Is It Really Safe to Invest in the S&P 500 Right Now? Here's What History Says

The past year has been a wild ride of ups and downs for the S&P 500, and if this roller coaster is starting to make you feel sick to your stomach, you’re not alone.


Load Error

A whopping 77% of U.S. adults are worried about severe market volatility in 2023, according to a recent survey from Allianz Life, while 62% are concerned that a recession is looming. And nearly two-thirds say they’d rather let their money sit in cash than endure market volatility.

It’s easy to feel pessimistic about the stock market right now, and it can also be tempting to stop investing. But the S&P 500 is safer than it seems, and history gives us one fantastic reason to be hopeful about the future.

What history says about the S&P 500

The S&P 500 has been in and out of bear market territory for nearly a year now, and those short-term fluctuations are tough to tolerate. But over the long term, there’s good reason to be optimistic.

Analytics firm Crestmont Research studied the rolling 20-year total returns of the S&P 500 starting in 1900 and found that in every single year (from 1919 to 2022), the index saw positive total returns. This means if you had invested in an S&P 500 ETF or index fund at any point after 1900 and held that investment for 20 years, you’d have earned positive total returns.

The last two decades have been especially volatile, as we’ve experienced two of the worst downturns in history: the dot-com bubble burst and the Great Recession. Yet the S&P 500 is still up by 144% since 2000 (and that’s despite the slump we’ve experienced over the past year).


© YCharts

In other words, if you had invested in an S&P 500 index fund or ETF in 2000 and simply held your investment through all the ups and downs, you’d have more than doubled your money by today.

Where to invest right now

Whether you’re nervous about market volatility or simply want an investment you can count on to keep your money safe, an S&P 500 ETF or index fund is a fantastic choice.

This type of investment tracks the S&P 500 itself, meaning it includes the same stocks as the index and aims to mirror its performance. Because it’s not possible to invest in the actual index, an ETF or index fund is the closest you can get.

Because all S&P 500 funds track the same index, they’re going to see similar long-term returns. But some of the strongest options include:

  • Vanguard S&P 500 ETF (NYSEMKT: VOO)
  • iShares Core S&P 500 ETF (NYSEMKT: IVV)
  • SPDR S&P 500 ETF Trust (NYSEMKT: SPY)

The Vanguard S&P 500 ETF, in particular, can be a strong choice because of its low fees. Its expense ratio is just 0.03% — one of the lowest among ETFs — which could save you thousands of dollars in fees over time.

Regardless of where you invest, it’s wise to keep a long-term outlook. The market could be shaky over the coming months or even years. But if you invest in an S&P 500 ETF and hold that investment for at least a couple of decades, you’re almost guaranteed to make money.

Also, while it may not seem like it, now can actually be a fantastic time to buy. Stock prices in general are still lower than they were a year or two ago, which means you can invest at a discount.

For example, the Vanguard S&P 500 ETF is currently priced at around $371 per share, down from around $437 per share in January 2022. In other words, by investing now, you’re getting the exact same investment, but at a $66 discount.

The stock market can be intimidating, but if you’re a long-term investor, there’s not necessarily a bad time to buy. By investing in an S&P 500 ETF now and holding that investment for the long haul, you can keep your money as safe as possible.


10 stocks we like better than Vanguard S&P 500 ETF

When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now… and Vanguard S&P 500 ETF wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of February 8, 2023


Katie Brockman 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.


Continue Reading