If the Stock Market Crashes, Young Investors in Their 20s Might Want to Buy This Nasdaq ETF and Hold It Until Retirement
Stock market downturns often present investors with incredible buying opportunities.
Overview
The benchmark S&P 500 (SNPINDEX: ^GSPC) index is having a strong year, led by technology stocks. But a growing chorus of risks could threaten this bull market. They include a rising inflation rate, interest rate hikes, geopolitical tensions, and a potential slowdown in artificial intelligence (AI) development from labs like Anthropic and OpenAI.
To make matters worse, the S&P 500 is trading at a Shiller cyclically adjusted price-to-earnings (CAPE) ratio of 41.2, its second-highest valuation since the peak of the dot-com internet bubble in 2000. The index plummeted by 49% when the bubble eventually burst, and while I'm not predicting it will fall by a similar magnitude this time around, a sharp correction could certainly be on the horizon.
Details
The stock market has always trended higher over the long term, so history suggests investors would be wise to buy the dip if a crash does eventuate. Purchasing an S&P 500 index fund is one of the surest ways to build wealth in the stock market in the long run, but enduring a little more volatility for an opportunity to earn even higher returns might be a worthwhile trade-off for young investors in their 20s.
Source
Originally published at www.fool.com.