Is Now a Good Time to Buy ETFs?
Key Points
No one knows what the stock market will do from day to day or even year to year.
It's not worth trying to guess what will happen next.
Most folks can invest in stocks now, but only with money they won't need for years.
- 10 stocks we like better than Vanguard S&P 500 ETF ›
Is now a good time to buy exchange-traded funds (ETFs)? Well, you're probably not alone wondering about that. The market, as measured by the S&P 500 index of 500 of America's biggest companies, has notched big double-digit gains in six of the past seven full years and was recently up more than 9% year to date (as of June 12). There's also geopolitical unrest and rising inflation.
All these can have you wondering if a stock market crash is around the corner -- and/or a recession.
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Given that, should you perhaps avoid the stock market and ETFs for now? Well, you might, if:
- The money you want to invest is money you might need in the next five (if not 10) years. Since no one knows what the market will do over the short run, don't take undue chances.
- You simply can't stomach volatility. (The stock market is simply volatile, though.)
- You're not sure what to invest in.
But for most people, especially those with long investing horizons, I think now is a good time to invest in one or more ETFs. (Remember that an ETF is a fund that trades like a stock.) Which one(s) you invest in matters, though. And perhaps invest gradually over time, if you fear a crash. Consider these ETFs:
- Vanguard Total Bond Market ETF (NASDAQ: BND): This ETF is focused on bonds, not stocks, and can help diversify your portfolio.
- Vanguard S&P 500 ETF (NYSEMKT: VOO): This is a classic low-fee S&P 500 index fund that will let you profit from the growth of the U.S. economy. It's home to gobs of high-tech growth stocks and many mid-sized companies, as well.
- Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD): This ETF focuses on delivering dividend income and growth. It recently yielded 3.25%. Dividend payers may fall less than high-flying growth stocks in a market downturn.
There are many other solid ETFs you might want to check out, too. Just aim to hang on to them for a long time.
Should you buy stock in Vanguard S&P 500 ETF right now?
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Selena Maranjian has positions in Schwab U.S. Dividend Equity ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF and Vanguard Total Bond Market ETF. The Motley Fool has a disclosure policy.
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