Latest news with #dollarcostaveraging
Yahoo
08-08-2025
- Business
- Yahoo
I Asked ChatGPT How To Earn Money When the Stock Market Is Volatile: Here's What It Said
The stock market can be a solid investment plan — if it's done well. With ups and downs in the market like we've seen this year, new investors might view stocks as risky bets. It's imperative to stick to a plan that's going to weather stock declines. Read Next: Explore More: Here's what ChatGPT recommended doing in times of stock market volatility. Focus On Dividend Stocks Dividend stocks regularly pay out a set amount to shareholders. Even when the market wavers, investors will likely still receive a piece of the pie. ChatGPT suggested investing in dividend stocks via the Vanguard High Dividend Yield ETF (VYM). ChatGPT added that reinvesting dividend money into the stock is a smart move that also steels you against market dips. Learn More: Try Dollar-Cost Averaging Another method ChatGPT recommended was dollar-cost averaging. To do this, set up your bank account to invest a set amount of cash into the stock market on a regular basis. Using this method, ChatGPT pointed out that 'you buy more shares when prices are low and fewer when prices are high, averaging out your cost and reducing the stress of timing the market.' Explore Advanced Options For those who already know a fair amount about the stock market and feel more comfortable, ChatGPT recommended two courses of action. One is to sell covered calls, which means you set a price (known as the strike price) and a time frame to sell your stock to an investor at that price. In exchange, you'll earn a premium. This is a good way to earn money on stocks you own — especially in stocks that don't fall or rise very much. Know that you have to own 100 shares per contract, and that you must sell the stock at the price you set. This means if it goes above that price, since you sold it already, you won't benefit from that gain. Another advanced option ChatGPT suggested is selling cash-secured puts. 'Here, you don't own the stock yet. Instead, you agree to buy it at a lower price if it falls to that level within a specific time frame. You're paid a premium for making that agreement,' ChatGPT explained. You'll need to have enough capital on hand to buy 100 shares. Expand Investments Looking outside of the stock market is also a possibility. ChatGPT suggested gold bonds and real estate as alternatives to investing in the stock market. This way, your portfolio is more diversified so your income doesn't depend solely on one investment strategy. Use High-Interest Savings or CDs High-yield savings accounts and certificates of deposit (CDs) can feel safer than the stock market because there's no real risk of loss. Storing cash in a high-interest savings account means your money grows as long as it's in the account. Similarly, CDs will grow at a set rate after a predetermined amount of time, so you know exactly how much money you'll get out of your investment. More From GOBankingRates New Law Could Make Electricity Bills Skyrocket in These 4 States I'm an Economist: Here's When Tariff Price Hikes Will Start Hitting Your Wallet 5 Strategies High-Net-Worth Families Use To Build Generational Wealth 25 Places To Buy a Home If You Want It To Gain Value This article originally appeared on I Asked ChatGPT How To Earn Money When the Stock Market Is Volatile: Here's What It Said
Yahoo
07-07-2025
- Business
- Yahoo
History Says This S&P 500 ETF Could Turn $500 Per Month Into $1 Million
By adopting a simple dollar-cost averaging strategy, with a long time horizon, investors can reap impressive financial rewards in the stock market. The Vanguard S&P 500 ETF is a low-cost option that tracks the performance of the broader S&P 500. There are valid arguments for why the benchmark index can perform better or worse than it has in the past. 10 stocks we like better than Vanguard S&P 500 ETF › As investors, we all want to be smart and lucky enough to find a huge winner. For instance, imagine investing in Nvidia 10 years ago. Since then, the artificial intelligence (AI) stock has soared 30,380% (as of July 1). However, investors should be aware that there are compelling passive vehicles to choose from. Exchange-traded funds (ETFs) can be a great choice for anyone's portfolio. And they provide exposure to different markets, indexes, or trends. Even better, seemingly small sums can turn into large amounts of money. History says this S&P 500 ETF could