With the stock market being whipsawed around and still well off its highs, many investors may be left wondering what to do. History suggests tariffs are generally not good for the stock market, although the ultimate impact depends on the scale of the tariffs and the state of the economy. President Donald Trump pausing tariffs for 90 days on all countries besides China, meanwhile, adds a new wrinkle.
At the same time, stocks often feel more pressure over the months after a stock market crash like the one we recently saw when the S&P 500 fell more than 10% in two days. A big rally like the 9.5% gain in the S&P 500 on April 9, meanwhile, is no guarantee that the stock market has found a bottom either. For example, the S&P 500 index rallied 11.6% on Oct. 13, 2008, only to fall to a much lower level by March 2009.
With much uncertainty in the market, one of the best strategies that investors can still use is to dollar-cost average into an exchange-traded fund (ETF). This involves buying the ETF at set times and amounts regardless of its price. In a down market, investors can also use a slightly modified version of this and look to invest even more on big dips. The key either way, though, is to invest consistently over a long period of time.
Let's look at two index ETFs that you can start implementing this strategy with today. Remember, you can start with a small amount like $500, but this is just a starting point. You want to invest regularly, such as once or twice a month.
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The Vanguard S&P 500 ETF
A timeless classic, the Vanguard S&P 500 ETF (VOO -2.73%) tracks the performance of the S&P 500 index, which consists of around 500 of the largest companies that trade in the U.S. by market capitalization (market cap). It is a market-cap weighted index, which means that the larger the company is by market cap (shares outstanding multiplied by price), the bigger the percentage of the index the stock represents.
The real beauty of the S&P 500 is that it lets its winners win and losers fade into obscurity. Stock picking isn't easy, and in fact, a JPMorgan study found that 40% of all stocks in the Russell 3000 (the 3,000 largest traded stocks in the U.S.) between 1980 and 2020 experienced catastrophic losses of 70% or more from which they never recovered and about two-thirds of stocks underperformed the index. However, broad-based market-weighted indexes perform well because they let their mega-winners run.
This can be seen in the Vanguard S&P 500 ETF's strong performance over the years as well as its current makeup. Today its top holdings are dominated by the biggest and most successful companies in the U.S.
Here is a list of the ETF's top holdings and their weightings as of the end of February:
| Holding | Weighting | Holding | Weighting | |
|---|---|---|---|---|
| 1. Apple | 7.2% | 6. Meta Platforms | 2.9% | |
| 2. Nvidia | 6.1% | 7. Berkshire Hathaway | 1.9% | |
| 3. Microsoft | 5.8% | 8. Broadcom | 1.8% | |
| 4. Amazon | 3.9% | 9. Tesla | 1.6% | |
| 5. Alphabet | 3.6% | 10. JPMorgan Chase | 1.5% |
Meanwhile, the ETF has been a strong performer over the long run. It's generated a total return of 223.7% over the past decade, as of the end of March. That equates to an average annual return of 12.5%.
The Invesco QQQ ETF
To add a little more spice to your investments, the Invesco QQQ ETF (QQQ -2.89%) is a great option. The ETF tracks the performance of the Nasdaq-100 index, which is made up of the 100 largest non-financial stocks that trade on the Nasdaq exchange. Like the S&P 500, it is a market-weighted index.
The ETF is more heavily weighted toward growth and technology stocks. Nearly 60% of its holdings are in the technology sector, with another 20% in the consumer discretionary sector. Many of its top holdings, however, do overlap with those of the Vanguard S&P 500 ETF.
Here is a list of the Invesco QQQ ETF's top holdings and their weightings as of April 9, 2025:
| Holding | Weighting | Holding | Weighting | |
|---|---|---|---|---|
| 1. Apple | 8.5% | 6. Broadcom | 4.1% | |
| 2. Microsoft | 8.2% | 7. Meta Platforms | 3.6% | |
| 3. Nvidia | 7.9% | 8. Costco Wholesale | 3% | |
| 4. Amazon | 5.7% | 9. Netflix | 2.8% | |
| 5. Alphabet | 5.1% | 10. Tesla | 2.8% |
That said, the ETF has actually nicely outperformed the S&P 500 over the years. It has a cumulative return of 380.2% over the past decade as of the end of March. And as of the end of 2024, over the last 10 years it has outperformed the S&P 500 over a 12-month rolling average 87% of the time.
It carries a little bit more risk given its concentration in growth stocks, but its track record speaks for itself.
