The stock market is in an interesting place right now. Major indexes just closed out their best quarter in years, with the S&P 500 (^GSPC 0.19%) soaring by more than 14% since early April, as of this writing. However, investor sentiment is also growing increasingly fearful.
The Fear and Greed Index measures investor sentiment on a scale from 0 to 100, with lower numbers indicating "fear" and higher figures suggesting "greed." Since May, this index has plunged from 71 to 34, suggesting investors are exercising greater caution.
Image source: Getty Images.
To be clear, recession odds remain relatively low, despite a weakening economy. Nearly 90% of chief economists expect global growth to slow over the next year, according to the World Economic Forum's May 2026 survey, but close to 60% believe a recession is not imminent.
While a recession may not be around the corner, it's only a matter of time before we face some type of downturn -- and right now is the best time to prepare.
The powerhouse ETF with a fantastic track record
If you're looking for a consistent long-term performer, the Vanguard S&P 500 ETF (VOO 0.14%) could be a fantastic choice.
This investment tracks the S&P 500, holding stocks from 500 of the largest U.S. companies. Because only large, profitable organizations are eligible to join the S&P 500, this index is well-positioned to recover from economic rough patches over time.
In fact, throughout the S&P 500's history, the ETF has ended every single 20-year period with positive total returns, according to analysis from Crestmont Research. In other words, you could have invested in an S&P 500-tracking fund at any point in history, and as long as you held it for 20 years, you'd have made money.
The S&P 500 has seen its fair share of volatility, too. Since 2000, for example, it's faced the dot-com bubble (leading to one of the longest bear markets in history), the Great Recession (the most severe economic downturn post-WWII), the COVID-19 crash in 2020 (the fastest market crash on record), and many more downturns along the way.
Despite all of this volatility, though, the S&P 500 has earned total returns of more than 700% since January 2000. If you'd invested $5,000 in an S&P 500 ETF back then, you'd have more than $41,000 by today.
NYSEMKT: VOO
Key Data Points
The Vanguard S&P 500 ETF, in particular, is a smart choice for its rock-bottom fees. Its 0.03% expense ratio is among the lowest in the industry, and it could save you thousands of dollars in fees over decades compared to higher-priced ETFs.
The biggest drawback of an S&P 500 ETF
No investment is perfect, and perhaps the main downside to an S&P 500 ETF is that it will only ever earn average returns. Because it tracks a major market index, it can't beat the market itself.
Historically, the S&P 500 has earned an average annual return of around 10%. If you were investing in, say, a growth ETF earning slightly higher average returns of 12% per year, here's the difference that could make in approximate overall earnings, assuming you're investing $200 per month.
| Number of Years | Total Portfolio Value: 10% Avg. Annual Return | Total With Portfolio Value: 12% Avg. Annual Return |
|---|---|---|
| 20 | $137,000 | $173,000 |
| 25 | $236,000 | $320,000 |
| 30 | $395,000 | $579,000 |
| 35 | $650,000 | $1,036,000 |
Data source: Author's calculations via investor.gov.
For investors seeking stability and consistency, the S&P 500's average returns might be a worthwhile trade-off. Investors seeking more out of their investment, however, may prefer a growth fund or a selection of individual stocks designed to beat the market.
No one can say exactly when the next recession will begin, but it pays to prepare early. The Vanguard S&P 500 ETF is a low-cost investment option, and history suggests it's extremely likely to recover from future downturns.
