Warren Buffett is the CEO of the Berkshire Hathaway holding company, where he oversees a number of wholly owned subsidiaries and a $281 billion portfolio of publicly traded stocks and securities. He plans to step down at the end of 2025, capping off a stellar run of success that dates back to 1965.

Had you invested $1,000 in Berkshire stock when Buffett took the helm 60 years ago, you would have been sitting on a whopping $44.7 million at the end of 2024. But he's a seasoned expert who knows exactly what to look for when he's buying stocks, so the average retail investor might struggle to replicate his returns.

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Therefore, Buffett often recommends buying low-cost exchange-traded funds (ETFs) that track indexes like the S&P 500 (SNPINDEX: ^GSPC). The Vanguard S&P 500 ETF (NYSEMKT: VOO) is one he's suggested by name in the past, and it's one of the most cost-effective options.

The Vanguard S&P 500 ETF tracks the S&P 500 by investing in exactly the same companies, and if history is any guide, it could turn $500 per month into $1 million over the long term. Here's how.

Image source: The Motley Fool.

A great index fund for investors of all experience levels

The S&P 500 is made up of 500 different companies, and they have to meet strict criteria to be included. Each company must have a market capitalization of at least $20.5 billion, and the sum of their earnings (profits) must be positive over the most recent four quarters. But even after ticking every box, a special committee has the final say over which companies make the cut.

The 500 companies in the S&P 500 come from 11 different sectors of the economy. Some sectors have a higher representation than others because the index is weighted by market capitalization, which means the largest companies have a greater influence over its performance than the smallest.

That's why the information technology sector has a massive weighting of 30.4%. It's home to the world's three largest companies -- Microsoft, Nvidia, and Apple, which have a combined market cap of $10 trillion.

The table below breaks down the top five sectors in the Vanguard S&P 500 ETF, their weightings, and some of the popular stocks within them:

Data source: Vanguard. Portfolio weightings are accurate as of April 30 and are subject to change.

Artificial intelligence (AI) is a dominant theme in the stock market right now because it's impacting almost every sector of the S&P, especially information technology, thanks to companies like Nvidia and Microsoft. But Amazon, Tesla, Alphabet, Meta Platforms, and even Netflix are using AI in unique ways to supercharge their various businesses.

But diversification is the main reason the S&P 500 is the most widely followed U.S. stock market index. Per the above table, the financial and healthcare sectors make up a combined 25% of the S&P, and the index also offers investors exposure to the industrial, energy, and even real estate sectors.

As I mentioned earlier, the Vanguard S&P 500 ETF is one of the cheapest ways to invest in the benchmark index. It features an expense ratio of just 0.03%, meaning an investment of $10,000 will incur an annual fee of just $3. Vanguard says the average expense ratio of similar ETFs across the industry is a whopping 25 times higher at 0.75%, which can detract from investors' returns over the long run.

Turning $500 per month into $1 million

The S&P 500 plunged by 19% from its record high earlier this year on the back of simmering global trade tensions that were triggered by President Trump's tariffs. But volatility is a normal part of the investing journey because the index suffers a decline of 10% or more every two and a half years, on average, and investors can expect a bear market decline of 20% every six years or so (according to Capital Group).

But even after accounting for every sell-off, correction, and bear market, the S&P 500 has delivered a compound annual return of 10.3% (including dividends) since it was established in 1957.

Based on that return, investors who deploy $500 per month into the Vanguard S&P 500 ETF could join the millionaires' club within 30 years:

Calculations by author.

Past performance isn't a reliable indicator of future results, so there is no guarantee the S&P will continue to deliver annual returns of 10.3%. But forces like AI could add trillions of dollars in market cap to some of the most influential companies in the index, which would support further gains.

Nvidia CEO Jensen Huang predicts AI data center spending will reach $1 trillion per year by 2028, which is great news for his company and every other semiconductor stock in the S&P. Then there are AI subsegments like autonomous driving and robotics, which could be trillion-dollar opportunities on their own.

But even if it takes a little longer than 30 years to turn $500 per month into $1 million, the S&P 500 is still likely to be significantly higher by then, so investors who start their investing journey today will almost certainly be better off than those who remain on the sidelines.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

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See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, JPMorgan Chase, Meta Platforms, Microsoft, Netflix, Nvidia, Pfizer, Tesla, Vanguard S&P 500 ETF, and Visa. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Looking for an investment to add to your long-term portfolio? Consider the Vanguard S&P 500 ETF (NYSEMKT: VOO), which tracks the S&P 500. It's a smart buy for most investors at most times. Even Warren Buffett has recommended it, directing that most of the money he leaves his wife be put into an S&P 500 index fund.

Here's a closer look at the fund and what's in it. See what you think and whether it might be a good fit for you.

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Image source: Getty Images.

Meet the S&P 500

Let's start with the S&P 500, which is the index tracked by this index fund. The S&P 500 is a grouping of 500 of the biggest companies in the U.S. Here are its recent top 10 components, by weight, as of early June:

Source: Slickcharts.com. ETF = exchange-traded fund.

Note that if you combine the two Alphabet classes, the total weighting is 3.82%, which would put it in fifth place in the ranking. You might also note that all seven of the "Magnificent Seven" stocks -- Apple, Microsoft, Google parent Alphabet, Amazon, Nvidia, Facebook parent Meta Platforms, and Tesla -- are held in the index in rather great proportion. Indeed, together, the top 10 holdings in the S&P 500 make up about a third of the entire index's value.

The S&P 500, like many stock indexes, is a market-capitalization-weighted index, meaning the biggest companies in it will have the most influence on it. That's evident just from the table above, which shows how much more influence Nvidia has than Tesla, and Tesla is the seventh-most influential component.

Remember, too, that there are 490 other stocks in the index, though most of them have relatively little influence on its movement individually. Other components include Costco Wholesale (recently ranked 18th), Starbucks (103), PayPal Holdings (150), Delta Air Lines (277), Ulta Beauty (357), and MGM Resorts International (485).

All together, these 500 companies comprise about 80% of the total value of the U.S. stock market. That's why the S&P 500 is often used as a proxy for the total U.S. stock market -- although doing so does omit thousands of smaller companies.

Why invest in an S&P 500 index fund?

So, why would you invest in a low-fee S&P 500 index fund, such as the Vanguard S&P 500 ETF? Here are some reasons.

For starters, it's a solid performer. The S&P 500 has averaged annual gains of close to 10% over long periods -- a rather powerful growth rate. Here's how your money might grow at that rate over time and at a slightly more conservative rate (because that 10% is not guaranteed):

Source: Calculations by author.

See? If you're diligent and stick with the program, you might amass a million dollars or more investing with just a simple index fund. On top of that, the S&P 500 index has outperformed a whopping 90% of managed large-cap mutual funds over the past 15 years. It's not easy to outperform an S&P 500 index fund.

One reason the S&P 500 index performs so well is that it's not comprised of the same 500 stocks for years and years. It gets adjusted over time. Now and then, some stocks are ejected from the index, and others are added. The ejected ones have likely been struggling or, at the very least, haven't been growing briskly, while the new components have grown enough to merit consideration for the index.

There are more reasons to love S&P 500 index funds: They give you instant diversification, spreading your dollars across technology companies (specializing in cloud computing, semiconductors, cybersecurity, and more), financial services companies, healthcare companies, consumer products companies, energy companies, retailers, and much more. You'll essentially be invested in the American economy.

Consider the Vanguard S&P 500 ETF

So, consider the Vanguard S&P 500 ETF. It's an exchange-traded fund (ETF) -- which is like a mutual fund but trades like a stock, allowing you to buy one or many shares through your brokerage account. It's a smart buy at just about any time, and many people will be best served by simply adding money to it over many years.

