There has been a lot of panic on the stock market recently as prices have fallen sharply in recent weeks. S&P500 (^GSPC 0.47%) has fallen nearly 6% since mid-July and many investors fear it will only get worse from now on.

To be clear, there is no way to accurately predict how the market will perform in the short term. Stock prices could continue to fall, or it could be a short-lived lull where the worst is already behind us.

The uncertainty of the market can often be the hardest part for an investor, so it’s normal to feel unsettled. However, downturns can also be smart investment opportunities, as stocks are essentially on sale right now. By investing during the tough market periods, you can set yourself up for potentially lucrative gains during the recovery phase.

Where you invest is important, however, because not all stocks recover from downturns. While there are no guarantees in the stock market, there is one exchange-traded fund (ETF) that offers next to no guarantees: the S&P 500 ETF.

The best ETF for risk-averse investors

Investing in the stock market is often compared to gambling because you are always taking a risk with your money. But that’s not necessarily true, especially if you invest in the right places. If you do your homework and buy high-quality stocks or funds, you’ll have a much better chance of making positive returns over time.

One of the safest and most reliable investments is an S&P 500 ETF, such as the Vanguard S&P 500 ETF, SPDR S&P 500 ETF Trustor iShares Cores S&P 500 ETF.

This type of investment is a collection of stocks that track the S&P 500 index. Each ETF contains shares of 500 of the largest US companies, from technology giants such as Apple And Microsoft to long-standing brands such as Procter & Gamble And Coca-Cola.

Investing in an S&P 500 ETF is a fantastic way to build a diversified portfolio with minimal effort. With just a single investment, you instantly own a stake in 500 companies across a wide range of industries. And because the companies in the S&P 500 are some of the strongest in the world, there’s an extremely good chance they’ll recover from market downturns.

In fact, research shows that in the long run it is almost impossible lose Money with an S&P 500 ETF. According to analysts at Crestmont Research, every 20-year period in the history of the S&P 500 has ended with a positive total return.

This means that if you invested in an S&P 500 fund at any point and simply held it for 20 years, you would have made money – regardless of the market performance during that time. The S&P 500 has experienced some extreme bear markets, recessions and crashes throughout its history, but has managed to recover from each one so far.

A major disadvantage that you should consider before buying

No investment is perfect for everyone, and that’s true of the S&P 500 ETF. While it can be a good choice for those looking for a safer investment with a long track record of recovering from downturns, it may not necessarily be the right choice if you’re looking for above-average returns.

By definition, an S&P 500 ETF can’t beat the market. It’s designed to follow the direction of the market, so it can only ever deliver average returns. If that’s a worthwhile trade-off for an investment that carries less risk and requires less effort, it could be a smart addition to your portfolio. Otherwise, you might want to opt for individual stocks.

Investing in individual stocks requires more research because you need to study the companies behind each stock you want to own. It can also be more expensive to get started because you need at least 25 to 30 stocks in your portfolio for proper diversification. However, this approach is also the best way to earn as much as possible in the stock market.

Whether or not you invest in an S&P 500 ETF depends on your goals and risk tolerance. This investment may not be the best choice for those looking to maximize their returns, but if you’re just looking for a safer and more reliable fund to get you through this and the downturns to come, the S&P 500 ETF is one of the best options on the market.