The Smartest S&P 500 ETF to Buy With $1,000 Right Now

The market has been on an absolute roller-coaster of a ride this year, dropping by over 20% after President Donald Trump announced his tariffs, before it recovered thanks to subsequent negotiations between the administration and some of the United States' largest trading partners. The turmoil has caused some investors to seek out safer sectors and companies amid the uncertainty.

There are still good companies to invest in, even if they're currently under pressure, but picking individual winners can be difficult. This makes an S&P 500 exchange-traded fund (ETF) an attractive way to continue investing right now.

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While there are many S&P 500 ETFs out there, Vanguard ETFs are some of the most popular and inexpensive. Here are three reasons why putting $1,000 into the Vanguard S&P 500 ETF (NYSEMKT: VOO) is still a wise long-term move in this market environment.

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1. It boosts your diversification

The Vanguard S&P 500 ETF tracks the S&P 500 index, so any investment in the ETF is spread across the 500 largest publicly-traded U.S. companies. That means you don't have to spend time guessing which companies might perform well in the coming years or which sectors will be long-term winners.

Diversification becomes increasingly important when there's lots of uncertainty in the market and the economy, like there is right now. The Federal Reserve said recently it expects interest rates to remain high while warning of the risk of stagflation. More than half of CFOs in a recent survey also believe a recession is around the corner.

The benefit of having your money in Vanguard's S&P 500 ETF is that when some parts of the market do better than others, you're unlikely to be overexposed to any one sector.

2. You've got a good chance of amassing sizable gains over time

Just like with any investment you make, there's no guarantee you'll earn positive returns with Vanguard's ETF. But historically speaking, the S&P 500 has been a great place to put your money.

Since 1957, the S&P 500 has had an annual average return of 10% (not accounting for inflation). That's a very impressive track record that investors can tap into without any time spent researching the market or individual stocks.

Actual dollar amounts can be helpful in understanding an investment's potential, so consider that if you invested $10,000 in Vanguard's S&P 500 ETF in 2000, it would be worth about $59,500 right now. Again, there's no guarantee the ETF will repeat that performance, but in over half a century, the S&P 500 has always trended upward and to the right.

3. It's inexpensive to own

When you buy an ETF, there's an annual fee you pay to the managers of the fund. Known as the expense ratio, this amount is levied on the balance of your investment in the fund. The average expense ratio for index fund ETFs is about 0.48% right now, according to Morningstar. But Vanguard charges a fraction of that for its S&P 500 ETF with its expense ratio of just 0.03%.

This means that for every $10,000 invested in Vanguard's ETF, you'll pay an annual fee of just $3. That's incredibly inexpensive, and it means that as your investments grow over time, you'll be able to hold on to more of your gains than you would with pricier ETFs.

Keep this in mind when buying the Vanguard S&P 500 ETF

The recent market turmoil is a good reminder to all investors that practicing patience, rather than giving in to panic, is the best way to position yourself for long-term success in the market. The same is true when you put money into the Vanguard S&P 500 ETF.

For example, the fund fell as much as 21.5% after the Trump administration announced its "Liberation Day" tariffs on foreign imports in early April. But the ETF has recovered and is up 1% year to date, as of this writing. If you had panicked when the market plummeted and sold your holdings, you would have locked in your losses.

The point here is that owning this fund -- even with its diversification and history of gains -- doesn't mean you won't have to be patient at times and resist the urge to sell when market conditions inevitably turn sour.

I have most of my portfolio in Vanguard's S&P 500 ETF, and I'm holding my position for the long term -- so I'll be right there with you fighting the panic and leaning into patience.

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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.