Vanguard is known for charging low fees, and this ETF sports an expense ratio (annual fee) of just 0.03%, meaning you'll be charged $0.30 annually for every $1,000 you have invested in the fund. Here's how the ETF has performed on an annualized basis over some recent periods:

Source: Data from Vanguard.com as of May 31, 2025. ETF = exchange-traded fund.

So, give the Vanguard S&P 500 ETF some serious consideration for a berth in your long-term portfolio. (Remember that short-term money that you may need within five or so years is best kept out of stocks.)

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

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*Stock Advisor returns as of June 2, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Selena Maranjian has positions in Alphabet, Amazon, Apple, Berkshire Hathaway, Broadcom, Costco Wholesale, Meta Platforms, Microsoft, Nvidia, PayPal, and Starbucks. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Costco Wholesale, Meta Platforms, Microsoft, Nvidia, PayPal, Starbucks, Tesla, Ulta Beauty, and Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom and Delta Air Lines and recommends the following options: long January 2026 $395 calls on Microsoft, long January 2027 $42.50 calls on PayPal, short January 2026 $405 calls on Microsoft, and short June 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.

The tech sector has been a market-beating beast in recent years. Tech-heavy exchange-traded funds (ETFs) like the Vanguard Information Technology ETF (NYSEMKT: VGT) and the Invesco QQQ Trust (NASDAQ: QQQ) have delivered annual returns of more than 21% over the last three years. Broad market trackers like the Vanguard S&P 500 ETF (NYSEMKT: VOO) only gained 15.5% per year over the same period. Yes, that's a fantastic return from a historic perspective, but the tech sector offered even stronger gains.

Image source: Getty Images.

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The technology boom has been driven by artificial intelligence (AI) news, starting with the public release of ChatGPT in November 2022. Many leaders in the AI market have soared sky-high, adding fuel to the tech sector's market performance fires, but also making those market darlings a bit expensive.

Fortunately, the market-moving forces left a few top-notch companies behind. I still see several tech stocks with a combination of bright business prospects and modest stock prices. Let's check out a couple of underappreciated bargain-bin tech stocks. This dynamic duo looks ready for a fresh bull run.

1. Criteo

Digital advertising has been a troubled sector since the first signs of an inflation crisis in 2021. Paris-based commerce media specialist Criteo (NASDAQ: CRTO) provides purchase-inspiring ad services to global brands. This focus placed the Parisian company in the epicenter of the inflation-based slowdown -- why invest in lavish marketing campaigns when consumers are pinching pennies and tightening belts?

Criteo's revenues have indeed slumped since then, and so has the stock price. You know what's surging in recent quarters, though? That would be Criteo's free cash flows:

CRTO Free Cash Flow data by YCharts

The cash profits took a temporary dip, but came back stronger, with trailing cash flows reaching an all-time high in May's Q1 2025 report. But Criteo's stock price is down more than 30% in the last quarter, and the shares are trading at the bargain-bin valuation of 11.3 times earnings and 6.6 times free cash flow.

I'm not saying the digital ad market is roaring back to life in the spring of 2025. The political climate may result in another inflation spike, and advertisers are already reducing their ad-spot spending right now. Hence, Criteo's undervalued stock may see more volatility and weakness in the coming months. However, I think the market makers have underestimated Criteo's ability to turn cash profits in a soft market.

The Criteo shares you buy at a discount in this downswing should return to more reasonable valuation ratios someday. At the same time, the company's robust cash generation makes it less vulnerable to short-term financial challenges. You can buy Criteo stock with confidence while it's cheap. This one is poised for great long-term returns, and patience is the greatest Wall Street virtue of them all.

2. Hewlett Packard Enterprise

My next recommendation is more of a household name. Hewlett Packard Enterprise (NYSE: HPE) has been around (in some form) since 1939. As the data center and cloud computing operator of the old HP business, HP Enterprise (aka HPE) plays a serious part in the AI boom.

Indeed, seven out of the 10 most powerful supercomputers today were built by HP Enterprise. Only Chinese rival Lenovo has more systems in the top 500 than HP Enterprise, and nobody can match the total number-crunching performance of this company's ultra-powerful systems. Any company or organization that needs a top-performance system for their AI training and operations is likely to check out HP Enterprise's catalog first.

So I'm talking about an AI powerhouse here. Yet, the stock price has dropped 16% lower year to date while smaller system builders Super Micro Computers (NASDAQ: SMCI) and Dell (NYSE: DELL) are up by 41% and down by just 1%, respectively. Trading at 8.9 times earnings and 14.3 times free cash flow, HP Enterprise looks downright cheap next to these challengers.

HP Enterprise's stock could double or triple in price and still be affordable next to Supermicro or Dell. This could be a great value play on the hardware side of the AI boom.

Should you invest $1,000 in Criteo right now?

Before you buy stock in Criteo, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Criteo wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $830,492!*

Now, it’s worth noting Stock Advisor’s total average return is 982% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 19, 2025

Anders Bylund has positions in Criteo, Vanguard Information Technology ETF, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool recommends Criteo. The Motley Fool has a disclosure policy.

In recent days, investors have breathed a sigh of relief. After weeks of concerns about the impact of President Donald Trump's import tariffs, a reason for optimism emerged. The U.S. and China -- the country subject to the highest tariffs -- reached an initial agreement, and one that was better than expected. As a result, the three major benchmarks climbed, with the S&P 500 (SNPINDEX: ^GSPC) even returning to positive territory for the year.

However, amid this excitement about a better situation ahead, billionaire Jamie Dimon remains somewhat cautious. The chief executive officer of JPMorgan Chase in a Bloomberg interview said despite the tariff deal, a recession isn't "off the table at this point." Though the bank's economists lowered their U.S. recession risk forecast to below 50% from 60%, Dimon said current uncertainties such as large deficits and high interest rates could weigh on the economy -- and that market volatility probably isn't over.

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"I think it's a mistake to think we can go through all the things we're going through, and the volatility itself will come down," Dimon told Bloomberg during the bank's conference in Paris.

As CEO since 2005, Dimon has accompanied JPMorgan as its market value soared more than 400% to $743 billion, and he's often looked to for his comments on the general stock market environment to come.

Moving forward, if Dimon is right, the market still may face some challenges even after this week's landmark agreement between the U.S. and China. And that's why it's important to prepare your portfolio to handle any environment. Here are five ways to do just that.

Image source: Getty Images.

1. Favor diversification

If your portfolio is heavily exposed to just one company or industry -- even if it's a winning one today -- now is a great time to adjust your strategy. We've seen in recent weeks that even the strongest companies -- such as artificial intelligence (AI) chip giant Nvidia -- saw their shares drop amid general tariff and economic concerns. So it's never a good idea to place narrow bets when investing in stocks.

Instead, include at least a few industries and eventually several stocks in your portfolio, so if one faces troubled times, the others may compensate. And if you're not as knowledgeable as you'd like to be about a certain industry that you'd like to invest in, don't worry: There's a simple solution. Try an exchange-traded fund (ETF) revolving around that particular industry. It will offer you immediate diversification and exposure to top companies in the field.

2. Invest in companies that have proven themselves

Well-established companies with a long track record of earnings growth over the years are your best friends during uncertain times. They've proven their ability to handle challenges -- so if their financial situations and strategies haven't significantly changed, there's reason to be confident they can do it again.

