The Fed is still not your friend if you are this type of investor: Cameron Dawson
Cameron Dawson and Matthew Tuttle provide guidance on the stock market on ‘Making Money.’
Whether you're an experienced investor or are just getting started in the stock market, periods of volatility can be nerve-wracking.
The market has seen plenty of ups and downs over the last few months, and some investors worry we could be headed toward a crash. With so much uncertainty in the world right now, there's a chance that more turbulence could be on the way.
While nobody can say for certain whether a crash is on the horizon or not, there is one investment that can help you prepare: the S&P 500 ETF.
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How an S&P 500 ETF can protect your money
An S&P 500 ETF is a fund that includes the same stocks as the S&P 500 index itself, with the aim of mirroring the index's long-term performance.
Because these stocks are from some of the largest and strongest companies in the U.S., that makes this type of fund more likely to survive stock market downturns. Strong companies can still take a hit during crashes, but there's a very good chance that the majority of these stocks will be able to bounce back eventually.
By investing in an S&P 500 ETF, it's likely your investments will rebound from downturns as well. Again, no investment is immune to volatility, so even S&P 500 ETFs will likely see short-term dips when the market is down. But over the long run, it's highly likely this type of fund will see positive average returns.
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Should you invest in an S&P 500 ETF?
S&P 500 ETFs are one of the safer types of investments, making them a smart option for risk-averse investors. The index itself has a decades-long history of recovering from downturns, so the chances are good that this type of fund will continue performing well over the long term.