turn $500 per month into $1 million. Here's what investors need to know. The Vanguard S&P 500 ETF (NYSEMKT: VOO) is a fantastic choice. Investors instantly get diversified exposure to all 11 sectors of the economy. It has an extremely low expense ratio of 0.03%. Plus, it's offered by one of the most reputable companies in the asset management industry. Over the past 30 years, the S&P 500 index has generated an annualized total return of 10%. Assuming that the same performance occurs over the next three decades (though there are no guarantees), a $500 monthly investment (for a total of 360 allocations) will turn into just over $1 million in 2055. If you can invest more money and extend your time horizon, the returns could be drastically better. Investing in this fashion -- putting $500 to work per month -- is called dollar-cost averaging (DCA). The beauty of this strategy is that investors don't have to correctly time the market. It's almost like an automatic approach that buys on a consistent basis, regardless of what the market is doing. DCA helps investors build a habit of constantly investing. The S&P 500 index contains 500 large and profitable U.S. companies. It's the most closely watched benchmark to assess how the stock market is performing. And based on the numbers mentioned, it looks like a wonderful choice. Investors are essentially betting on the track record of economic growth and innovation to continue, which has been a smart bet to make in the past. While the S&P 500's historical 10% annualized total return is a solid showing, investors should understand that the future is uncertain. Returns could be lower or higher over the next 30 years for a variety of reasons. The case for why the future will be worse than the past comes down to a single variable: valuation. The CAPE ratio is a widely used measure of the S&P 500's valuation. It's currently at 36.1 and has only been higher on very few occasions since 1881. Data shows that forward returns are weaker when this multiple is elevated. This is precisely what supports the current bearish case for the market. On the other hand, some factors can lead anyone to be bullish as we look ahead. The AI wave is on top of everyone's mind these days, with some researchers believing the technology could be a boon for economic growth. There are also huge capital inflows into passive vehicles, which increases demand for stocks. And since the Great Recession about a decade and a half ago, there has been a significant expansion in the money supply, a trend that supports higher asset prices. In my view, there are valid arguments to be made on both sides of the aisle here. However, I would default to thinking that it's a safe bet to assume the S&P 500 continues to produce a 10% annualized gain, in line with history. This still makes the Vanguard S&P 500 ETF a worthwhile investment to put $500 per month into. Before you buy stock in Vanguard S&P 500 ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard S&P 500 ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Neil Patel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Nvidia and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy. History Says This S&P 500 ETF Could Turn $500 Per Month Into $1 Million was originally published by The Motley Fool Sign in to access your portfolio
Fast Company
04-07-2025
- Business
- Fast Company
Why dollar-cost averaging is the smart investing strategy for all us regular folk
Typical investment advice either sounds incomprehensible ('The blockchain does the hokeypokey and fiat currency goes the way of the dodo!') or too simple ('Just get in on the ground floor of the next Apple!') and does very little to help the average person become an investor. This kind of standard advice doesn't work because it assumes investing is a onetime event. Instead, newbie investors should look at growing their money as a consistent habit. Habitual investing allows you to take advantage of the so-easy-it's-complicated advice to 'buy low and sell high.' That's because consistency is the key to an investment strategy called dollar-cost averaging. Here's what you need to know about how dollar-cost averaging works and how it can protect your money from market fluctuations. What is dollar-cost averaging? When you use the dollar-cost averaging strategy, you invest the same amount into an asset at regular intervals. This practice ensures that you are consistently investing a set amount of money, which is an important