An example is Amazon (NASDAQ: AMZN). The e-commerce and cloud computing giant struggled with higher inflation a few years ago and even shifted to an annual loss. But the company didn't sit still, and instead used this as an opportunity to revamp its cost structure -- a move that led it back to profitability a year later and continues to make this market giant more efficient.

So, it's worth looking at how a company has managed past difficulties, and those that have excelled may be great candidates for your buy list.

AMZN Net Income (Annual) data by YCharts

3. Buy dividend stocks

No matter what the market is doing in a given year, your portfolio still could deliver some gains if you invest in dividend stocks. These players offer you passive income just for owning the shares. This is something you'll particularly appreciate when the market is down.

How to choose a top dividend company? Look to the list of Dividend Kings, which includes companies such as Coca-Cola, Johnson & Johnson, and many others across sectors. These companies have boosted their dividend payments for at least the past 50 years, a sign that rewarding shareholders is important to them. So you can buy with confidence that these payments likely will continue well into the future.

4. Commit to an asset that's always won over time

It's impossible to predict the future with 100% accuracy. But one particular asset always has won over time, suggesting it could continue along this path. And this is the stock market as a whole -- from the S&P 500 to the Dow Jones Industrial Average (DJINDICES: ^DJI) and the Nasdaq Composite (NASDAQINDEX: ^IXIC). After each past decline, the indexes have gone on to advance over time.

^SPX data by YCharts

To benefit from this, commit to an asset that tracks one of the three major benchmarks. An example is the Vanguard S&P 500 ETF (NYSEMKT: VOO). The purchase will offer you instant diversification as well as a great chance of scoring a win -- as long as you hold on for the long term.

5. Focus on the long term

It may be very tempting to get in on the trendy stock of the moment and sell it a few weeks later for a profit. But it doesn't always work out that way. In many cases, a few weeks after your purchase, instead of gains, you may see losses -- at least on paper. That's all part of the short-term investing routine, and that puts the pressure on you to "time the market."

But I've got good news for you: You don't have to worry about all of that when you invest for the long term -- and through long-term investing, you may set yourself up for an even bigger win. How to do it? Buy quality stocks with bright future stories when they're trading for reasonable prices -- and hold on for at least five years.

You may experience ups and downs, but you won't have to worry about an economic downturn or recession wiping out your gains. By sticking with solid players throughout business and market cycles, you're likely to position yourself for a win over the long run.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $349,648!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $40,142!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $635,275!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

See the 3 stocks »

*Stock Advisor returns as of May 12, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of Motley Fool Money. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, JPMorgan Chase, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

There are plenty of good places to invest your money right now, but tariffs and economic uncertainty are making it much harder to feel confident about buying stocks in some sectors.

I tend to be cautious about where I put my money, but one investment that almost always looks like a good place to invest is the Vanguard S&P 500 ETF (NYSEMKT: VOO). Here are five reasons it would be my only choice if I had to pick just one stock -- or in this case, an exchange-traded fund -- for my retirement portfolio.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

1. Instant diversification

One of the best things about the Vanguard S&P 500 ETF is that the money you invest in it will be spread across 500 of the largest U.S. companies, which make up the S&P 500. Because the exchange-traded fund tracks the S&P 500 index, you won't have to worry about picking stocks across a variety of sectors -- you can enjoy a base level of diversification as soon as you own the fund.

With the Vanguard S&P 500 ETF, there's less of a need to know which sector is booming or which company is inventing the next big thing. This is ultimately a bet on the long-term rise of the broad market.

2. It has a fantastic track record

While the common financial disclaimer, "Past performance is not a guarantee of future results," applies to this fund just like it applies to every other stock you might own, the S&P 500 does boast a long history of gains.

The index has delivered an average annual rate of return of 10.1% (not accounting for inflation) since 1957. This Vanguard ETF won't return that exact amount annually -- there will up years and down years. But given enough time, the S&P 500 has always rebounded from its lows and made significant gains.

3. It's inexpensive to own

All funds charge fees, usually quantified as an expense ratio, and the average fee for index equity ETFs is 0.14%. That's already quite low, but Vanguard's fund is a standout for its ultra-low annual fee of just 0.03%.

That means that for every $10,000 you have in the fund, you'll pay just $3 annually. This is especially important as your portfolio grows over time. With the Vanguard S&P 500 ETF, you'll keep more of the gains you make from the market because of the fund's industry-low expense ratio.

4. It's easy to buy and sell shares

While Vanguard's ETF is a fund that tracks the S&P 500, it's not any more difficult to buy and sell than any other stock. This means that if you need to sell some shares of the fund quickly, exit your position, or buy new shares, you can do it the same way you would with any stock through your preferred brokerage.

And because the fund is one of the most popular options out there -- it's the largest Vanguard ETF -- it's highly liquid for when you're ready to sell.

5. You'll have exposure to some of the best companies in the market

The S&P 500 index is composed of some of the largest, most stable, and profitable companies, which means you'll be invested in quality businesses.

Of course, that doesn't mean the fund is immune to volatility -- it's been on a wild ride over the past few months in response to tariffs -- but it does mean that your money is invested in a fund that tracks the growth of many industry-leading companies.

It's worth mentioning that given the considerable uncertainty in the market and economy right now, even stable, profitable companies can underperform in this environment. That's why it's important for investors to remember that if you buy the Vanguard S&P 500 ETF, you should plan to hold onto it for years, just like any other stock, in order to reap the full rewards.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $714,958!*

Now, it’s worth noting Stock Advisor’s total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 5, 2025

Chris Neiger has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

2025 has been an eventful year on Wall Street. The market has been making wild moves in response to unpredictable events. Many market watchers expect a downturn, a recession, and/or another bear market to emerge any day now. Then again, they've already been looking for these negative outcomes for several months.

There was a sharp drop in early April, but it didn't really stick. Whether you call the current situation a bear market or not, it's certainly a period of huge volatility.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

I understand if you've sworn off investing altogether amid these shifting economic conditions However, I've been putting more spare cash to work than usual in recent months -- and I plan to continue doing so. Let me explain why I'm an unusually active stock investor in this fickle market. By the time I'm done, you just might want to join me.

Timing the market is an impossible game

Nobody knows what the stock market will do tomorrow, or next week, or next year.

There are surprises around every corner. Nobody expected the COVID-19 pandemic. The artificial intelligence (AI) surge was another surprise. The shocking dot-com boom was followed by an equally unexpected crash. I could go on and on.

The point is, real-world events have profound and unpredictable effects on the stock market. Some shocks beget golden eras for specific industries. Others can lay a muffling blanket over the whole economy.

So I don't trust anyone who says they know what the market will do over a specific period. Even master investor Warren Buffett can't forecast Wall Street's next moves.

"Let me be clear on one point: I can't predict the short-term movements of the stock market," Buffett said in a 2008 New York Times article. "I haven't the faintest idea as to whether stocks will be higher or lower a month or a year from now."

If Buffett doesn't know, I don't stand a chance of getting it right. It's not for me to forecast when the next market downturn will start, or how deep it might go. Trying to time my stock purchases for the absolute bottom of a potential trough is a bad idea.

Image source: Getty Images.

Time in the market is a winning strategy

That 2008 Buffett article didn't end on that gloomy note, of course. He went on to describe his contrarian investment style, and his focus on holding great stocks for a long time.

"Be fearful when others are greedy, and be greedy when others are fearful," he wrote. Yeah, you've heard that bit before. "Bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price."

In the long run, great companies will make patient shareholders happy. If you're not comfortable with picking the best stocks in a crowded market, a diversified mutual fund or exchange-traded fund (ETF) will do the same job.

For example, the Vanguard S&P 500 ETF (NYSEMKT: VOO) will never beat the market. However, it will help you build up your wealth if you invest in it steadily over many years and decades.

