Why Investing in This Stellar ETF Could Transform Your Retirement Strategy in Your 20s

Key Points

• The Nasdaq-100 index includes the 100 largest companies on the Nasdaq exchange, heavily weighted toward technology.

• As of late July 2023, the Nasdaq-100 is down 9% from its peak, compared to a 3% decline in the S&P 500.

• The Invesco QQQ Trust tracks the Nasdaq-100 and has delivered a 10.9% annual return since its inception in 1999.

The Nasdaq-100 index, characterized by its concentration in technology stocks, typically outperforms the more diversified S&P 500. However, it is presently experiencing greater volatility, evidenced by a 9% drop from its recent record high. Despite this, the Invesco QQQ Trust (NASDAQ: QQQ), an ETF mirroring the Nasdaq-100, boasts a compound annual growth rate of 10.9% over nearly 27 years, compared to the S&P 500’s 8.6%.

Significantly, stocks within the Nasdaq-100, such as Apple, Nvidia, and Alphabet, have enjoyed substantial gains, averaging over 500% returns since the start of 2023 due to their roles in the AI boom. This trend suggests that the potential for long-term growth remains strong, especially for young investors looking to take on some risk for higher returns.