The Smartest Index ETF to Buy With $1,000 Right Now

Globe and Mail

01-04-2025

Right now, there is a lot of uncertainty in the stock market. While stocks have bounced off their recent lows, the major market indices are still well off their highs and prone to volatility. Technology stocks, which had led the market higher in the past few years, have particularly struggled in recent months.
Much of this stems from fears about the economy and the current on-again, off-again tariffs and potential trade wars. In addition, there is some concern that artificial intelligence (AI) infrastructure spending could begin to cool in coming years, which has impacted tech stocks. For example, there have been reports that Microsoft is pulling back on some data center projects. However, its data center capital expenditures (capex) are still on the rise this year, and others are also spending big.
Despite the recent dip in tech stock prices, the sector has still been one of the best places to invest over the past decade. Today, tech companies have grown to become some of the largest companies in the world. In fact, eight of the top 10 stocks by market cap in the S&P 500 (SNPINDEX: ^GSPC) are classified as technology stocks, or they have very large tech components to them.
For investors looking to take advantage of this dip in tech stocks, there is one great exchange-traded fund (ETF) to buy: the Invesco QQQ ETF (NASDAQ: QQQ).
A long track record of outperformance
The Invesco QQQ ETF tracks the performance of the Nasdaq-100 index, which consists of the 100 largest nonfinancial stocks on the Nasdaq exchange. The index, and thus ETF, is heavily weighted toward growth, and in particular, tech stocks.
At the end of 2024, nearly 60% of the ETF's holdings were in the technology sector. However, some large companies with large tech components get grouped into other sectors. Amazon and Tesla, for example, are classified as consumer discretionary stocks. Amazon operates the largest cloud computing business in the world, and this segment makes up the bulk of its profits, so it is every bit a technology company as it is a retailer.
Here is a list of the Invesco QQQ ETF's top holdings and their weightings as of March 26, 2025:
Holding Weighting Holding Weighting
1. Apple 9.1% 6. Broadcom 3.8%
2. Microsoft 7.9% 7. Meta Platforms 3.6%
3. Nvidia 7.6% 8. Netflix 2.8%
4. Amazon 5.8% 9. Costco Wholesale 2.8%
5. Alphabet 5.1% 10. Tesla 2.7%
Data source: Invesco.
This weighting toward tech and growth stocks has helped lead the ETF to a strong performance over the years. As of the end of February, the ETF has generated a cumulative return of 407.4% over the past 10 years. That easily surpasses the 238.8% return of the S&P 500 over the same period. Meanwhile, the ETF has outperformed the S&P 500 over 12-month rolling monthly periods 87% of the time over the past decade, and 84% of the time in the last five years.
That's a strong track record that most ETFs cannot match, making the Invesco QQQ ETF one of the best investments to make with $1,000 right now while the market is down.
Don't stop there
That said, investing $1,000 in the Invesco QQQ ETF as a one-off investment isn't going to make you wealthy. However, if you can invest $1,000 each month into the ETF, it would be a great start to building long-term wealth.
Consistently investing money at set periods of time is called dollar-cost averaging, and it is one of investors' best strategies to use outside stock picking. Invest $1,000 each month over a 20-year period with a 13% average annual return, and you'll have over $1 million at the end of this period. While 13% is a pretty substantial return and is not guaranteed, the Invesco QQQ ETF has generated a more than 17.5% return over this period, so it is quite plausible.
With the market still off its highs, this is a great time to start investing. Just remember to continue to consistently invest in both good markets and bad to get the most out of your ETF investments.
Don't miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this.
On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves:
Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $284,402!*
Apple: if you invested $1,000 when we doubled down in 2008, you'd have $41,312!*
Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $503,617!*
Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of March 24, 2025
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Geoffrey Seiler has positions in Alphabet and Invesco QQQ Trust. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Netflix, Nvidia, and Tesla. The Motley Fool recommends Broadcom and Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.