The Smartest S&P 500 ETF to Buy With $500 Right Now

There's no getting around the fact that most stocks have reacted strongly to President Trump's recent tariff announcements. The volatility in the market in early April caused some massive price swings from the S&P 500, including a 9.5% surge in one day after the previous four trading sessions brought it down by 12%.

Unfortunately, more market instability could be on the way as countries and businesses navigate the current tariff situation and try to determine how it might impact them and the economy.

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The turmoil has understandably left many people wondering where to put $500 or more right now. Here's why investing in the Vanguard S&P 500 ETF (NYSEMKT: VOO) could be a wise long-term move.

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The S&P 500 has proved to be a fantastic place for your money over the long term

There's no guarantee that when you invest your money in the stock market, you'll earn a return. However, history shows that investing in the S&P 500 has been a wise choice. Vanguard's S&P 500 ETF tracks the index, giving you exposure to 500 of the largest U.S. publicly traded companies.

The index is weighted toward technology stocks, which comprise about 30% of the fund's distribution. But even with that tilt toward those large tech companies, you'll still have substantial diversification across many sectors and companies in the financial sector, healthcare, consumer goods, energy, and others.

The long-term benefit of this can be seen from the S&P 500's historical returns of about 10% per year, on average (not adjusted for inflation). Of course, some years will be much better, and some could bring losses. But over time, the market has consistently trended upwards.

The added benefit of Vanguard's S&P 500 ETF is that it charges a very low fee to have your money invested. The fund's expense ratio is just 0.03%, which means you'll pay just $0.30 for every $1,000 you have invested.

Shares of the fund are under $500 right now, making it a perfect place to invest that amount. If you have a brokerage that allows you to buy fractional shares, you can invest with even less.

You don't have shift strategies based on tariffs

President Trump's tariff rollout over the past few weeks has been nothing short of chaotic. Companies from all sectors are still trying to determine the impact they might have on their business. Tariff percentages are still in flux, and some goods are temporarily exempted while new ones are being threatened, all of which have created a very uncertain time for companies.

While Vanguard's S&P 500 ETF can't shield your investments from the volatility caused by tariffs, it does allow you to ignore it to a certain degree. By spreading your investments across the broader market, you don't have to try to pick and choose companies that can weather the tariff turmoil.

Instead, you can take some comfort in the idea that when the market returns to some normalcy, your diversified investment will have the chance to grow no matter what sector or company is doing well.

Keep this in mind

There are still a lot of unknowns with tariffs and how they'll impact the economy. Right now, there's a growing sentiment that they could spur a recession, with dozens of economists saying there's a 47% chance one could occur this year. CEOs are feeling pessimistic as well, with recent data showing about 60% of them believe a recession will occur over the next six months.

Because of this uncertainty, it's likely that the S&P 500 could be volatile for a while, and some of the gains it's made over the past few years may not be the norm in the short term. That's not a big problem if you have a long investment horizon, but it's worth keeping in mind as companies try to adjust to shifting tariff policies.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

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Chris Neiger 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.