Investing in the Most Intelligent ETF for $200 at This Moment
Investing in the Most Intelligent ETF for $200 at This Moment
Two hundred bucks ain't a fortune, but used wisely, it can yield decent profits. So let's check out a smart way to invest two hundred smackers.
Exchange-traded funds, the ideal pick
Exchange-traded funds (ETFs) are among the best ways to dip your toes into the stock market. Basically, they're like a bag of assorted stocks, grouped together based on a specific characteristic.
For instance, some ETFs concentrate on a specific sector, like financial or energy companies. Others choose stocks based on their size. And still, others focus on the country of origin, purchasing shares of stocks from countries like Japan, Germany, Brazil, and so on.
There are countless companies that create and manage these ETFs, and the fees investors pay can vary based on the fund's strategy, composition, and expenses. Let's explore a few different types of ETFs and see which one strikes the smartest chord right now.
Types of ETFs
There are countless ETFs, each created to serve a unique purpose and audience. For example, the Vanguard Growth ETF (VUG -1.43%) is packed with growth stocks. Its top holdings include tech titans like Apple, Microsoft, and Amazon.
Next, there's the Vanguard Value ETF (VTV -0.59%). This fund is all about value stocks. Its top holdings include dividend-paying stocks like ExxonMobil, Procter & Gamble, and Coca-Cola.
Finally, there's the iShares Top 20 U.S. Stocks ETF (TOPT -1.45%). This fund zeroes in on the 20 largest American stocks; its top holdings include Tesla, Apple, Microsoft, Nvidia, Alphabet, and Amazon.
Each of these funds caters to a different audience, but none of them are my top pick for an investor with two hundred bucks to invest. Instead, I'd focus on a different ETF: the Invesco QQQ Series I Trust (QQQ -1.33%). Here's why.
Why the Invesco QQQ Series I ETF is a smart choice for so many investors
This ETF is a smart choice for three reasons:
- It's geared towards benefiting from fast-growing tech companies.
- It boasts a solid performance history.
- Its fees are low, making it a suitable fit for almost any portfolio.
Let's begin with the fund's strategy. This fund is designed to follow the Nasdaq-100 index, which includes the 100 largest non-financial companies on the Nasdaq exchange. Consequently, the fund's top holdings are similar to, but slightly different from the Vanguard Growth ETF. For example, this fund still includes tech giants like Apple, Microsoft, and Nvidia in its top holdings, but it omits financial stocks like Visa and Mastercard.
As for performance, the Invesco fund has been one of the top-performing ETFs for some time. Over the past decade, for instance, the Invesco fund has delivered a compound annual growth rate (CAGR) of 18.3%. That's well ahead of what the Vanguard Growth ETF (up 15.9%) produced, and it's nearly double the return of the Vanguard Value ETF (up 10%).
Finally, the fund boasts reasonable fees. Its expense ratio is only 0.2%. That means only $20 a year is paid in fees for an investment of $10,000. For a smaller amount, say $200, an investor will only surrender $0.40 in annual fees.
Taking into account the combination of low fees, excellent performance, and sound strategy, the Invesco ETF is the perfect choice for an investor looking to put two hundred bucks to work today.
Investing two hundred dollars in exchange-traded funds (ETFs) could yield decent returns. The Invesco QQQ Series I Trust (QQQ) is a smart choice due to its focus on fast-growing tech companies, solid performance history, and low fees, making it suitable for almost any portfolio.
With two hundred dollars, an investor will only pay 0.40 in annual fees for the Invesco ETF, demonstrating its affordability for small investors.