Why Investing in the S&P 500 Might Be a No-Brainer Move Right Now

It may seem like a bad time to invest in the stock market due to the uncertainty ahead, but it may actually be a no-brainer to do so right now. While the S&P 500 (^GSPC 0.13%) is down roughly 10% in 2025 as of Thursday’s prices, historically, it has risen in value.

The index is designed to track 500 of the best publicly traded stocks on the market. And by investing in exchange-traded funds (ETFs) that track the broad index, long-term investors have an easy way to benefit from the market’s growth over the years.

Here’s how you can easily invest in an S&P 500 ETF, and why you should consider doing so today.

An easy way to track the index

There are many ETFs available that can help you track the S&P 500. One of the most popular options is the SPDR S&P 500 ETF (SPY 0.14%). It has a low expense ratio of 0.09%, and its total returns (which include dividends) over the past 10 years have been nearly identical to those of the index.

^SPX data by YCharts

As you can see, investing in the ETF over the long haul has allowed investors to generate some great returns, while enjoying a lot of diversification and taking on minimal risk. A $10,000 investment in the fund over this time frame would have grown to some $30,000 — and that’s even when you factor in the market’s decline this year.

But often, when prices rise too quickly, market forces can bring them down back to reality.

Were stocks overdue for a decline?

The S&P 500 has historically averaged annual returns of around 10%. That’s just an average, however, and there will be both good and bad years mixed in along the way. For example, in 2024 and 2023, the index rose by more than 20% — well above its long-run average. And that propelled it to a higher-than-typical valuation.

The cyclically adjusted price-to-earnings ratio, also known as CAPE, looks at a 10-year period to help gauge how cheap or expensive the stock market is. And prior to the market sell-off this year, the CAPE ratio was up around 37. The last time it was that high was back in 2021, just before the following year’s crash in the markets, when the S&P 500 would decline by more than 19%.

The CAPE ratio is down to 33 now. And while that’s still high, it suggests that stocks are not as egregiously overvalued as they were at the beginning of the year. That doesn’t guarantee that more of a decline won’t be coming this year, but investing in the SPDR S&P 500 ETF when valuations are more modest can help investors secure better returns over the long run.

Why buying on a time of weakness is a good idea

The market was arguably overdue for a decline heading into this year, given its impressive performance heading into 2025, and buying at elevated levels may have been risky due to the potential for a correction.

While you don’t necessarily want to time the markets, it’s generally a good idea to invest in the S&P 500 at a time of weakness, simply because it can lead to far better returns in the long haul than if you bought when its valuation was at record levels. Even though stocks may still fall this year, investing in the S&P 500 right now can be a great move for long-term investors.