Is the Vanguard S&P 500 ETF Index Fund a Buy Now?

The Vanguard S&P 500 ETF (NYSEMKT: VOO) is arguably the best way to match the returns of the American stock market. It's one of the three largest exchange-traded funds (ETFs) based on the popular S&P 500 (SNPINDEX: ^GSPC) market index, which reflects the performance of 500 top-quality domestic companies. The fund's annual fees are minimal. The Vanguard group behind the scenes was built around the investor-friendly policies of founder John Bogle. If you want to follow the broader market, the Vanguard S&P 500 ETF is always a great place to start.

But there's a more general question in play here. Is this the time to get into the stock market, in the first place?

Let me show you why the answer is "yes," no matter what you think the stock market might do in 2025 or over the next couple of years. You may not want to go all-in with a large purchase today, but this moment is as good as any other to start a new Vanguard S&P 500 ETF position -- slowly.

Market predictions are all over the map

First and foremost, I can't tell you exactly what the stock will do over the summer of 2025. There are tons of conflicting opinions on this matter -- probably more than usual.

Hedge funds are reportedly buying lots of promising tech stocks right now, suggesting a bullish market outlook in this group. At the same time, bearish short-selling activity is on the rise and many market watchers expect a full-fledged recession amid the Trump administration's unpredictable tariffs.

So the stock market might be falling off a cliff, or preparing for a majestic surge. The real outcome probably lies between these extremes. Trying to time the market in this erratic economy sounds like a terrible idea.

Perfect timing is mostly just luck

In all fairness, the starting price for any investment can make a significant difference to your long-term results. If you invested $3,000 in an S&P 500 index fund at the start of 2008, you'd have a total return of $16,970 by June 2, 2025. But if you saw stocks trading at unreasonable valuations at back then, and held off on making that $3,000 investment until early 2009 instead, your account would show a total return of $26,940 instead. The S&P 500 dipped as much as 48% lower in the subprime mortgage crisis.

It's still a game-changing over 17 or 18 years, but of course I'd rather have a compound annual growth rate (CAGR) of 14.3% than 10.5%. Most people didn't see that crash coming, though. Trading volumes soared when the Lehman Bros. firm went out of business, but cooled down as the financial meltdown continued. In a perfect world, more investors would be eager to buy great stocks at temporary discounts, thereby boosting the daily trading volumes. The opposite scenario unfolded instead.

And most people will mistime the next economywide market crash, too. It's one thing if you really do see clear signs of some unavoidable market trend, like the soaring home prices of the early 2000s or the skyrocketing average price-to-earnings ratios just before the dot-com bubble popped. It's fine to keep your cash on Wall Street's sidelines when you expect a downturn fairly soon. Otherwise, you should consider putting your money to work over time.

Three money-making plants grow together. Image source: Getty Images.

One simple solution: buy in thirds

Buying in thirds is one simple approach to unpredictable markets. Divide your investable cash in three equal buckets (metaphorically speaking, of course). Then you buy your favorite asset in three equal portions, stoically looking away from the price charts to place those pre-planned trades no matter what. The three portions may be a month apart, or a year, or any other schedule that makes sense in your situation. The important part is that you make a plan that works with your budget, and you stick to it whether stock prices go up or down in the meantime.

Let's say you used this method around the subprime mortgage panic of 2008, starting at the beginning of that year with a six-month pause between your Vanguard S&P 500 ETF purchases.

This is how the three buys would have worked out in the long run:

Calculated from YCharts data on 6/2/2025.

As expected, these hypothetical returns would fall short of a single perfectly timed buy-the-dip purchase, but they're also much better than the worst-case scenario of making a big buy just before a terrible market drop. The CAGR for this thought experiment would be roughly 12.1%.

Stop overthinking and start investing

Maybe you already have a solid investing strategy in mind. Congratulations -- you're ahead of the game and should continue with your chosen plan. Don't be distracted by blaring headlines along the way, but feel free to take advantage of unexpected opportunities.

Perfection is the enemy of progress, especially on Wall Street. The worst thing you can do is stay out of the market forever, waiting for an ideal buy-in price that might never come.

If you're just getting started, don't worry about placing your first trade on the perfect day. Almost nobody does that, and it's honestly just the luck of the draw. Just set your budget, pick a three-part timing schedule that works for you, and invest the reserved cash in Vanguard S&P 500 ETF shares on those dates.

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Anders Bylund has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.