It's essentially impossible to reliably predict what the market or an individual stock will do in the short term. And for retail investors, trying to is usually a poor strategy. By contrast, taking a long-term perspective, buying and holding a diversified portfolio of stocks, and consistently adding to your investments regardless of whatever near-term fluctuations are moving the market, can yield significant returns.
Investing in exchange-traded funds (ETFs) is one of many approaches that can help you achieve your financial goals. They can provide instant diversification, and depending on which one you pick, expose you to a range of companies either within a niche or across various sectors. Putting your money into a basket of stocks with growth-oriented profiles can magnify your potential returns. On that note, here are two top ETFs to consider that could double your money in the years ahead.
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1. Vanguard Growth ETF
The Vanguard Growth ETF (VUG 0.89%) is a passively managed fund that tracks the performance of the CRSP US Large Cap Growth Index, which is composed of large-cap U.S. growth companies. The ETF holds about 160 stocks and is heavily weighted toward the technology sector.
The Vanguard Growth ETF has a pretty impressive track record of outperforming the S&P 500 over the long term. For example, during the past decade, the ETF has clocked an average annualized return of 17%, compared to around 15% for the S&P 500. While past returns aren't always an indicator of future performance, if the ETF was to continue this growth pattern it could take just around four to six years to double your initial investment.
And as a Vanguard fund, the ETF has an extremely low expense ratio of just 0.04%. This means investors keep a larger portion of their returns over time. For example, you would pay just $4 in annual fees for every $10,000 invested in the fund.
NYSEMKT: VUG
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It's worth noting that because it is market weighted, the fund's holdings are highly concentrated in technology-focused megacaps such as Nvidia, Microsoft, Apple, Amazon, Meta Platforms, and Alphabet.
This means that the ETF is positioned to benefit from tailwinds like the ongoing artificial intelligence (AI) boom, but it also offers exposure to the relative stability and financial resources of other types of large-cap stocks. Whether you like to invest in a combination of individual stocks and ETFs, or prefer to just put cash into the market via the basket approach, the Vanguard Growth ETF looks like a no-brainer addition to a well-diversified portfolio.
2. Invesco QQQ Trust
The Invesco QQQ Trust (QQQ 0.98%) tracks the performance of the Nasdaq-100 index, which includes the 100 largest non-financial companies listed on the Nasdaq. Because so many tech companies and other innovators have chosen to list on the Nasdaq, this fund provides a simple way to invest in an array of major innovation-driven companies, including the big tech players and notable names like Broadcom, Netflix, and Tesla.
This ETF has a storied record of outperforming the S&P 500, especially during bull markets. For example, a $20,000 investment made in the Invesco QQQ Trust a decade ago would be worth about $120,000 today, given the nearly 500% total return the ETF has delivered in that time frame. And in the past decade, its average annualized return has been around 19.6%. If that pace were to continue, it could take as little as four years to double your money.
NASDAQ: QQQ
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The ETF's expense ratio is 0.2%, which is relatively low compared to many funds with similar structures. The Invesco QQQ Trust is set up as a unit investment trust. Without getting too into the weeds about how that makes it different from other ETFs, this means that it cannot employ certain cost-saving measures that are standard practice for other funds.
Those specific operational requirements necessitate a higher expense ratio compared to more flexible, passively managed ETFs such as the Vanguard Growth ETF. Still, if you're looking for exposure to some of the biggest names in tech with a single investment, and you have the risk tolerance to withstand some potential volatility, the Invesco QQQ Trust could be a match made in heaven for your portfolio.
