After dipping into correction territory late last week, the S&P 500 (^GSPC 1.08%) is currently down by 8.73% since mid-February, as of this writing. Recession fears are still surging, however, with close to 60% of U.S. investors feeling pessimistic about the market’s six-month future, according to a mid-March survey from the American Association of Individual Investors.
While nobody knows for certain whether a recession or bear market is looming, the silver lining is that now can be a fantastic opportunity to buy stocks at a discount. The market is essentially on sale right now, and there are a few supercharged Vanguard exchange-traded funds (ETFs) you might want to load up on.
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1. Vanguard S&P 500 ETF
If you’re a more risk-averse investor or are simply looking for a safer option right now, the Vanguard S&P 500 ETF (VOO 1.01%) could be a smart buy.
This ETF tracks the S&P 500 index, which means it includes the same stocks as the index and aims to mirror its long-term performance. The S&P 500 contains stocks from 500 of the largest corporations in the U.S., many of which are industry-leading juggernauts with plenty of experience surviving tough economic times.
An S&P 500 ETF is one of the safer investments you can buy, especially during periods of volatility. The index itself has survived countless recessions, crashes, and bear markets over the last century — including multiple severe downturns in the last 25 years alone.
Because the Vanguard S&P 500 ETF tracks the S&P 500 index, it’s also very likely to survive any downturns that may be looming. If you’re feeling nervous about the future of the market, this ETF could help protect your portfolio.
2. Vanguard S&P 500 Growth ETF
If you’re looking for an S&P 500 ETF with some extra punch, consider the Vanguard S&P 500 Growth ETF (VOOG 1.68%). This fund also includes stocks from the S&P 500. However, it only includes companies that have the highest potential for long-term growth.
The Vanguard S&P 500 Growth ETF can be a smart middle ground between a relatively safe investment, like the S&P 500 ETF, and a higher-risk growth ETF. It contains 209 stocks poised for faster-than-average growth. However, because all of those stocks are from large companies listed in the S&P 500, this fund also carries less risk than many other growth ETFs.
Over the last 10 years, it’s earned an average rate of return of 14.63% per year, compared to the Vanguard S&P 500’s 10-year average return of 12.93% per year. While that may not sound like a major difference, it could add up to hundreds of thousands of dollars over time.
For example, say you’re investing $200 per month. If you’re earning an average return of 14% per year, you could accumulate around $856,000 after 30 years. With an average return of 13% per year, those contributions would add up to around $704,000 in that time.
3. Vanguard Information Technology ETF
The Vanguard Information Technology ETF (VGT 1.32%) focuses solely on the technology industry, with 314 stocks from various corners of the tech sector. It’s on the riskier side, as it offers less diversification than the other two ETFs on this list, but also has a long history of significant returns.
Over the last 10 years, it’s earned an average rate of return of 19.76% per year. At that rate, investing $200 per month could add up to around $2.7 million in 30 years.
Keep in mind, though, that the tech sector tends to be hit hard during tough economic times. The tech-heavy Nasdaq Composite (^IXIC 1.41%) has dropped by more than 11% since mid-February alone, so the short-term may be incredibly volatile. Over time, though, this ETF has significantly outperformed the market.
If you’re thinking about buying a tech fund, now could be a smart time. As of this writing, this ETF is priced at around $560 per share — down from around $644 per share one month ago. If you’re willing to take on more risk for the chance at earning significantly higher-than-average returns, now could be a smart time to invest in the Vanguard Information Technology ETF.
Market downturns are daunting but can also be incredible buying opportunities. No matter what you buy, it’s wise to keep a long-term outlook and plan to hold your investments for at least a few years. The short term may be volatile, but historically, the market has a flawless track record of surviving even the worst downturns.
