Which provides a more lucrative long-term return: the Nasdaq-100 or the Leading S&P 500 Growth Shares?
Investing in the long-term, you might want to consider growth stocks. They offer the potential for superior gains compared to dividend stocks, which often prioritize making regular payments over high growth rates. The downside? Volatility. But for long-term investors, focusing on growth stocks could lead to outperformance over dividend stocks.
Instead of picking individual growth stocks, you might want to consider exchange-traded funds (ETFs). Two popular options are the Invesco QQQ Trust (QQQ) and the Vanguard S&P 500 Growth Index Fund ETF (VOOG).
Over the past decade, the Invesco fund has outperformed VOOG. According to historical data, the Invesco fund has averaged an annualized total return of 19%, while VOOG has averaged around 16% over the same period. Both funds have tech giants like Apple, Nvidia, and Microsoft in their top holdings, but the Invesco fund focuses more on Nasdaq 100, which includes the top non-financial stocks on the Nasdaq exchange.
However, this focus on a limited range of growth stocks could higher volatility. On the other hand, VOOG's broader mix of stocks, which includes tech stocks accounting for approximately 57% of its total net assets, may offer more stability in the short term.
So, which one is the better option for your portfolio? It depends on your risk tolerance and investment goals. If you're comfortable with volatility and seeking high growth, the Invesco fund might be a good fit. If you prefer stability and diversification, VOOG could be a better choice.
In the grand scheme of things, both funds can be promising long-term investments. They both track growth-oriented stocks and offer potential for superior returns. Ultimately, it's about finding the balance that aligns with your investment strategy.
Considering the risk associated with focusing on a limited range of growth stocks, you might want to diversify your investment by including the Vanguard S&P 500 Growth Index Fund ETF (VOOG) in your portfolio. This fund may provide more stability, especially in the short term, due to its broader mix of stocks.
Furthermore, if you're keen on finance management and aiming to maximize the growth potential of your investment, allocating some of your money towards exchange-traded funds like the Invesco QQQ Trust (QQQ) could also yield significant returns over the long term, as demonstrated by its historical outperformance compared to VOOG.