Is the SPDR S&P 500 ETF Trust the Smartest Investment You Can Make Today?

Source The Motley Fool

With the three major indexes slipping over the past few weeks, now may not seem like the best time to invest in stocks. It's always more tempting to buy when we see a particular stock or asset rising, as we can easily imagine our returns if the momentum keeps going. The idea is to hop on the bandwagon and immediately see your investment take off.

But as strange as this may sound initially, to truly score an investing win, one of the best things to do is consider buying during these periods of uncertainty. Why? Because quality stocks and other assets may be trading at bargain prices, meaning you can snap them up for a song and go on to benefit once they recover and advance over the long term.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

It's important to remember that, generally, elements troubling the market -- from a government policy decision to rising inflation or a recession -- won't last forever. Today, investors are concerned about President Donald Trump's tariffs on imports from China, Canada, and Mexico and the impact that will have on the economy and corporate earnings.

This may, indeed, represent a headwind, but quality companies will be able to manage these times and come out ahead. Considering this, is the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) -- a bet on the S&P 500 -- the smartest investment you can make today? Let's find out.

An investor stands near a window and looks at something on a tablet.

Image source: Getty Images.

What's an ETF?

First, let's talk a little bit about this sort of investment. It's an exchange-traded fund (ETF), an instrument that includes many different stocks based on a particular theme, such as retail or biotech, or according to the player's presence in a particular index, the latter being the case with the fund we're talking about today.

Like stocks, ETFs trade daily on the market. So, if you're familiar with buying stocks, you can go about purchasing an ETF in exactly the same way. The one thing to be aware of is that ETFs do come with a management fee, expressed as an expense ratio. To preserve your winnings over time, go for an ETF with an expense ratio of less than 1%. With a ratio of 0.09%, the SPDR S&P 500 ETF largely fits the bill.

Now, we'll consider this ETF specifically and whether it's a smart buy for you. The SPDR S&P 500 ETF tracks the S&P 500's performance, so it truly is a bet on the overall stock market. It's important to remember that this index includes the top companies driving today's economy and makes adjustments regularly to ensure this is always the case. So, by investing here, you'll always be exposed to the leaders of the moment.

The S&P 500's recent performance

Of course, during market downturns, you'll likely see this ETF fall -- as is the case today. Moving in lockstep with the S&P 500, it's slid more than 6% over the past two and a half weeks. During times like these, certain individual stocks in your portfolio may be more likely to outperform. For example, as the overall market declined, stocks, including beverage giant Coca-Cola and pharma powerhouse AbbVie, advanced over the past month. This is why it's a great idea to diversify across companies and industries -- and across stocks and ETFs.

SPY Chart

SPY data by YCharts.

But if you can make only one investment right now, the smartest move may be to pick up a few shares of the SPDR S&P 500 ETF, and here's why. The price, considering recent declines, has come down. But more importantly, this purchase offers you exposure to an index that has demonstrated resilience 100% of the time throughout its history.

After every period of decline, the index has gone on to recover and soar over time. In fact, the S&P 500 has delivered an annualized average return of more than 10% since its launch as a 500-company index in the late 1950s.

It's impossible to time the market and pick up a stock or an ETF at its very lowest point, but here's some good news: The S&P 500's track record offers us reason to be optimistic about returns over time if we invest in it at any point. And that's why the SPDR S&P 500 ETF Trust makes a fantastic buy right now -- even if the S&P 500 falls further in the short term.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $292,207!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $45,326!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $480,568!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Continue »

*Stock Advisor returns as of March 3, 2025

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Natural Gas sinks to pivotal level as China’s demand slumpsNatural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
Author  FXStreet
Jul 01, 2024
Natural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
placeholder
AUD/USD: Current price action is likely the early stages of a recovery – UOB GroupAustralian Dollar (AUD) is likely to trade in a sideways range between 0.6220 and 0.6290. In the longer run, current price action is likely the early stages of a recovery phase that could potentially reach 0.6350, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
Author  FXStreet
Jan 22, Wed
Australian Dollar (AUD) is likely to trade in a sideways range between 0.6220 and 0.6290. In the longer run, current price action is likely the early stages of a recovery phase that could potentially reach 0.6350, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
placeholder
Five bullish Shiba Inu (SHIB) Price Predictions for April 2025SHIB price targets diverge as investors weigh Shibarium L3 upgrades, burn-rate surges, and altcoin market sentiment. Forecasts range from a conservative $0.000012 to a parabolic $0.00030.
Author  FXStreet
Apr 16, Wed
SHIB price targets diverge as investors weigh Shibarium L3 upgrades, burn-rate surges, and altcoin market sentiment. Forecasts range from a conservative $0.000012 to a parabolic $0.00030.
placeholder
Gold price slides back closer to $3,300 amid positive risk tone, modest USD uptickGold price (XAU/USD) trades with a negative bias for the second consecutive day, though it lacks bearish conviction and holds above the $3,300 mark during the Asian session on Wednesday.
Author  FXStreet
20 hours ago
Gold price (XAU/USD) trades with a negative bias for the second consecutive day, though it lacks bearish conviction and holds above the $3,300 mark during the Asian session on Wednesday.
placeholder
Gold extends consolidation ahead of key US data releasesGold price (XAU/USD) continues to trade in a narrow range around $3,300 on Wednesday as traders await key US economic data, which could become the catalyst for an imminent breakout. 
Author  FXStreet
18 hours ago
Gold price (XAU/USD) continues to trade in a narrow range around $3,300 on Wednesday as traders await key US economic data, which could become the catalyst for an imminent breakout. 
goTop
quote