1 No-Brainer S&P 500 Vanguard ETF to Buy Right Now for Less Than $1,000

Americans have become increasingly interested in exchange-traded funds, which let investors diversify their investments over various sectors and companies instead of picking individual stocks to buy. For example, investors can choose energy-specific ETFs, artificial intelligence ETFs, and others that track stock market indices.

Last year, U.S. investors funneled more than $1 trillion into ETFs, beating record inflows set in 2021. But with so many options available, which one is the best option? I’m partial to the Vanguard S&P 500 ETF (VOO -0.13%), a passively managed fund that aims to track the performance of the S&P 500. Here’s why it’s a great place to put $1,000 right now.

1. It’s a low-cost fund

Vanguard ETFs have some of the lowest fees in the industry. That’s good news because it means that you’ll keep more of your gains when the fund’s value increases rather than having them siphoned off by high management costs.

The Vanguard S&P 500 ETF charges an expense ratio of just 0.03%, which is low by even passively managed fund standards, with the average expense ratio being around 0.12%. This means that for every $10,000 you have invested in Vanguard’s S&P 500 ETF, you’ll pay just $3 annually, compared to $12 for the average fund.

This low expense ratio makes the Vanguard S&P 500 ETF one of the cheapest ways to track the market, and it’s one big reason why putting $1,000 toward the fund is a smart move. As the S&P 500 grows, you’ll be keeping far more gains from your initial investment than with other ETF alternatives.

2. The S&P 500’s returns are impressive over time

Some investors aim for market-beating returns, and there’s nothing wrong with that goal. But it’s important to remember that the S&P 500’s average historical annual return of about 10% (before inflation) is still a very good return on your investment.

You’re not guaranteed to see those results every year, of course, and you’ll certainly have some years where you’ll have losses if you stay invested long enough. But over time, the S&P 500 has consistently been a moneymaker for those who patiently keep their money in the market.

Consider that over the past five years, the S&P 500 has fluctuated as a result of a global pandemic, soaring inflation, rapid interest rate hikes, geopolitical turmoil, an artificial intelligence (AI) boom, and President Trump’s tariffs. That’s a lot of market influence packed into just five years, and yet the S&P 500 has gained nearly 90% since the start of 2020.

Past performance isn’t indicative of future returns, as they say, but I use this example to show that even when there’s a lot of uncertainty in the world, the market tends to rebound.

3. You don’t have to be a good stock picker

There are a lot of great companies to invest in, but it’s time-consuming to do the research necessary to find great stocks. And even after doing your due diligence before buying, you’ll likely spend some time keeping up with the company’s earnings reports, management changes, and macroeconomic forces that could influence its share price.

Or, you could skip all of that. You can still invest in great companies and know that you’re well-diversified among many sectors and trends by buying Vanguard’s S&P 500 ETF. Some people like doing their own research and enjoy keeping up with the stocks they own. I get it. But if you prefer not to, then buying an S&P 500 ETF is a great option.

For all of the reasons above, I have most of my investment portfolio in Vanguard’s S&P 500 ETF. I like knowing that most of my investment strategy doesn’t involve panicking whether I’ve tied too much money up into one stock or hoping that a long-term investment bet I’ve made eventually pays off. If you’re looking for that peace of mind — and some likely solid returns along the way — putting $1,000 into the Vanguard S&P 500 ETF is a fantastic option.