Since mid-February, the S&P 500 (SNPINDEX: ^GSPC) has fallen by over 14%, as of this writing. The Nasdaq Composite (NASDAQINDEX: ^IXIC) and the Dow Jones Industrial Average (DJINDICES: ^DJI) have dropped by around 19% and 12%, respectively, in that time.
Some investors are concerned that prices could have further to fall, especially if a recession is looming. Analysts at JPMorgan said last week that they believe there's a 60% probability of a recession beginning by the end of 2025, fueled primarily by President Donald Trump's recent tariff policies.
Image source: Getty Images.
Investing in the stock market during such volatile times can be daunting, but if you can keep your money invested for at least five to seven years, market dips can be great times to pick up bargain stocks.
By investing at lower prices, you not only snag great stocks at a discount, but you could also set yourself up for substantial gains when the market eventually recovers. And if you're not into picking individual stocks, you can turn to exchange-traded funds (ETFs), which give you ownership of lots of stocks at once. Here are three Vanguard ETFs I'm loading up on right now.
1. Vanguard S&P 500 ETF
If you're feeling nervous about volatility and want a safer option that's almost guaranteed to get you through a rough patch, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is a fantastic option.
This ETF tracks the S&P 500, meaning it includes stocks from all 500 companies within that index. These businesses are among the largest and strongest in the world, and many of them have a decades-long history of surviving even the worst recessions.
While there are no guarantees in the stock market, the S&P 500 has a flawless track record over the long term so far. Over the last 25 years, it has earned total returns of nearly 260%.
Gray bars = U.S. recessions. ^SPX data by YCharts
No matter what the future holds for the stock market, an S&P 500 ETF is likely to pull through. Just be sure you're willing to stay in the market for at least five years to give your investment enough time to recover from any volatility.
2. Vanguard S&P 500 Growth ETF
The Vanguard S&P 500 Growth ETF (NYSEMKT: VOOG) is similar to the Vanguard S&P 500 ETF, but it has more potential for long-term growth, and also is riskier.
This ETF also tracks the S&P 500, but rather than including all of the stocks within the index, it only contains those with the most potential for higher-than-average returns.
By investing in this fund, you can essentially get the best of both worlds: a collection of strong and stable stocks with a history of surviving downturns, as well as stocks with a greater chance of beating the market over time. With 212 holdings in this fund, you're also getting plenty of diversification -- which can help limit risk.
^SPX data by YCharts
Just be aware that, like any fund focused on growth stocks, this ETF can be subject to greater levels of volatility. High-growth stocks tend to be hit harder during market downturns, even if they go on to see significant returns over time. Before you buy, be sure you're willing to stay invested throughout the market's rough patches.
3. Vanguard Information Technology ETF
If you're looking to gain exposure to the tech industry with less effort than buying individual stocks, you may opt for the Vanguard Information Technology ETF (NYSEMKT: VGT).
This ETF contains 310 stocks from the technology industry, ranging from heavy hitters like Apple and Nvidia to smaller tech companies with more potential for explosive growth. Within the tech sector, there's also plenty of diversification across various subsectors -- from systems software to semiconductors to IT consulting and more.
Tech stocks can be more volatile during periods of economic uncertainty, but they can also be explosive during periods of growth. By investing during the downturns, you could set yourself up for significant gains when the market experiences its next upswing.
^SPX data by YCharts
Nobody knows what the market will do in the coming weeks or months, but this isn't the first time stocks have faced significant volatility.
Downturns like the dot-com bubble burst, the Great Recession, and the crash triggered by the COVID-19 pandemic all led to widespread fear among investors. But those who stayed the course and continued investing reaped the biggest rewards during the recovery periods, and this downturn will likely be no different.
No matter what may be coming, the market's long-term future is bright. By investing in healthy stocks and funds and holding them for the long term, you can better protect your finances while still building long-term wealth.
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Katie Brockman has positions in Vanguard S&P 500 ETF and Vanguard Information Technology ETF. The Motley Fool has positions in and recommends Apple, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.