There is a misconception that investors must bet heavily on individual stocks to be successful in the stock market. However, different types of investments, including exchange-traded funds (ETFs), can generate life-changing investment returns. The big question is: How fast are we going to get there?
Indeed, a person who wants to become a millionaire overnight will have to take big risks that are unlikely to pay off. Trying to get rich quick is almost always a bad strategy.
However, if you have some patience, the Invesco QQQ ETF (NASDAQ: QQQ) could be a great option for generating big profits without spending your hard-earned money gambling.
Here’s why this exchange-traded fund will turn you into the millionaire you’ve been looking for.
Proven results and how Invesco QQQ works
An exchange-traded fund is a group of stocks that trade under a single ticker symbol. ETFs often follow a market index or investment style. Invesco QQQ follows the Nasdaq 100, a group of large-cap growth stocks primarily in the technology sector. Big technology companies have dominated the stock market for more than a decade, thanks to growing trends like cloud computing and digital advertising. The most famous market leader stocks, known as the ‘Magnificent Seven’, currently account for over 42% of Invesco QQQ. It has generated exceptional investment returns over the past 10 years.
QQQ total return level chart
With total returns reaching 700% in just 10 years, the question that will create millionaires is whether this performance will continue. There’s reason to think it can be done. Today, technology leaders dominate the modern economy. Think of powerful companies like Amazon, Meta, Apple, Alphabet, Microsoft, Tesla, and Nvidia. They lead in huge and growing end markets such as artificial intelligence (AI), cloud computing, digital advertising, self-driving cars, and renewable energy.
The Nasdaq 100 and Invesco QQQ contain dozens of other stocks, but these few are the foundation. Analysts expect nearly all of the Magnificent Seven stocks to maintain double-digit earnings growth over the long term. If that happens, these major investors in Invesco QQQ could continue to propel the ETF to new heights.
There is a pitfall
Risk and reward go hand in hand. Although Invesco QQQ’s constituent companies are primarily large-cap stocks with low bankruptcy risk, high-growth technology stocks are prone to market boom-bust cycles and can cause large drawdowns. Look at how much Invesco QQQ has fallen from its highs from time to time.
QQQ chart
Many investors may have a hard time mentally enduring a 30%, 60%, or even 75% drop in their investment. That’s why portfolio diversification is so important. Indeed, Invesco QQQ is diversified across over 100 stocks, but investors also need to consider how much risk and volatility their entire portfolio has. Despite Invesco QQQ’s long-term investment returns, it is not wise to invest all your money in it.
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Is Invesco QQQ a millionaire maker today?
The leading technology companies, which represent more than 40% of Invesco QQQ, continue to enjoy decades of growth opportunities. Technology cycles can be volatile at times, but the long-term direction appears to be positive. Yes, Invesco QQQ is an investment that could make you a millionaire.
But the Magnificent Seven has already had two years of impressive results, raising questions about whether tech stocks are once again in a bubble. True, no one knows when the next market crash will occur or how bad it will be. So focus on the long term.
Consider responsible investment strategies that include portfolio diversification and dollar-cost averaging. Buy slowly and regularly, and save if you can. That way, you can enjoy long-term growth while managing risk, and potentially have extra cash in case a market downturn occurs.
Should you invest $1,000 in Invesco QQQ Trust now?
Before purchasing Invesco QQQ Trust shares, consider the following:
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Justin Pope has no position in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
Is Invesco QQQ ETF a Billionaire Maker? Originally published by The Motley Fool