part of retirement planning. But dollar-cost averaging also ignores any fluctuations in the asset's price over time. You invest the same dollar amount on the same schedule no matter what, rather than trying to time your purchase for when the asset is 'on sale.' This releases you from the stress of trying to time the market. How dollar-cost averaging works Let's say you started a new job in June and determine you can invest $250 per month starting in July. You decide to try dollar-cost averaging, investing the same amount into the same asset each month. The number of shares you purchase might change from month to month as the price changes, but it will average out over time. That's because you're purchasing the same dollar amount at regular intervals, so you don't have to worry about timing—and since you make a purchase of the same dollar amount each time, you purchase fewer shares when prices are high and more shares when they're low, lowering the average price over time. Over the last six months of 2025, here's how your monthly $250 investment might affect your average share price: Month Amount Invested Share Price Number of Shares Purchased July $250 $10 25 August $250 $12 20.83 September $250 $10 25 October $250 $8 31.25 November $250 $7 35.7 December $250 $9 27.78 Total Invested Average Share Price Total Shares Purchased $1,500 $9.06 165.56 By investing $1,500 using dollar-cost averaging over a six-month time period, you've paid an average of $9.06 per share and purchased a total of 165.56 shares. Compare that to investing $1,500 all at once in July, when the share price was $10 per share. You would have only 150 shares and would have spent almost a dollar more per share. Benefits of dollar-cost averaging This strategy gives normal people a no-muss-no-fuss method of taking advantage of all the good investment mojo Warren Buffett is banging on about without having to get a degree in finance. Specifically, it offers these benefits to retirement investors, noobs, and anyone else who doesn't feel a thrill when cracking open a fresh new prospectus: It lowers your investment risk. Consistent smaller investments reduce your risk of making a hefty investment when the market (or the specific asset) is at its peak. And since this strategy lowers the average cost of each share you purchase, using dollar-cost averaging lowers your overall investing risk. It eliminates emotional investing. Emotions tend to lead us astray in financial decisions, and that's especially true when it comes to investing. Dollar-cost averaging helps you avoid the emotional investment roller coaster. Rather than buying when you're feeling irrationally exuberant or selling because you're afraid there will be no tomorrow, you invest on a schedule. It makes investing more accessible. Unless you were born with an emerald spoon in your mouth, it's unlikely that you have thousands of dollars sitting around to invest. Dollar-cost averaging not only helps smooth out the effects of market fluctuations and timing but it also makes investing possible and accessible for those of us who don't have a lump sum to invest from the beginning. Know the downsides There are some potential drawbacks to the dollar-cost averaging strategy, although I'm convinced the benefits outweigh them. Specifically, dollar-cost averaging does not negate the need to do your research. Consistently investing in a failing asset will not mitigate the risk of losing your money. Before you start using the dollar-cost averaging strategy, take the time to research and identify investments that align with your goals, risk tolerance, and time horizon. The other potential downside to remember is that the market tends to rise over time, so even with dollar-cost averaging, you'll probably spend more money per share in your 10th year of investing than you did during your first. But this is a minor problem, since the alternative is to invest a lump sum, which most people can't afford to do. Slow and steady Dollar-cost averaging not only helps investors build a kind of rational investing discipline, but it also mitigates the risk of volatility and timing while making the practice of investing more accessible. Building a consistent investing habit may sound less sexy than jumping on a hot stock tip that makes millions overnight, but it's a proven strategy that will treat you right. What more can you ask for?
Yahoo
29-06-2025
- Business
- Yahoo
What's the Best Investment Strategy to Retire a Multi-Millionaire?
