What do the next 5 years have in store for VOO?

To say that the Vanguard S&P 500 ETF (VOO) has had a good run recently would probably be an understatement. Over the past five years, VOO is up more than 110%. And in the past year, it’s up around 18%.

In this Reddit post, we have someone wondering what’s in store for VOO in the next five years. And the short answer is, that’s anyone’s guess. That’s why it’s important to have realistic expectations if you’re investing in VOO, and to plan to keep your money in it for the long haul.

The upside of investing in VOO

The Vanguard S&P 500 ETF is often considered an appropriate investment for savers who want instant diversification in their portfolios. VOO aims to match the performance of the S&P 500 index itself, which consists of the 500 largest publicly traded companies by market capitalization.

To put it another way, the companies VOO invests in are large, established businesses. And because there are so many of them, VOO can be a good investment for people who are skittish about researching stocks individually.

A lot of people turn to VOO, or funds like it, for the simplicity. But clearly, the payoff can also be huge, as evidenced by how well VOO has done in recent years — and how well the S&P 500 has done, too.

What’s in store for VOO?

It’s impossible to know what the coming years have in store for VOO or the S&P 500 itself. The S&P 500’s average yearly return is roughly 10%. This doesn’t mean that the index will generate that return every year, though.

It’s common for stock values to fluctuate based on a host of factors. It’s also more than possible for the broad market to experience a downturn.

Meanwhile, there are some financial experts who think that many of the stocks in the S&P 500 are overvalued right now. If so, it may be that the index is due for a correction.

Since it’s not possible to predict where the S&P 500 will go over the next five years, if you’re going to invest in VOO, it’s a good idea to have a long-minded approach. If you’re saving for a milestone that’s five years away, VOO may actually be a pretty risky investment. If you’re saving for a retirement that’s 25 years away, VOO could be a solid bet.

It’s always a good idea to think long-term when putting money into the stock market. Even though VOO could be regarded as a less risky investment because it covers so many different companies, at the end of the day, if the stock market enters bear market territory, your portfolio balance could plummet if you’re heavily invested in VOO.

The good news about stock market downturns is that they tend to be temporary, which is why you need to give yourself ample time to recover from them. So while there’s a good chance VOO will continue to gain value in the next half decade, it could lose value just as easily. If you’re in it for the long haul, though, that won’t necessarily be a problem.