So I won't nail the perfect time to buy -- but at least I'm trying

Math is a wonderful science. I'm particularly thrilled about the power of compound growth.

Earning annual returns of 10% on your investments for a decade won't just double your money, because you're not just experiencing those 10% gains on your portfolio's original value. In the second year, you'll also see a 10% gain on the first year's gains, and so on in every year that follows. The benefits really start to rack up over time. In this basic example, If you started with a $1,000 investment, after 10 years, your investment would be worth $2,594.

Longer investment periods will continue to boost the overall returns. Add another decade to that $1,000 thought experiment with perfect annual returns of 10%, and you'd have $6,727 at the end. Going to 30 years results in a $17,449 result.

In reality, your gains won't be smooth. You'll go through down years like 2022 and fantastic periods like 2024. Adding more cash to your portfolio is a great idea when the market is booming. Yet as Warren Buffett suggests, you can get more value for your investing dollar when stock charts are trending down.

What I'm buying in 2025

That's why I don't mind buying stocks and exchange-traded funds in this nerve-wracking economy. My most recent buys have included the Vanguard S&P 500 ETF and the more aggressive Vanguard Russell 1000 Growth (NASDAQ: VONG) ETF. Among my hand-picked stock buys in recent weeks, you'll find a few shares of retail giant Walmart (NYSE: WMT) and media-streaming pioneer Roku (NASDAQ: ROKU). These are some of my best investment ideas right now.

It feels easy to find undervalued stocks right now. I've only shared a few of my 2025 purchases here. Most of them have posted negative returns in the early going, and that's fine. I might just keep buying them at better and better starting prices.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $617,181!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $719,371!*

Now, it’s worth noting Stock Advisor’s total average return is 909% — a market-crushing outperformance compared to 163% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 5, 2025

Anders Bylund has positions in Roku, Vanguard S&P 500 ETF, Vanguard Scottsdale Funds-Vanguard Russell 1000 Growth ETF, and Walmart. The Motley Fool has positions in and recommends Roku, Vanguard S&P 500 ETF, and Walmart. The Motley Fool has a disclosure policy.

The stock market remains volatile but not quite as frantic as earlier this year. Meanwhile, the major market indexes remain well below their recent highs.

Against this backdrop, now is a great time to invest in high-quality exchange-traded funds (ETFs) that track indexes. ETFs are a collection of assets that trade as a single unit and are a great place for new and experienced investors alike because they bring instant diversification with the flexibility to be traded like a single stock.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

And $500 is a great starting point -- but just that. The key to investing, particularly with ETFs, is to contribute consistently over time. It's a strategy known as dollar-cost averaging, where you regularly invest a set amount at a specific time. This could be with each paycheck or on a particular day of the month.

It is important to stick with this strategy, whether the market is up or down. Down markets are a great time to pick up stocks on the cheap and get a better cost basis.

And you should continue to do so even in bull markets, which tend to last a long time. In fact, according to a JPMorgan Chase study, since 1950, the S&P 500 hit a new all-time high on 7% of its trading days, and on a third of those days, the index never dropped lower.

Let's look at three great index ETFs you can begin to invest in right now.

The Vanguard S&P 500 ETF

One of the most popular ETFs in the world is the Vanguard S&P 500 ETF (NYSEMKT: VOO), and for good reason. As the name says, it tracks the roughly 500 largest companies that trade on a U.S. stock exchange. The index is market-cap weighted, which means that the larger a company's value, the bigger part of the portfolio it occupies.

And as with most Vanguard ETFs, it comes with a minuscule expense ratio. Even seemingly low expense ratios, such as 1%, eat into returns over time, especially as your investments grow in size. The Vanguard ETF's expense ratio is only a scant 0.03%.

With this Vanguard ETF, investors get an instant portfolio of the companies that have grown to become some of the world's largest. The index is also generally considered the benchmark for the U.S. stock market as a whole.

The ETF has a long history of solid returns. Over the past decade, it has generated an average annual return of 12.3%, as of the end of April.

The Vanguard Growth ETF

Sticking with Vanguard and its low costs, the Vanguard Growth ETF (NYSEMKT: VUG) is another great option. It mimics the CRSP US Large Cap Growth Index, which is essentially the growth side of the S&P 500. It has a similarly low expense ratio of 0.04%.

The Vanguard Growth ETF gives you an instant portfolio of many of the large-cap growth stocks that have been helping drive the market over the past several years. It is heavily weighted toward the tech sector, which makes up about 57% of its holdings. And some very tech-heavy companies, such as Amazon and Tesla, are categorized into other sectors.

If you're looking for exposure to the so-called "Magnificent Seven" stocks (Apple, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla), this ETF is a good option. At the end of last quarter, these seven stocks accounted for over 50% of its holdings.

This fund has been a strong long-term performer, generating a 14.5% return over the past 10 years, as of the end of April.

Image source: Getty Images

The Invesco QQQ ETF

Beating the returns of the S&P 500 is not an easy task, but one ETF that has been able to consistently outperform it is the Invesco QQQ ETF (NASDAQ: QQQ), which tracks the performance of the Nasdaq 100. Like the other indexes mentioned above, the Nasdaq 100 is also market-cap weighted. It contains the 100 largest nonfinancial stocks on the exchange.

That index has historically attracted fast-growing companies, particularly in the technology sector. As such, it is also very heavily weighted toward tech, checking in at a similar 57% to the Vanguard Growth fund.

The Invesco ETF has been the best performer of these three over the past decade, with an average annual return of nearly 17% over the past 10 years, as of the end of April. And this has not been just from a couple of big years of outperformance. On a rolling 12-month basis, it has outperformed the S&P 500 more than 87% of the time over the past decade (for the period ended March).

It carries a 0.2% expense ratio, but its consistent outperformance over the years more than justifies its higher cost.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $617,181!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $719,371!*

Now, it’s worth noting Stock Advisor’s total average return is 909% — a market-crushing outperformance compared to 163% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 5, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Alphabet, Invesco QQQ Trust, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, Tesla, Vanguard Index Funds - Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Since hitting a peak in January, the S&P 500 index has traded down, and is currently 14% off that record (as of April 22). President Donald Trump's economic policies, particularly around trade and tariffs, are causing a lot of uncertainty.

For individual investors, it can be scary to see the value of their portfolios declining. However, it's crucial to remain optimistic over the long term. Now might be a great time to put money to work.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

The stock market is in the midst of a sell-off. The best investors should still consider buying my top Vanguard exchange-traded fund (ETF) with $2,000 right now.

A simple way to diversify

The S&P 500 is the most closely watched index for a good reason. This benchmark contains some of the largest companies in the U.S., and it represents about 80% of the total market value of all stocks that trade on exchanges in this country.

I view the Vanguard S&P 500 ETF (NYSEMKT: VOO) as one of the best ways for investors to gain exposure to the performance of the S&P 500. It's a simple way to automatically diversify your portfolio.

The ETF contains businesses in every sector, ranging from communication services and consumer discretionary to real estate and utilities. And it has exposure to some of the most dominant companies.

The ETF is offered by Vanguard, a pioneer in the industry that's been around since 1975. With total assets under management of $10.4 trillion (as of Jan. 31), this is a very reputable company to entrust with your hard-earned savings.

Double-digit returns at a low cost

In 2023 and 2024, the S&P 500 produced a total return of 26% and 25%, respectively. These gains were fantastic, but investors shouldn't expect this type of performance to continue. Instead, it's more reasonable to assume that we'll see a reversion to the mean.