Consistent dollar-cost averaging is the best investment strategy to retire a multi-millionaire. Monthly investments of as little as $500 can turn into millions of dollars when you are set to retire. There are a number of ETFs that can help you get the necessary returns to become a multi-millionaire. 10 stocks we like better than Vanguard S&P 500 ETF › The secret to retiring a multi-millionaire is quite simple. There is no easier way to accomplish this than by using a consistent dollar-cost averaging strategy. If you start investing early and use this investment strategy, your odds of retiring a multi-millionaire are extremely good. Dollar-cost averaging is one of the simplest and most effective investing strategies out there. Instead of trying to time the market, you simply invest at regular intervals, regardless of where prices are. By investing a fixed amount every month, or every paycheck, you'll buy more shares when prices are low and fewer shares when they're high. Over time, this will smooth out your cost basis and help protect you from big market swings. It's a disciplined approach that will keep you investing through both bull and bear markets. Some of the best investment vehicles to use this strategy with are exchange-traded funds (ETFs). With ETFs, you can get an instant portfolio of stocks without doing a lot of research. ETFs are also very accessible. You can feel comfortable starting with a small amount -- the key is just investing consistently. With the power of compounding, dollar-cost averaging consistently into an ETF can help you retire a multi-millionaire. You also don't have to start with a large amount. If you are in your mid-twenties and have 40 years until retirement, a simple $500 investment each month can turn into a nearly $5 million nest egg by the time you hit retirement age with just a 12% average annual return. If you're older, though, don't fret. A $1,000 investment each month at a 12% annual return can give you a $3 million portfolio after 30 years. However, the sooner you start, the better, as $1,000 each month for 40 years turns into nearly $10 million. Let's look at five ETFs with strong track records that can help you retire a multi-millionaire. With a 12.8% return over the past decade, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is one of the first choices that investors should consider when looking to implement a dollar-cost-averaging strategy. The ETF replicates the performance of the S&P 500, which is widely considered the benchmark for the U.S. stock market. The ETF is a nice blend of growth and value large-cap stocks, and with around 500 stocks in the fund, it gives investors instant diversity. Growth stocks have been leading the way in the market for the better part of two decades. The Vanguard Growth ETF (NYSEMKT: VUG) is a great way to invest in this dynamic. With a 15.3% return over the last 10 years, this ETF is another solid choice for investors looking to use a dollar-cost-averaging strategy. While the ETF officially tracks the CRSP US Large Cap Growth Index, this is essentially the growth side of the S&P 500. It's not as diversified as the S&P 500, with only around 165 stocks in its portfolio, but you're getting the best of the large-cap growth stocks through the ETF. The Invesco QQQ Trust (NASDAQ: QQQ) has quite simply been one of the best-performing non-sector-specific or non-leveraged ETFs over the past decade. The ETF tracks the performance of the Nasdaq-100 index, which is made up of the 100 largest non-financial stocks that trade on the Nasdaq Stock Exchange. The Nasdaq has long been known as the exchange for emerging growth and technology companies, so the ETF is heavily weighted toward these types of stocks. The ETF has generated an average annual return of 17.7% over the past 10 years, easily ahead of the return of the S&P 500 over the same stretch. Even more impressive is that it has consistently beaten the S&P 500 more than 87% of the time on a 12-month rolling basis. Investing in growth and technology stocks is not the only investment style, and the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is a nice value investment alternative. The ETF tracks the Dow Jones U.S. Dividend 100 Index, which consists of high-yielding U.S. stocks that have long track records of consistently paying out dividends. While the ETF has only generated a 10.6% average annual return over the past 10 years, it has produced a 12.2% annual average return since its inception in October 2011. That's a solid long-term track record. If you're looking to swing for the fences, the ARK Next Generation Internet ETF (NYSEMKT: ARKW) could be right for you. Unlike the other ETFs, it is actively managed and does not follow an index. Instead, it is focused on investing in companies "that benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media." In addition to investing in stocks, it currently has an investment in an ETF that tracks the price of Bitcoin. The ETF has been a strong performer, generating an average annual return of 18.2% over the past 10 years. However, you'll need a strong stomach, as the ETF has seen some wild swings over the past few years, as shown in the table below. Year 2020 Year 2021 Year 2022 Year 2023 Year 2024 Year Performance 157.08% -16.65% -67.49% 96.99% 42.27% Data source: Ark Invest. As such, this ETF is only for the most aggressive investors. Before you buy stock in Vanguard S&P 500 ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard S&P 500 ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor's total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 23, 2025 Geoffrey Seiler has positions in Invesco QQQ Trust and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Bitcoin, Vanguard Index Funds-Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy. What's the Best Investment Strategy to Retire a Multi-Millionaire? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
