There aren’t many stocks I’d want to hold on to forever, or just buy and forget about. Economic and market conditions can change quickly, and what was once a safe stock may no longer look so solid. When you’re talking about a period of twenty or more than thirty years, it can be virtually impossible to predict what the future will hold for the markets as a whole, let alone for individual stocks.
That’s why an Exchange Trade Fund (ETF) can be an ideal option if you’re investing for the long term. With an ETF, you don’t have to worry about picking stocks or updating your portfolio to reflect the latest trends. Many Vanguard ETFs also charge low fees in exchange for excellent diversification. One ETF that can be a solid investment for buy-and-hold investors is the Vanguard S&P 500 ETF (NYSEMKT: VOO).
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Billionaire investor Warren Buffett has been advocating for years that investors simply buy the shares S&P500. Because it’s a collection of the world’s best stocks, it’s an easy way for even novice investors to grow their portfolios over the long term. Buffett told CNBC in 2017: “The trick is not to pick the right company. The trick is to essentially buy all the major companies through the S&P 500 and do it consistently and in a very, very cheap way. “
And if you’re looking for low-cost funds, this is where Vanguard can come into play. The Vanguard S&P 500 ETF has a low expense ratio of 0.03%. And for that modest amount you get access to the S&P 500 index. It’s a buy-and-forget investment that can be an excellent way to bet on the economy in the long run. And over the years, it has done a great job of tracking the broad index.
While the S&P 500 can be a great way to invest for the long term, investors should remember that volatility can and will occur; it won’t be a straight line in value. As a reminder, you only need to look back to 2022, when the index lost almost 20% of its value. And depending on which analyst you ask today, some are predicting even bigger losses next year given the high valuation of the markets.
But if you’re investing for not just years but decades and possibly the rest of your life, then the good news is that you don’t have to worry about a bad year, because in the long run the S&P 500 will likely recover. as it has always been. The overwhelming long-term trend is that the index will increase in value, and the only question is what returns the index will ultimately average. Historically, the annual return has been around 10% per year, but that could be lower in the coming years as it reaches new highs in 2024.