In the past decade, the Vanguard S&P 500 ETF has generated a total annualized return of 11.3%. If we zoom out even further, the S&P 500 has typically put up a 10% yearly return. Looking ahead, it's best to have a more tempered outlook, with a double-digit gain certainly in the cards.

It's hard to complain about these kinds of results. Data shows that the vast majority of active fund managers, so-called professionals in the investment management industry, lose to the S&P 500 over an extended period. And in doing so, they still charge high fees to clients.

The Vanguard S&P 500 ETF is somewhat of a no-brainer investment option when viewed in this light. It carries a tiny expense ratio of 0.03%. On a $2,000 investment, only $0.60 goes to Vanguard to cover its overhead expenses. That's a great deal.

Keep the right mindset

There's a lot of fear right now among investors. No one is sure how the tariff situation will play out. And people are worried about a recession in the near future. It can make sense that investors would be hesitant to put money to work. However, it's important to always maintain a long-term mindset.

There have been numerous bear markets and corrections in the past. And every single time, the S&P 500 has ultimately recovered to reach a new high. The lesson for investors is to accept that drawdowns are normal. Moreover, the best times to invest are when everyone else seems to be running for the exits.

Investing $2,000 right now in the Vanguard S&P 500 ETF is a smart decision that will benefit you in the long run.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Neil Patel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

The Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) isn't the most popular exchange-traded fund (ETF) on the market. With $83.7 billion in assets under management, it's not even among the five largest ETFs in the Vanguard family. But it is the biggest name in dividend-oriented ETFs, making it a leading choice for income investors who don't want to worry about picking individual dividend stocks.

So this Vanguard fund is well respected, but is it a good ETF to buy right now? I'll help you take a look. First, let's see what makes this ETF tick.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Inside the Vanguard Dividend Appreciation ETF

As usual, Vanguard isn't hand-picking stocks for this ETF. It's actually an index fund, tracking the components of the S&P U.S. Dividend Growers index. By handing off the heavy research work to another organization -- S&P Global (NYSE: SPGI) in this case -- Vanguard can automate the fund management and offer the resulting ETF with very low management fees.

So I need to take one more step to figure out how this ETF is designed. As it turns out, the underlying market index picks out proven dividend growth stocks among companies headquartered in the United States.

There's a minimum requirement for the stock's daily dollar-based trading volume. Real estate investment trusts (REITs) aren't allowed because they belong in a different S&P index. Each candidate must have increased its annual dividend payout for at least the last 10 years. Oh, and the highest-yielding 25% of this filtered list are also excluded. The idea here is to reduce the risk that often comes with excessive yields.

That's the selection process. Easy-peasy. Buying shares of the Vanguard Dividend Appreciation ETF gives you exposure to more than 300 consistent dividend growth stocks. The ETF is weighted by market cap, and Vanguard charges a tiny annual fee of 0.05%.

Comparing the Vanguard Dividend Appreciation ETF to its famous S&P 500 cousin

The resulting stock list has a lot in common with the better-known Vanguard S&P 500 ETF (NYSEMKT: VOO). Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) are the two largest holdings on both lists. Despite the dividend fund's focus on high-quality payouts, its 1.9% yield is just a little bit higher than the S&P 500 ETF's at 1.4%. Their long-term performance tends to be quite similar, whether you account for reinvested dividends or not:

VOO data by YCharts

But there are significant differences, too. The third- and fourth-largest holdings in the dividend fund are Broadcom (NASDAQ: AVGO) and JPMorgan Chase (NYSE: JPM). Their rankings on the general S&P 500 list are No. 8 and No. 11, respectively. Many of the leading S&P 500 stocks are not in the habit of paying dividends at all, not to mention raising their payouts every year.

The sector-by-sector composition is very different, too. As expected, the dividend appreciation fund owns more stocks in the industrial, healthcare, and finance segments, with a milder focus on consumer goods and technology.

Finally, it's less top-heavy than the ordinary S&P 500 tracker. The top five holdings in the dividend ETF add up to 18.3% of the total portfolio, compared to 24.9% for the five largest S&P 500 components. From this point of view, the smaller fund with just 338 components is more diversified than the 505-ticker S&P 500 ETF.

Who should consider this dividend-focused ETF right now?

Now you know what the Vanguard Dividend Appreciation ETF looks like, and it's time to answer the real question on everyone's mind: Is it a good ETF to buy in April 2025?

Most people should prefer the good old S&P 500 fund, most of the time. Its modest long-term performance advantage can make a significant difference when you're building a nest egg over decades.

But I understand if you prefer a more balanced portfolio in these uncertain times. The tech giants that recently lifted the S&P 500 to all-time highs might be due for a price correction, after all. It's not easy to keep the growth engines running in every possible economy. And the lower-risk dividend fund does have a history of strong performance in troubled times.

The S&P 500-beating periods tend to be fairly short, though. Even if you time your market calls to perfection, you'd still probably be better off in five or 10 years with the ultra-reliable S&P 500 ETF under your belt.

Then again, everyone's financial situation is unique. The Vanguard Dividend ETF can be the way to go if you prefer its blend of stable stocks, robust dividend payouts, and broader diversification. So I'm not throwing this interesting fund under the bus. It can be the right fund for some people, especially in a shaky economy like the current situation. Still, you should take a closer look at the standard S&P 500 option before committing too much capital to this idea.

Should you invest $1,000 in Vanguard Dividend Appreciation ETF right now?

Before you buy stock in Vanguard Dividend Appreciation ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Dividend Appreciation ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

Now, it’s worth noting Stock Advisor’s total average return is 859% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. Anders Bylund has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, JPMorgan Chase, Microsoft, S&P Global, Vanguard Dividend Appreciation ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The S&P 500 index (SNPINDEX: ^GSPC) is made up of 500 companies from 11 different sectors of the economy, so it's the most diversified of the major U.S. stock market indexes. It's currently down 12.5% from its record high, placing it firmly in correction territory, amid simmering global trade tensions that were sparked by President Trump's "Liberation Day" on April 2.

The president announced a sweeping 10% tariff on all imported goods from America's trading partners, in addition to much higher "reciprocal tariffs" on goods from specific countries that have large trade surpluses with the U.S. The reciprocal tariffs have been paused for 90 days (except those on Chinese goods) pending negotiations, but investors are still concerned about a potential economic slowdown, hence the stock market sell-off.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

But this isn't the first time President Trump has ventured down this policy path, and history suggests the stock market is likely to recover in the long run. The Vanguard S&P 500 ETF (NYSEMKT: VOO) is an exchange-traded fund (ETF) which directly tracks the performance of the S&P 500 -- here's why investors might want to buy it on the dip.

Image source: Getty Images.

A diversified, low-cost index fund suitable for most investors

Companies have to meet a strict criteria to gain entry into the S&P 500. For example, the sum of their earnings must be positive over the most recent four quarters, and they must have a market capitalization of at least $20.5 billion. But ticking all the boxes isn't always enough, because inclusion is at the discretion of a special committee that meets once per quarter to rebalance the index.

Although 11 different economic sectors are represented in the S&P 500, the information technology sector alone makes up 29.3% of the total value of the index. It's home to the world's three largest companies: Apple, Microsoft, and Nvidia, which have a combined market capitalization of $8.3 trillion. They are likely to continue creating value for investors long into the future as they battle for leadership in different segments of the artificial intelligence (AI) boom.

The financial sector is the second-biggest component of the S&P 500, representing 14.7% of its total value. It includes investment banking giants like JPMorgan Chase and Goldman Sachs, in addition to Berkshire Hathaway, which is the $1 trillion holding company managed by legendary investor Warren Buffett.

