term investing depends on building a portfolio you can actually stick with, even when markets (or the S&P’s tech darlings) hit turbulence. The best plan is the one you can hold—calmly—when the world is decidedly not chill.