Worried about the Stock Market? 1 Safe ETF You Can’t Go Wrong With

The stock market has caused quite a bit of panic lately as prices have fallen sharply in recent weeks. The S&P 500 (^GSPC 0.47%) it’s currently down nearly 6% since mid-July, and many investors are worried it’s only going to get worse from here.

To be clear, there is no way to know exactly what the market will do in the short term. Stocks could fall further, or this could turn out to be a short-lived decline, with the worst behind us.

Market uncertainty can often be the hardest part as an investor, so it’s normal to feel nervous. But recessions can also be smart investment opportunities because stocks are essentially on sale right now. By investing during difficult market times, you can set yourself up for potentially lucrative gains during the recovery period.

Where you invest matters, though, because not all stocks will recover from recessions. While there are no guarantees in the stock market, there is one exchange-traded fund (ETF) that comes as close to guaranteed as possible: the S&P 500 ETF.

The best ETF for risk-averse investors

Investing in the stock market is often compared to gambling because you are always taking a risk with your money. But that’s not necessarily true, especially if you invest in the right places. Doing your homework and buying quality stocks or funds gives you a much better chance of seeing positive returns over time.

One of the safest and most reliable investments out there is an S&P 500 ETF, such as Vanguard S&P 500 ETF, SPDR S&P 500 ETF Trustor iShares Core S&P 500 ETF.

This type of investment is a collection of stocks that tracks the S&P 500 index. Each ETF contains stocks from 500 of the largest US companies, from tech giants such as Apple and Microsoft to old brands such as Procter & Gamble and Coca cola.

Investing in an S&P 500 ETF is a fantastic way to build a diversified portfolio with minimal effort. With a single investment, you’ll instantly own a stake in 500 companies across a wide variety of industries. And because the companies in the S&P 500 are among the strongest in the world, there is an extremely high chance that they will recover from market downturns.

In fact, research shows that, in the long run, it’s nearly impossible lose money with an S&P 500 ETF. According to analysts at Crestmont Research, every 20-year period in the history of the S&P 500 has ended with positive total returns.

This means that if you had invested in an S&P 500 fund at any point in history and simply held for 20 years — no matter what the market was doing during that time — you would have made money. Throughout its history, the S&P 500 has faced extreme bear markets, recessions and crashes, but so far it has managed to recover from each one.

A big downside to consider before buying

No investment is perfect for everyone, and that includes the S&P 500 ETF. While it may be a strong choice for those looking for a safer investment with a long history of recovering from recessions, it may not necessarily be suitable if you want to get above average returns.

By definition, an S&P 500 ETF cannot beat the market. It is designed to track the performance of the market so that it can always achieve average returns. If this is a worthwhile trade-off for a lower-risk, lower-effort investment, it could be a smart addition to your portfolio. Otherwise, you should opt for individual stocks.

Investing in individual stocks requires more research as you will need to study the companies behind each stock you are interested in owning. It can also be more expensive to get started as you will need at least 25 to 30 stocks in your portfolio for adequate diversification. However, this approach is also the best way to earn as much as possible in the stock market.

Whether or not you choose to invest in an S&P 500 ETF will depend on your goals and risk tolerance. This investment may not be the most suitable for those who want to maximize their earnings. But if you just want a safer, more reliable fund that can see you through this recession and the ones to come, the S&P 500 ETF is one of the best options available.