Healthcare is the third-largest sector, with a 10.9% weighting, followed by consumer discretionary at 10.2%. The latter is home to giants like McDonald's, Home Depot, Amazon, and Tesla.

Vanguard isn't the only firm that offers an S&P 500 ETF -- investors can also buy State Street's SPDR S&P 500 ETF Trust, for example, which holds exactly the same stocks. But the Vanguard S&P 500 ETF is among the cheapest with an expense ratio of just 0.03%, which is much lower than the industry average of 0.75% (according to Vanguard).

That means a $10,000 investment would incur just $3 in fees each year, instead of $75 (on average) for competing funds, so investors get to pocket significantly more of their gains over the long run.

A stellar track record of performance

The S&P 500 might be down 12.5% from its all-time high right now, but history is proof that corrections are a normal part of the investing journey. According to Capital Group, declines of 10% or more happen once every two-and-a-half years (on average), so they are simply the price we pay for an opportunity to earn much higher returns over the long term compared to sitting on cash or other risk-free assets.

On that note, the S&P 500 has delivered a compound annual return of 10.3% since it was established in 1957, even after factoring in every sell-off, correction, and even bear market. The table below displays how much investors could earn over the long run by parking $10,000 in the index compared to holding cash:

Calculations by author.

Past crashes in the S&P 500 were triggered by a variety of economic shocks. There was the dotcom internet crash in the early 2000s, followed by the Global Financial Crisis in 2008, and then the COVID-19 pandemic in 2020.

But back in 2018, President Trump imposed five sets of tariffs on America's trading partners, covering around 12.6% of the country's total imports. The move sparked fears of a global trade war which sent the S&P 500 plunging by as much as 19.8% that year, so investors who were around back then might be feeling a sense of déjà vu.

But over time, America's trading partners came to the table for negotiations which led to fairer deals, and even exemptions from the levies in some cases. As a result, the S&P 500 bounced back with a vengeance in 2019, soaring by a whopping 31.5%. Since we know the Trump administration is currently trying to strike trade deals with Japan, Europe, and China, I wouldn't be surprised if the worst of the decline in the S&P 500 is over.

As a result, the Vanguard S&P 500 ETF could be a great buy during the correction, especially for investors who plan to hold for the long term.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

Now, it’s worth noting Stock Advisor’s total average return is 859% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Goldman Sachs Group, Home Depot, JPMorgan Chase, Microsoft, Nvidia, Tesla, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The price of gold is hitting new all-time highs -- surpassing $3,500 per ounce. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) is in a correction. Some investors may be wondering if it is better at the moment to buy the dip in the S&P 500 or ride the gold wave higher.

Below I'll discuss why gold is doing so well, different ways to invest in gold -- including through an exchange-traded fund (ETF) -- and if gold is a better buy than an S&P 500 index fund.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Gold is piling on the gains

Gold prices are up over 30% year to date at the time of this writing, compared to a 12.3% sell-off in the S&P 500. Its price performance also slightly beat the S&P 500 in 2024.

Gold has been so hot that it's up more than the S&P 500 over the last three-year, five-year, and 10-year periods -- although the S&P 500 is beating it over the last five-year and 10-year periods when you account for dividends reinvested.

Still, gold's torrid run-up may come as a surprise, especially given the strong gains in the S&P 500 led by megacap growth stocks. It wasn't long ago that investors questioned when the first U.S. company would surpass $1 trillion in market cap. Apple, Microsoft, and Nvidia all closed out 2024 with market caps over $3 trillion.

Gold has made most of its gains over the S&P 500 during the last three years (there were two major sell-offs in the S&P 500 -- in 2022 and now in 2025) thanks to its steady rise in that time. Even with dividends included, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is massively underperforming the SPDR Gold Shares ETF (NYSEMKT: GLD) fund over the last three years.

Data by YCharts.

The S&P 500 generally is driven higher by earnings and investor sentiment, and higher earnings justify higher stock prices. When sentiment is positive, investors may be willing to pay more for stocks, based on future earnings expectations.

Gold is based on supply and demand. It's a commodity, not a company.

Lower interest rates can reduce borrowing costs and drive gold prices higher. However, geopolitical uncertainty is an even greater catalyst for higher gold prices.

Tariff tensions, the threat of trade wars, and President Donald Trump's attacks on Federal Reserve Chairman Jerome Powell can weaken confidence in U.S. markets and potentially jeopardize their credibility. As a result, fearful investors around the world may turn away from U.S. stocks toward gold.

Another driving factor is the People's Bank of China -- the largest official sector buyer of gold in 2023 and 2024. Reports indicate that the central bank boosted its gold reserves for the fifth consecutive month in March.

In sum, there are valid near-term factors driving gold prices higher. However, that doesn't mean investors should dump stocks in favor of gold.

Buying gold versus equity ETFs

Buying gold through jewelry, coins, or bullion comes with storage and security risks. The most straightforward and liquid way to buy and sell gold is through an ETF, such as the SPDR Gold Shares.

The fund uses a custodian that holds physical gold on its behalf, with the fund passing along a 0.4% expense ratio as a fee for its services. By comparison, the Vanguard S&P 500 ETF charges a mere 0.03% expense ratio.

The better buy now depends on your investment objectives and existing holdings. If you're looking to add a new asset class to your portfolio that can perform well, even if geopolitical tensions persist, then gold could be worth a closer look. However, if you're looking to invest in a variety of companies under the simplicity of one tradable ticker, then an S&P 500 index fund may be a better fit.

Another factor worth considering is what makes up the S&P 500. A whopping 35% of the Vanguard S&P 500 ETF is invested in just 10 companies -- Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta Platforms, Berkshire Hathaway, Broadcom, Tesla, and JPMorgan Chase. If you already own sizable positions in these companies, then buying an S&P 500 index fund may not achieve the level of diversification you're looking for. There are plenty of low-cost ETFs out there that don't include these megacap names or are less top-heavy.

However, if you're looking for broad-based exposure to the market, then an S&P 500 index fund is a good starting point.

Integrating gold into a diversified portfolio

Gold has been on a tear in recent years, which has bridged the gap between gold's gains and the S&P 500 over the last decade. However, for most investors, it's probably best that gold serve more as a role player in a diversified portfolio, rather than the focal point.

Gold could fall or underperform the S&P 500 if the supply/demand imbalance changes. It's also more difficult to analyze because it isn't based on business fundamentals.

Another factor worth considering is that there aren't dividends on gold ETFs, whereas S&P 500 index funds and plenty of other equity-based ETFs have dividends, which provide passive income no matter what the market is doing.

Ultimately, the amount of gold to include in a portfolio depends on your risk tolerance and what you already own. Investors with ultra-long-term time horizons may be better off keeping gold exposure to a minimum, especially given the long-term opportunity cost of investing in gold instead of the stock market. However, the near-term catalysts for gold are undeniable, so it makes sense that gold is crushing the S&P 500 year to date.

Should you invest $1,000 in SPDR Gold Trust right now?

Before you buy stock in SPDR Gold Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SPDR Gold Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

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JPMorgan Chase is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, Tesla, and Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

When most investors think about buying "the market," they probably have the S&P 500 index (SNPINDEX: ^GSPC) in mind. But that's not the market -- it's just 500 or so hand-selected large and economically representative companies. If you want to own the market, you'll have to consider an exchange-traded fund (ETF) like the Vanguard Total Stock Market ETF (NYSEMKT: VTI) or the SPDR Portfolio S&P 1500 ETF (NYSEMKT: SPTM). They are not interchangeable, and in the end, one may be even better than the S&P 500 index.

