If you want to retire a millionaire with little effort, consider investing in exchange-traded funds, or ETFs. With an ETF, your money typically gets invested in many different stocks -- sometimes even hundreds or thousands. You don't have to do the work of picking enough individual stocks to diversify your portfolio. Instead, you're automatically diversified with a single purchase.
Global investment firm Invesco (IVZ 1.10%) has several ETFs that could help you take your retirement funds to the next level. With enough time and patience, these three Invesco ETFs could help make you a millionaire by the time you retire.
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1. Invesco QQQ ETF
The Invesco QQQ ETF (QQQ 1.54%) tracks the 100 stocks in the Nasdaq 100 Index, which consists of the 100 largest non-financial companies that trade on the Nasdaq stock exchange. The Nasdaq is a tech-heavy index, which is why tech stocks account for nearly 58% of the fund's holdings, followed by consumer discretionary (19%) and healthcare (7%) stocks.
The fund's largest holdings are Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), NVIDIA Corp. (NASDAQ: NVDA), Amazon (NASDAQ: AMZN), and Meta Platforms Inc. (NASDAQ: META) Class A shares.
This leading Nasdaq ETF has significantly outperformed the S&P 500 index over long stretches of time, with total 10-year returns of about 445% compared to 238% for the S&P 500. However, because the QQQ is so heavily weighted in tech stocks -- which tend to be volatile -- the fund is significantly riskier than an S&P 500 index fund. In 2022, for example, when the S&P 500 dropped by around 19%, the QQQ tanked by a jaw-dropping 33%. Because it's significantly riskier than the overall stock market, you may want to be cautious about allocating a large chunk of your wealth into the fund if you're getting close to retirement.
The fund's ETF expense ratio is a reasonable 0.2%. That means you'd pay $2 in fees on a $1,000 investment.
QQQ Total Return Level data by YCharts.
2. Invesco High Dividend Low Volatility ETF
It's essential to seek out lower-risk investments as retirement gets closer. When you only have a couple of years until retirement, there's less time for your money to recover should the stock market nosedive.
A dividend ETF like the Invesco High Dividend Low Volatility ETF (SPHD -0.37%) is a good choice. Companies that can afford to consistently pay dividends tend to be less risky and typically have a consistent record of turning profits.
The fund tracks the S&P 500 Low Volatility High Dividend index, which is made up of the 50 least volatile stocks in the S&P 500 index with a high-dividend yield. Its Securities and Exchange Commission (SEC) 30-day yield is 4.65%.
The fund tends to underperform the S&P 500 index over long time horizons because it doesn't have the high-growth stocks that drive the market's performance during good times. But it tends to hold up better when the overall stock market is on a losing streak. The ETF's largest concentrations are in utilities (20%), consumer staples (16%), and real estate (14%).
The fund's expense ratio is 0.30%. If you invested $1,000, that would translate to fees of just $3.
3. Invesco Galaxy Bitcoin ETF
The Invesco Galaxy Bitcoin ETF (BTCO -1.51%) works a bit differently than the other two ETFs on this list. Rather than investing in many different assets, it's one of roughly a dozen new ETFs that aim to track the spot price of Bitcoin (BTC) -- similar to spot ETFs that track the price of gold.
The new Bitcoin ETFs debuted in January after winning approval from the SEC. The decision made it possible to gain direct exposure to Bitcoin without dealing with the headache of cryptocurrency exchanges or custody issues.
The price of Bitcoin has risen more than 150% in the past six months -- largely due to anticipation surrounding the new spot ETFs and the SEC's subsequent approval, along with the Bitcoin halving that will occur in mid-April.
It's important to remember, though, that Bitcoin remains a speculative asset -- even though the new ETFs have helped make it more mainstream. Throughout its 15-year history, it's been subject to huge price swings. ETFs like the Invesco Galaxy Bitcoin ETF can offer a safer, more convenient way to gain crypto exposure than buying coins. But financial planners typically recommend limiting your exposure to speculative assets to about 5% of your portfolio.
The fund has a 0.25% expense ratio, which works out to $2.50 in fees on a $1,000 investment. However, all fees are waived for the first $5 billion invested until at least July 10, 2024.
ETFs are a great tool for powering your portfolio so that you can afford to retire. Whether you choose to invest in individual stocks and bonds, ETFs, or a combination, aim to save at least 15% of your salary in tax-advantaged accounts like 401(k)s and individual retirement accounts (IRAs).
