Nvidia (NASDAQ: NVDA) has generated some massive returns for investors in recent years. But the danger in buying the stock today is that at an extremely high valuation, you might be limited in the returns you get from it. While it may still be a good long-term investment, you may be better off putting your money into other growth stocks instead.
You could even simplify your strategy even further by investing in an exchange-traded fund (ETF), which can give you exposure to a broad range of stocks while still putting you on a path to generate some great returns.
A fund with tremendous long-run potential
For growth investors, one ETF that is a popular option is the Invesco QQQ Trust (NASDAQ: QQQ). It tracks the Nasdaq-100 index and gives investors exposure to the top growth stocks in the world within just a single investment. It’s a safer alternative than putting all or even most of your money into a few investments, even if you’re incredibly bullish on them.
With the Invesco fund, you don’t even need to stay on top of what the hot new growth stocks are, as the Nasdaq-100 is made up of the top 100 nonfinancial stocks on the exchange. You’ll still get exposure to Nvidia, but along with that, you’ll also have exposure to Microsoft, Apple, and many other top tech stocks.
By investing in the fund, you can put yourself in a good position to beat the markets. Over the past 10 years, the Invesco QQQ fund has generated total returns (which include dividends) of more than 450%, which is far higher than the S&P 500‘s comparable returns of 235%. That means that the ETF has averaged a compounded annual growth rate of 18.6% in the past decade — well above the S&P 500’s long-run average of around 10%.
The fund could put you on a path to reach $1 million
The Invesco ETF can be an ideal option for long-term investors due to the effects of compounding and its potential to generate significant annual returns. While a near-19% growth rate may be a bit of an optimistic expectation to set for any investment for the very long term, even at a much lower average annual return, the ETF could generate considerable wealth for investors who buy and hold.
Suppose, for example, that you invest $25,000 into the ETF. If it averages an annual growth rate of around 13%, then after a period of 30 years, it’ll grow to be worth nearly $1 million. If you’re able to invest $30,000, it would take less than 29 years to get to $1 million. And if you can invest additional funds over the years, that can help accelerate your gains.
Invesco’s ETF is a good default option for investors
If you’re not sure what to invest in and are worried that hot stocks like Nvidia have become too expensive, the Invesco ETF can be a great option to consider investing in. It has a low expense ratio of 0.2%, and it gives you an easy way to invest in the best growth stocks in the world.
Even if you don’t have a lot of money to invest today, you can periodically add to your investment every month or year to build up your position over time. And regardless of whether the ETF is up or down at the time you invest, it’s likely to perform well in the long run, and that’s ultimately what is most important.
Should you invest $1,000 in Invesco QQQ Trust right now?
Before you buy stock in Invesco QQQ Trust, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $759,759!*
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Forget Nvidia: This ETF Could Turn $25,000 Into $1 Million was originally published by The Motley Fool
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