The best way to buy "the market"

It would be virtually impossible for most investors to go out and buy 500 stocks, let alone 1,500 or 3,598 (more on this strangely precise number in a second). So the only real option for buying the market is to buy a pooled investment vehicle like a mutual fund or an ETF. Given the many benefits of exchange-traded funds, including ultra-low costs and all-day trading, ETFs are likely to be the go-to option.

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Image source: Getty Images.

But when you are looking to buy "the market," you have to actually decide what that means. The S&P 500 index is a good starting point, but it is a list of roughly 500 companies that have been selected by a committee to be representative of the U.S. economy. The stocks in this index, which can be bought via the Vanguard S&P 500 ETF (NYSEMKT: VOO), make up around 80% of the market cap of all U.S. stocks. That's a lot of the market, but it isn't all of the market.

The rest of the market is largely made up of small and medium-sized companies. However, there will also be large companies that didn't make it past the committee process for some reason, which often includes financial troubles of some sort. But all of these companies add diversification for investors who truly want to own "the market." This is where the Vanguard Total Stock Market ETF and the SPDR Portfolio S&P 1500 ETF come in.

Extending the theme and just buying it all

The SPDR Portfolio S&P 1500 ETF is basically a cousin to the S&P 500 index. It owns the S&P 500, plus the S&P MidCap 400 Index and the S&P SmallCap 600 Index. Add it all up, and you get roughly 1,500 stocks that account for around 90% of the market cap of all U.S. stocks. All three of these indexes follow the same basic committee approach, though the S&P 500 gets the most scrutiny.

Still, that's not all of the market. The Vanguard Total Stock Market ETF gets you much closer, with 3,598 holdings. That said, there's no screening process here other than the stock being traded on a U.S. exchange. Like the S&P options, the Vanguard Total Stock Market ETF is market cap weighted, so the largest stocks have the most effect on the ETF's performance. However, adding in those extra 2,000 or stocks has made a big difference on the performance front.

SPTM Total Return Price data by YCharts.

As the total return chart above highlights, the Vanguard Total Stock Market ETF has outperformed both the S&P 500 index and the S&P 1500 index over the longer term. In other words, when you buy the market, all of those extra stocks -- around 20% of the overall market cap of the U.S. market -- appear to add value. Notably, cherry-picking stocks with a committee doesn't appear to help all that much.

If you want "the market," think bigger

If you say you own the market and you only own the S&P 500 index, you don't actually own the market. If history is any guide, owning as much of the market as possible appears to have a performance benefit. That's why index investors should probably take a closer look at the Vanguard Total Stock Market ETF. You may decide to stick with the S&P 500 and its committee approach, but you should at least look at your other, and possibly more attractive, options.

Should you invest $1,000 in Vanguard Total Stock Market ETF right now?

Before you buy stock in Vanguard Total Stock Market ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Total Stock Market ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

Now, it’s worth noting Stock Advisor’s total average return is 859% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF and Vanguard Total Stock Market ETF. The Motley Fool has a disclosure policy.

Could investing in a simple, low-fee S&P 500 index fund today set you up for life? You may not want to know the answer. You may prefer to hunt for exciting growth stocks instead. But I'm here to tell you that regularly plunking meaningful sums in an S&P 500 index fund can do wonders over long periods.

Even Warren Buffett has endorsed S&P 500 index funds, stipulating in his will that much of what he leaves his wife should go into one. Here's a look at why you might consider investing in an S&P 500 index fund, too.

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Image source: Getty Images.

Meet the S&P 500 index

An S&P 500 index fund is an index fund that tracks the S&P 500 -- an index (a grouping) of 500 of the biggest companies in the U.S. The fund will hold roughly or exactly the same stocks in roughly the same proportion, aiming for roughly the same performance -- less fees. And there are some very low fees out there.

Here are the recent top 10 components in the index by weight:

Data source: Slickcharts.com, as of April 16, 2025.

It's worth noting that this index is a market-capitalization-weighted one, meaning that the biggest companies in it will move its needle the most. For example, you can see in the table above that Microsoft's weighting is about four times that of Tesla, so Microsoft's stock-price moves will make a much bigger difference in the index than will Tesla's. Of course, these are still the top 10 components. General Mills is also in the index, recently in 255th place, and with a weighting of just 0.07%. Toy company Hasbro, in 488th place, recently had a weighting of 0.02%.

Altogether, these 500 companies make up about 80% of the total value of the U.S. stock market. Thus, the S&P 500 is often used as a proxy for the market. It's mainly made up of giant, large, and medium-sized companies, though. If you want a more accurate proxy, you might opt for a broader index fund, such as the Vanguard Total Stock Market ETF (NYSEMKT: VTI), which aims to include all U.S. stocks, including small and medium-sized ones, or the Vanguard Total World Stock ETF (NYSEMKT: VT), encompassing just about all the stocks in the world.

Why invest in an S&P 500 index fund?

Here's a top-notch S&P 500 index fund to consider -- the Vanguard S&P 500 ETF (NYSEMKT: VOO). Its expense ratio (annual fee) is a mere 0.03%, meaning that for every $1,000 you have invested in the fund, you'll pay an annual fee of... $3.

Why invest in such a fund? Well, because it can perform really well over time and it's way easier to just keep adding money to it than to spend time studying investing and scouring the stock market for the best investments. Instead of looking for a few needles in a haystack, buy the haystack!

Owning shares of an S&P 500 index fund means you'll quickly own (small) chunks of 500 of the biggest companies in America -- and as some companies grow and others shrink over time, the index will be adding and dropping components accordingly.

The table below shows how big a nest egg you might build over time in an S&P 500 index fund, if your money grows at 8%. For context, the S&P 500 has averaged annual gains of around 10% over many decades -- including dividends and not including the effect of inflation. So using 8% is a mite conservative.

Source: Calculations by author.

If that's not convincing enough, know that you probably can't do as well with some other, managed large-cap stock mutual fund. The S&P 500 index has actually outperformed most such funds, which tend to be run by highly trained financial professionals working hard to outperform the index. Over the past 15 years, for example, the S&P 500 bested 89.5% of all large-cap funds.

Whether you opt for a low-fee S&P 500 index fund or not, be sure to have a solid retirement plan, and to be saving and investing in order to have a comfortable financial future.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 781%* — a market-crushing outperformance compared to 149% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

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*Stock Advisor returns as of April 21, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Selena Maranjian has positions in Alphabet, Amazon, Apple, Berkshire Hathaway, Broadcom, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Tesla, Vanguard S&P 500 ETF, and Vanguard Total Stock Market ETF. The Motley Fool recommends Broadcom and Hasbro and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

We're just four months into the year and there's already been a multitude of events that have rocked the capital markets.

Back in January, a Chinese artificial intelligence (AI) start-up called DeepSeek shook investors to the core as the company claimed to build its models on older, less sophisticated IT architectures than American AI developers had been using. While these fears subsided relatively quickly, the market volatility continued thanks to mixed opinions on important economic data related to inflation and jobs reports.

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Most recently, the event that has caused the biggest stir in the stock market is President Donald Trump's new tariff agenda. Since he announced his global tariff policies on April 2, stocks have been whipsawing so dramatically it's become both jarring and disorienting for investors to figure out what to do.

During times like these, a famous Warren Buffett quote always comes to mind. Let's assess the magnitude that the tariff news has had on the market. More importantly, we'll explore the mindset of the "Oracle of Omaha" -- which could help investors moderate any panic and fearful emotions they may be feeling right now.