23-06-2025
- Business
- Yahoo
$1,000 in QQQ Could Turn Into $10 Million
A $1,000 monthly investment in the Invesco QQQ Trust ETF could turn into $10 million, if you have time and use a disciplined dollar-cost-averaging strategy. The ETF has been a great performer over the past decade. With the ETF's heavy ties to companies in the tech sector, how AI unfolds will likely play a big role in its future performance. 10 stocks we like better than Invesco QQQ Trust › While the headline may sound unbelievable, it's no joke. A $1,000 investment in the Invesco QQQ Trust ETF (NASDAQ: QQQ) could indeed turn into $10 million. That said, this is not a get-rich-quick scheme, and you will need two aids in getting there: time, and a disciplined dollar-cost-averaging strategy. A $1,000 investment in the Invesco QQQ Trust ETF that you just let sit there won't turn into $1 million, let alone $10 million, unless you have a very, very long time horizon. In fact, if you invested $1,000 in the exchange traded fund (ETF) 10 years ago, you'd have just over $5,000 today. That's not bad, but it's very far from $10 million. Instead, what you'd need to do is invest $1,000 consistently every month in the ETF. The fund (as of the end of May) has generated an average annual return of 17.7% over the past 10 years and 18.1% over the past five years. If you invested $1,000 a month in the Invesco QQQ Trust ETF and saw a similar rate of return for about 30 years, you'd have around $10 million. For those unfamiliar with the Invesco QQQ Trust ETF, it tracks the performance of the Nasdaq-100. This popular index consists of the 100 largest non-financial companies that trade on the Nasdaq stock exchange. The index is weighted by market cap, which means that the larger a company is by market capitalization (shares outstanding multiplied by its share price), the higher the percentage it commands in the index. The index has always been heavily weighted toward growth stocks, as during its early days, the Nasdaq Stock Market drew in younger, more growth-oriented companies (due to its less stringent listing requirements and lower listing fees than those of the New York Stock Exchange). Meanwhile, many of the country's top technology companies got their start on the Nasdaq. This led the exchange to eventually become associated with technology stocks, leading other up-and-coming tech stocks to follow suit and list there when they went public. Today, the technology sector represents over 57% of the Nasdaq-100's portfolio weighting. The strong performances of the Invesco QQQ Trust ETF and the Nasdaq-100 over the past decade are directly tied to their tech-heavy makeup. Over that time, tech stocks have come to dominate the ranks of the world's largest companies. This can be seen in the ETF's top holdings and their current weightings. Here is a list of the Invesco QQQ Trust ETF's top holdings and their weightings as of June 18, 2025: Holding Weighting Holding Weighting 1. Microsoft 8.9% 6. Broadcom 4.8% 2. Nvidia 8.8% 7. Meta Platforms 3.8% 3. Apple 7.3% 8. Netflix 3.2% 4. Amazon 5.6% 9. Tesla 2.9% 5. Alphabet 4.9% 10. Costco Wholesale 2.6% Data source: Invesco. As you can see from the list above, many of the ETF's top holdings are helping lead the way in artificial intelligence (AI). With AI still in its early innings, these stocks could still have a lot of room to grow despite their size. However, given the Invesco QQQ Trust ETF's concentration in these top stocks, how it performs in the future will depend a lot on their performance. If AI becomes the game-changing technology that many predict, the Invesco QQQ Trust ETF will have the opportunity to post returns similar to its performance over the past 10 years. It's worth remembering that the Nasdaq-100 did crash after the Internet boom in the early 2000s. Today, though, AI is largely being led by very large, profitable, cash-rich companies, most of which still trade at pretty attractive valuations. If you're a risk-tolerant investor with a long-term perspective, the Invesco QQQ Trust ETF is a great investment vehicle that can help you build substantial wealth over time. The key is not veering from that dollar-cost-averaging strategy. Remember, the Nasdaq 100 completely crashed back in 2000 -- shortly after the Invesco QQQ Trust ETF was launched in 1999 -- and look at where the ETF is now. If you'd continued to invest in it during that downturn, you'd be in very good shape today. Before you buy stock in Invesco QQQ Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Invesco QQQ Trust wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $881,731!* Now, it's worth noting Stock Advisor's total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 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, Intercontinental Exchange, 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. $1,000 in QQQ Could Turn Into $10 Million was originally published by The Motley Fool
