1 No-Brainer Stock Market Index Fund to Buy Right Now for Less Than $1,000

Key Points

• The Vanguard S&P 500 ETF (VOO) consistently outperforms supposedly "safer" alternatives like gold and dividend funds over the long term.

• Gold funds and dividend growth funds may look good during crises but tend to lag behind the S&P 500 after just a few years.

• Time in the market beats timing the market, making VOO a smart buy no matter where Wall Street is going next.

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

The economy looks scary sometimes. With international tensions running high, unpredictable tariff moves, and record-breaking stock market prices, I get it if you're looking for "safe haven" investments right now. I'll admit to doing it myself, keeping some investable cash on the sidelines until I find a suitable low-risk idea.

But the more I look for so-called safer options, the more I want to just add that spare cash to my Vanguard S&P 500 ETF (NYSEMKT: VOO) holdings. Even if the bears are onto something, and the stock market is poised for a painful correction someday soon, I still highly recommend this hard-to-beat favorite of long-term investors.

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 »

Image source: Getty Images.

Not even Warren Buffett can predict market swings

At the heart of my VOO recommendation, you'll find this simple truth: Time in the market almost always beats timing the market.

You have to be some sort of genius to consistently predict broad market swings before they happen. The closer you want to get to the absolute peaks and bottoms of each cycle, the harder it gets. And even the greatest masters of investing are wrong very often.

Remember our Motley Fool CAPS playground for serious investors? The five highest-rated CAPS players have an average stock-picking accuracy of 68.9%. That's far from perfection, but good enough to dominate an investing game with more than 88,000 players. Oh, and investing legend Warren Buffett often reminds people that he can't predict the stock market's general trend in the short or medium term. He's all about betting on sensible business growth over the long haul.

Most of us ordinary humans might as well flip a coin. Maybe there's a Wall Street storm brewing, or the bull market might continue for years. I don't know for sure, neither do you, and unexpected developments could knock even the best predictions wildly off target. The coronavirus pandemic was as predictable as the Spanish Inquisition, and so was the artificial intelligence boom.

I tested the "safer" alternatives -- and I wasn't impressed

I still tried to find a few lower-risk ideas for a rainy day. To backtest my ideas, I compared the candidate index funds against the Vanguard S&P 500 ETF. For testing periods before Vanguard launched that exchange-traded fund (ETF) almost exactly 15 years ago, the underlying S&P 500 (SNPINDEX: ^GSPC) index served the same comparative purposes.

At first glance, some of the low-risk investments looked promising. The classic gold-tracker SPDR Gold Shares (NYSEMKT: GLD) held up better than the S&P 500 in the first year of the subprime mortgage meltdown in 2008. So did the Vanguard Dividend Growth Fund (NASDAQMUTFUND: VDIGX):

^SPX data by YCharts

But the low-risk magic melts away in the long run. The gold fund lagged behind the S&P 500 index after six years, and the dividend growth fund delivers very S&P 500-like returns over time. I know which asset I'd rather hold on to today, 17 years after the crisis (hint: it rhymes with "less than three, fly under"):

^SPX data by YCharts

Cash under the mattress is another losing strategy

Similar trends developed with other lower-risk ETFs and different financial crisis periods. In some cases, the supposed low volatility funds either followed the S&P 500 trend line down or actually underperformed the market index when times were tough.

And what about simply sitting on that cash for a while -- perhaps a few years? That's another underperforming idea. Even if you start from an all-time high just before a steep drop, the S&P 500 and its index funds will certainly gain value in a five- or 10-year period. Meanwhile, the cash under your pillow keeps losing value to inflation effects.

So yeah, I'm talking myself into buying some more Vanguard S&P 500 ETF shares very soon. It's a proven long-term strategy, endorsed by geniuses like Warren Buffett and Jack Bogle, and arguably a great investment idea in any economy -- including this one. And you don't have to be rich to get started. One share of this fund costs roughly $600 today.

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 $649,037!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,086,028!*

Now, it’s worth noting Stock Advisor’s total average return is 1,056% — a market-crushing outperformance compared to 188% 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 September 8, 2025

Anders Bylund 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.