Trump's tariffs are wreaking havoc on the markets

The chart below illustrates the returns of both the S&P 500 and Nasdaq Composite so far this year. As I alluded to above, there have been multiple drop-offs across both indices throughout the first few months of 2025. However, the clear anomaly shown below is the precipitous decline that occurred in early April -- immediately after Trump's tariff policies became public:

^SPX data by YCharts.

Even though it's scary, this market dip presents opportunity

The stock market is a fascinating case study in human psychology. It's a medium that reflects a wide range of emotions. When the markets are soaring, most people are euphoric. When the markets are crashing (like they are now), most people run for the hills.

But even during the so-called good and bad times, there exist a small cohort of people known as contrarians. These investors go against the grain; they don't adhere to mainstream ways of thinking.

When the stock market is roaring, a contrarian may become concerned that valuations are becoming disconnected from the performances of actual businesses. In other words, contrarians will think that people are investing more into narratives than concrete fundamentals. By contrast, when valuation levels drop, a contrarian may be inclined to start putting money to work as stocks become more attractive at their normalized prices.

Buffett is a well-known contrarian. And right now, I can't stop thinking about his famed line, "You want to be greedy when others are fearful, and you want to be fearful when others are greedy." On the surface, that philosophy might not entirely resonate with the average investor. But below, I'll make the case for why Buffett's logic makes a lot of sense.

Image source: The Motley Fool.

Remember to keep the long term in focus

The chart below illustrates the performance of the S&P 500 and Nasdaq Composite over the last two decades. Each of the grey-shaded columns indexed against the performance of the S&P and Nasdaq represents a different recessionary period.

^SPX data by YCharts

Do you notice anything? Naturally, right around the time a recession went into effect, both indices started to fall. However, following the recessions both the S&P 500 and Nasdaq started to rise again -- eventually reaching new highs.

I'm not showing this trend because I'm predicting a recession. Rather, I'm making the case that the stock market is quite a resilient place in the long run -- even if emotions can sometimes drive a lot of the action in the near term. These dynamics underscore that some brave investors (like Buffett) were actually buying during historical periods of prolonged sell-offs and market crashes. In other words, some investors were greedy when most others were fearful and panic-selling.

I'll admit that it's really difficult to identify stocks that may be oversold or that are less exposed to tariffs. Instead of going down those rabbit holes, I think a prudent strategy is to simply buy the overall market right now. What I mean by that is to consider putting some money to work in exchange-traded funds (ETFs) such as the Vanguard S&P 500 ETF (NYSEMKT: VOO), SPDR S&P 500 ETF Trust, or the Invesco QQQ Trust.

Each of these funds provides investors with diversified exposure in the form of multiple industry sectors and a healthy mix of growth and value stocks. And as the chart above makes clear, the S&P 500 and Nasdaq tend to exhibit strong rebounds following periods of economic turmoil.

I think that using a strategy of dollar-cost averaging into these major indices will wind up being a savvy move years down the road.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,779!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $659,306!*

Now, it’s worth noting Stock Advisor’s total average return is 787% — a market-crushing outperformance compared to 152% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

With the S&P 500 (SNPINDEX: ^GSPC) ending last week down more than 10% in two days, the stock market experienced its first crash since March 2020, when the COVID-19 pandemic began to escalate. The culprit this time was the U.S. enacting punitive tariffs against much of the rest of the world and an ensuing trade war. These tariffs were even applied to two islands uninhabited by humans, with the Trump administration saying the duties were added so that other countries could not evade tariffs by shipping goods through the ports of these islands.

With the market in turmoil and a lot of volatility likely ahead, let's look at four ways investors can navigate the current market crash.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

1. Have liquidity

In a bear market or an impending bear market, one of the most important things investors can have is liquidity, or cash on the sidelines. By having available cash, investors can then take advantage of market dips.

If you're fully invested, consider selling some of your least favorite positions to raise some cash that can later be used to buy ideas you have more conviction in. If these are in a non-retirement account, you'd also get the potential benefit of a tax loss when you next file.

To be clear, you don't want to start panicking and just sell stocks. Instead, you want to look at this as an opportunity to high-grade (improve the quality of) your portfolio.

2. Create a list of high-quality stocks to buy

Another important thing you can do is create a list of high-quality stocks and the prices at which you'd start buying them. Undoubtedly, there have been stocks you've liked in the past, but their valuations were too high.

This could be highfliers like Palantir Technologies (NASDAQ: PLTR) or Cava Group (NYSE: CAVA) whose businesses are doing great but whose stock valuations just skyrocketed over the past year or two. Perhaps it could be stocks in industries that have always tended to have high multiplies, such as cybersecurity companies like CrowdStrike (NASDAQ: CRWD) and Palo Alto Networks (NASDAQ: PANW). There could also be blue chip tech names like Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) or Amazon (NASDAQ: AMZN) whose stocks have just gotten cheaper, given their collection of businesses and future prospects.

The key, though, is to gather a list of high-quality stocks you'd be comfortable owning over the long run. And then, when they reach your price target, be ready to start building positions in them. Just do the research beforehand so you're ready to pounce.

Image source: Getty Images.

3. Consider writing puts

A more advanced strategy to use in a down market is to write (sell) put options. By writing a put option, you collect a cash premium up front, but you are then obligated to buy that stock if the buyer exercises his option to sell it to you. As such, you want to do this only with stocks and at prices where you would want to buy them.

For example, if Amazon was on your list of stocks to buy at $150, you could write a put on Amazon stock with a strike price of $150 and a May 9 expiration and collect around $3.70 in premium. If the stock falls below $150 and the option is exercised, you'd own the stock at $150. Note that each option represents 100 shares. If Amazon doesn't fall to that price, you just collect the premium, which would be worth around $370 for each option.

This strategy's intention is twofold. One is to let you buy into a stock you want to own at a lower price. However, if the stock never reaches that price, you still earn some return.

The downside to this strategy is that it does tie up some capital, which you could potentially use elsewhere. That is why I prefer to keep the expiration dates short, at about a month.

In addition, if the stock blows past your price target on the downside, you are still obligated to buy at the strike price. This is most likely to occur if a major event happened when the market was closed, and it opened way down. However, the assumption we are using is that you'd be a buyer of the stock at the strike price regardless. The other disadvantage is that if the market does make a quick reversal, you would lose out compared to if you had jumped in right away and bought the stock.

However, this is a nice strategy to supplement your investments, allowing you to earn some extra cash as you wait for stocks to hit your buy prices.

4. Dollar-cost average with ETFs

Another strategy investors should consider is dollar-cost averaging. In this strategy, you make investments at set times and dollar amounts regardless of their prices.

This strategy works particularly well with exchange-traded funds (ETFs) such as the Vanguard S&P 500 ETF (NYSEMKT: VOO) or the Invesco QQQ ETF (NASDAQ: QQQ). These two ETFs track major market indexes that have proven to be long-term winners. The Vanguard ETF tracks the S&P 500, which comprises the 500 largest stocks traded in the U.S., while the QQQ ETF tracks the Nasdaq-100, which is more tech- and growth-oriented.

With ETFs, you don't have to worry about individual stock research. You can buy an ETF that immediately gives you a portfolio of leading stocks. Consistently dollar-cost averaging into index ETFs is a great way to build long-term wealth, and a down market is a great place to start implementing this strategy.

Should you invest $1,000 in S&P 500 Index right now?

Before you buy stock in S&P 500 Index, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $590,231!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 5, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has positions in Alphabet, Invesco QQQ Trust, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, CrowdStrike, Palantir Technologies, and Vanguard S&P 500 ETF. The Motley Fool recommends Cava Group and Palo Alto Networks. The Motley Fool has a disclosure policy.