One of the biggest misnomers about investing is that prospective market participants need considerable sums of capital to get started. Investors who invest with patience, time, and compounding can reap big long-term rewards even when starting small.
That potential certainly exists with the Invesco Nasdaq 100 ETF (QQQM +0.06%). For those not familiar with this exchange-traded fund (ETF), it's basically the lower-cost counterpart to the famous Invesco QQQ ETF (QQQ +0.05%). Both funds track the Nasdaq-100, but the QQQ ETF charges 0.18% per year, or $18 on a $10,000 investment, while the $103.7 billion Invesco Nasdaq 100 ETF has an annual expense ratio of 0.15%.
This ETF can turn small stakes into large dollar amounts over the long term. Image source: Getty Images.
That's not a big difference, but over time it can add up, suggesting that cost-conscious investors should opt for the lower-fee option. Speaking of time, it's something investors want to put on their side with these growth ETFs. Consider the case of the QQQ ETF, which is the older of these two funds.
It debuted in March 1999. An investor who put just $100 into it the following month would have had $1,520 as of July with no additional contributions to the initial $100 stake.
Imagine what that $1,520 could have been if the investor contributed $100 monthly to their cause. We don't have to imagine. A backtest shows that an investor who contributed $100 per month for a decade to the QQQ ETF would have more than $38,000.
NASDAQ: QQQM
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That figure would be higher with the Invesco Nasdaq 100 ETF, which turns six years old in October, due to its lower expense ratio.
Of course, past performance isn't a guarantee of future returns, but that doesn't mean this ETF can't turn $100 monthly contributions into $40,000 or more over a decade. If history repeats or rhymes over the coming decade, the Nasdaq-100 Index could extend its long-term outperformance of the S&P 500. And if the artificial intelligence (AI) trend gains more momentum, that'd be one more tailwind for the Invesco Nasdaq 100 ETF.
