Investing in the best growth stocks in the world can be a great way to build up your wealth over the years. One top index that contains many fast-growing businesses is the Nasdaq-100, which contains the 100 largest nonfinancial stocks on the Nasdaq stock exchange. This includes big names such as Nvidia, Microsoft, Meta Platforms, and many other well-known tech stocks.
Rather than picking individual stocks, you can get exposure to all those high performers by investing in an exchange-traded fund (ETF), such as the Invesco QQQ Trust (QQQ +1.31%), that tracks the index. But if you invested $25,000 into that ETF today, could that be enough to eventually make you a millionaire?
The Invesco QQQ Trust has outperformed the S&P 500 by a wide margin
Over a 10-year period, the Invesco QQQ Trust has generated total returns (which include reinvested dividends) of 380%, versus just under 225% for the S&P 500, reflecting how the broader market has performed. That averages out to a compound annual growth rate of 17% for this Invesco ETF and 12.5% for the S&P 500 -- that's higher than the S&P 500's long-run average of 10%.
That's a fantastic performance for the ETF, but that doesn't mean it will continue to grow at such a high rate in the future. Strong gains over the past 10 years -- not just for the Nasdaq-100, but the overall market -- suggest that valuations may be inflated right now, and that lower returns may be more likely in the years ahead. That's something that would be prudent for long-term investors to account for.
How long might it take for a $25,000 investment to turn into $1 million?
Regardless of whether the Nasdaq-100 will continue to rise in value at a high rate, it's still an excellent place for growth investors to put their money. If you buy shares of the fund, you don't have to worry about picking individual stocks or rebalancing your portfolio to ensure you always have the best growth stocks on the index. The ETF will take care of all that for you.
The table below shows how a $25,000 investment in the Invesco QQQ Trust would grow at varying annual growth rates. Also note that no growth rate can be guaranteed.
|
Future Portfolio Balance Assuming You Invest $25,000 Today | |||||||||
|---|---|---|---|---|---|---|---|---|---|
|
Annual Growth Rate | |||||||||
| Year | 9% | 10% | 11% | 12% | 13% | 14% | 15% | 16% | 17% |
| 5 | $38,466 | $40,263 | $42,126 | $44,059 | $46,061 | $48,135 | $50,284 | $52,509 | $54,811 |
| 10 | $59,184 | $64,844 | $70,986 | $77,646 | $84,864 | $92,681 | $101,139 | $110,286 | $120,171 |
| 15 | $91,062 | $104,431 | $119,615 | $136,839 | $156,357 | $178,448 | $203,427 | $231,638 | $263,468 |
| 20 | $140,110 | $168,187 | $201,558 | $241,157 | $288,077 | $343,587 | $409,163 | $486,519 | $577,640 |
| 25 | $215,577 | $270,868 | $339,637 | $425,002 | $530,764 | $661,548 | $822,974 | $1,021,856 | $1,266,446 |
| 30 | $331,692 | $436,235 | $572,307 | $748,998 | $977,897 | $1,273,754 | $1,655,294 | $2,146,247 | $2,776,616 |
| 35 | $510,349 | $702,561 | $964,371 | $1,319,990 | $1,801,713 | $2,452,504 | $3,329,388 | $4,507,852 | $6,087,587 |
Calculations by author.
While getting to $1 million is certainly attainable, a lot depends on how much of a slowdown there may be in the Invesco QQQ Trust's performance. If it were to mimic its 17% annual gains, then it would take less than 25 years to surpass the $1 million mark. But if it slows down significantly and averages less than what the S&P 500 has achieved historically, then even after 35 years, you might not get to $1 million.
The growth rate is the most difficult variable to account for, which is why a straightforward answer of whether you can expect a $25,000 investment to be enough to get to $1 million isn't easy. My assumption would be that it isn't, simply because averaging a high growth rate over the long haul is difficult and highly unlikely. There will inevitably be bad years along the way. You'll probably need to invest more than just $25,000 to get to $1 million.
Putting money in the Invesco QQQ Trust makes sense, regardless of your future expectations
There's no crystal ball that can tell you how one investment will perform over the other in the long run. But you can increase your odds of long-term success by putting your money into investments that are well-positioned for strong gains, such as the Invesco QQQ Trust.
While a $25,000 investment in the fund may not be enough to guarantee you'll end up a millionaire, by having a position in the top growth stocks in the world, you can still increase the chances that you'll outperform the broader market.
