You've probably seen this before: An under-the-radar company reports good news, and all of a sudden its shares soar by double digits in one trading session. Day traders who happen to get in on the stock cheer as they sell and lock in gains. And so you may be tempted to give day trading a try, with the goal of building a fortune.
But things don't always work out that way in the world of day trading, the high-risk business of buying and selling a stock within a period of hours. Sure, you could score some victories, but you're likely to face losses too -- and they could be devastating. Day trading isn't the surest way to riches for most investors.
I have some good news for you, though: There's another path to wealth, and it's much more secure. Long-term investing offers you many opportunities to grow wealth over time, and one of these strategies involves buying exchange-traded funds (ETFs). In fact, one ETF in particular could offer you all of the elements you need to significantly boost your portfolio over the long run. So, forget day trading and give the following asset a try.
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A way to invest in many stocks
First, some quick notes on ETFs. These funds include a variety of stocks revolving around a particular theme -- for example, they can focus on growth or on an industry, or even track an index. The funds are traded like stocks, with prices fluctuating daily, so you can purchase shares of them just as you would a stock.
One thing to keep in mind before diving in is that ETFs involve some level of management, so they come with fees. In order to minimize your expenses and maximize your gains, you'll want to look at a fund's expense ratio and only consider buying if it's less than 1%.
There are many advantages to buying an ETF and holding on for the long term, versus trying to pick today's stocks-on-the-move and then selling them a few hours later. You don't have to identify one winner, because the ETF offers you exposure to many players -- and that increases your chances of winning. It also means you don't have to devote time daily to research and to following the market's and the economy's every move.
This investment over time allows you to benefit from companies' growth over a period of years -- which could amount to a greater return than a day trade. And all of this comes without the stress of day trading, so you can sleep at night.
Many ETFs offer great long-term opportunities today, but one I would zero in on for growth is the Schwab U.S. Large-Cap Growth ETF (SCHG +1.07%). That's because this fund offers you all of today's top growth players, those that have driven the S&P 500 index into a new bull market. At the same time, the ETF has outperformed the S&P 500 over the past year.
NYSEMKT: SCHG
Key Data Points
Investing in the "Magnificent Seven"
Schwab U.S. Large-Cap Growth's top five holdings are Microsoft, Apple, Nvidia, Amazon, and Meta Platforms. And with Alphabet in the sixth position, the fund is heavily invested in most of the stocks known as the "Magnificent Seven," a reference to the 1960 Western; these players have reported solid earnings growth in recent times, and their stock performance has followed.
The fund also has a significant position in Eli Lilly, a pharmaceutical company that has stood out over the past year thanks to its top-selling weight loss drugs.
Right now, Schwab U.S. Large-Cap Growth favors information technology, consumer discretionary, communication services, and healthcare stocks -- they all have double-digit percentage weightings in the fund. But down the road this could change, depending on which industries and stocks are growing the most.
So, by investing in this fund, you'll always be betting on the market's highest-growth players -- and you won't have to lift a finger. On top of this, Schwab Large-Cap Growth's expense ratio is only 0.04%, making it a low-cost way to potentially achieve financial freedom.
Now, with a market environment favoring growth, is the perfect time to add such a fund to your portfolio -- and kick-start your effort to build wealth.
