The stock market has been on a wild ride so far this year. The nasdaq officially entered bear market territory, down more than 25% since the beginning of the year, and the S&P 500 it’s also down about 16% in that time period.
While this recession could signal that a full-blown downturn is coming, no one knows for sure what the future holds for the market. Even experts cannot predict exactly how the market will behave in the short term, and no one knows if we will see a drop.
However, market downturns can be a good time to invest more, because prices are significantly lower. If the market crashes in the future, there’s one investment I’m going to load up on: an S&P 500 ETF.
What is an S&P 500 ETF?
An exchange-traded fund (ETF) is a type of investment that includes multiple stocks within a single fund. An S&P 500 ETF tracks its namesake index, meaning it contains all of the stocks within the index and is intended to reflect their performance.
Since it is impossible to invest in the S&P 500 index directly, investing in an S&P 500 ETF is the closest thing.
The main reason I plan to load this type of investment is that it is very likely to recover from a market downturn. The index itself has faced dozens of corrections, crashes and bear markets over the decades, and has always managed to bounce back, regardless of how severe those downturns were or how long they lasted.
In addition, the S&P 500 itself includes shares of 500 of the largest and strongest organizations in the US. Familiar names like Amazon, Apple, AlphabetY Tesla make up the index, and if any stock is likely to survive a recession, it’s the ones in the S&P 500.
Should you invest in an S&P 500 ETF?
This type of investment can be a great option for many investors. Not only is an S&P 500 ETF very likely to bounce back from market volatility, but it’s also an easy investment to stay out of.
With an ETF, you automatically invest in all the stocks within the fund. This means you never have to worry about choosing individual stocks or deciding whether to sell specific investments. All you have to do is invest in the ETF, and it will do all the work for you.
However, for some investors, the hands-off nature of S&P 500 ETFs can be a disadvantage. If you prefer more control over your portfolio, this type of investment may not be right for you.
Also, by nature, S&P 500 ETFs can only earn average returns. are designed for follow, continue the market, making it impossible for them hit The market. For many investors, the relative safety of this type of investment outweighs the average returns. But if your primary goal is to beat the market, you’re better off investing in individual stocks.
The stock market may be shaky right now, but recessions can be one of the best times to invest because you’re buying at a deep discount. S&P 500 ETFs may not be right for everyone, but they could be a smart choice for you.