The Invesco QQQ Trust tracks the Nasdaq-100 and is up more than 400% during the past decade.
The Nasdaq is home to many of the best growth stocks in the world. But an even more exclusive club is the Nasdaq-100 index, which tracks the most valuable stocks on the exchange (excluding financial stocks). In 10 years, it has generated total returns, including dividends, of about 460%. At that rate of return, an $18,000 investment would have turned into more than $100,000.
Investing in an exchange-traded fund (ETF) such as the Invesco QQQ Trust (QQQ 0.93%), which tracks the index, can be a great way to build up your wealth over the years. And even if you don’t have a large amount of money to invest today, it can still be worthwhile to invest modest amounts on a regular basis. Below, I’ll show you how a $50-per-week investment in the Invesco QQQ Trust can grow over the long term.
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What kind of return can you expect from the Nasdaq-100 index?
The biggest and most difficult variable to account for when projecting future returns is the annual growth rate. The Nasdaq-100 index has averaged a compound annual growth rate of nearly 19% during the past decade, based on its total returns.
That’s a phenomenal performance, but that doesn’t mean that it will continue growing at such a high rate in the future. The stock market has been a bit hot in recent years, and you may want to brace for more modest returns. A good growth rate to use as a base case is the S&P 500‘s long-run average, which is about 10%. A best-case scenario might have you outperforming it and averaging a long-run return of 11%. But there’s also the possibility that the QQQ ETF ends up doing worse and you end up averaging a lower rate of return, perhaps 9%.
To give you a well-rounded picture of how an investment in the fund might grow over the long term, it’s important to consider all of the above scenarios. Although there’s no way to know for sure what the annual return will be, doing this analysis can at least give you a broader idea of what you might reasonably expect in the long run.
How big could your investment become?
If you invest $50 per week, that’s the equivalent of $2,600 per year. After 10 years, if you keep investing monthly, you will have put aside $26,000. If you’re able to keep the habit up for 20 years, then you would have invested $52,000. After 30 years, your contributions would total $78,000.
The big payoff, however, comes from putting those investments in the QQQ ETF, which can make the most of those contributions. In the table below, you can see what your estimated portfolio balance would be, assuming you invested $50 each week into the fund, based on varying growth rates.
| Year | 9% Growth | 10% Growth | 11% Growth |
|---|---|---|---|
| 10 | $42,184 | $44,693 | $47,389 |
| 20 | $145,859 | $166,066 | $189,587 |
| 30 | $400,660 | $495,673 | $616,279 |
Table and calculations by author.
Even if you averaged 9% growth, after 30 years, your investment would be worth more than $400,000 — more than five times the $78,000 you would have contributed over that period. If you end up averaging an 11% return, then you’re up to more than $600,000. The difference in even just a few percentage points can work out to hundreds of thousands of dollars over a long duration. And that’s why it’s important, when investing for the long haul, to try and stack the odds in your favor as best as you can, which means investing in top growth stocks.
Investing in a growth-focused fund such as the Invesco QQQ Fund can help you achieve strong returns in the future. And although it may be vulnerable to sell-offs and experience some bad years, if you remain invested, it can potentially generate life-changing returns.
