Succeeding in the stock market doesn’t require one to pick the best individual businesses for their portfolio. Thousands of exchange-traded funds (ETFs) exist that can help automate the investing process, providing exposure to various themes or industries that you might be bullish on.
Perhaps no trend has had a greater impact on the economy and markets in the past couple of decades than technology. More recently, this is showing up in the ongoing artificial intelligence (AI) boom. Luckily, investors don’t have to look far to bet on this tailwind.
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Here’s the best tech ETF to buy with $2,000 right now.
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Betting on technology looks like a lucrative move
It seems that technology, the internet, and AI will only become more important. From an investment perspective, it makes sense to want more of your capital in the right place.
That’s why the Invesco QQQ Trust (NASDAQ: QQQ) is the top technology ETF to invest $2,000 in. It tracks the performance of the largest 100 non-financial companies that trade on the Nasdaq stock exchange. As of this writing, this fund had $324 billion in assets under management, demonstrating its impressive scale.
This ETF might have 100 different stocks in it, but the top 10 account for a whopping 49.8% of the total. Unsurprisingly, the “Magnificent Seven” are very important.
Investors considering owning the Invesco QQQ Trust must be bullish on various tech-driven trends. Companies in the ETF are benefiting from e-commerce, digital advertising, digital payments, streaming entertainment, electric vehicles, cloud computing, and of course, AI.
Stellar performance at a low cost
The beauty of owning this ETF is that there is no need to try to pick single stocks that could be the big winners of tomorrow. The Invesco QQQ Trust ensures you’ll have exposure to the tech companies that become successful in their respective market niches. Viewed this way, it’s a low-maintenance strategy to allocate capital.
In the past decade, the Invesco QQQ Trust has generated a total return of 404% (as of May 27). This means a $2,000 investment made in May 2015 would be worth $10,000 today, trouncing the performance of the broader S&P 500 index.
Understanding the cost structure is critical. The last thing investors want to do is buy an ETF that charges an arm and a leg for subpar returns. This isn’t the case here. Out of a $2,000 investment, just $4 goes to paying the 0.2% expense ratio on an annual basis. You get to keep more of your money.
What will the future hold?
Investors have heard the saying that past results won’t guarantee future returns. This is the right way to think about the Invesco QQQ Trust over the next decade and beyond. While outsize returns are possible, it’s best to keep expectations in check.
The optimistic view is that technology businesses generally have done well over the long term, due to their disruptive products and services and cultures of innovation. And there’s no reason to think this will change. That bodes well for return prospects.
But it also pays to have the right mindset. Don’t forget that volatility is the name of the game, especially with some of the companies that are included in the Invesco QQQ Trust. Investor sentiment can shift on a dime. That’s why it’s a good idea to think about the next 10 years and beyond with this investment. Those who are patient may be rewarded.
Should you invest $1,000 in Invesco QQQ Trust right now?
Before you buy stock in Invesco QQQ Trust, consider this:
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Neil Patel has positions in Invesco QQQ Trust. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
