Should You Invest in the S&P 500 or the Nasdaq-100 Right Now?
Written by David Jagielski for The Motley Fool -> Tracking the S&P 500 has been the default option for many long-term investors. The Nasdaq-100, however, has delivered far superior returns in recent years. For investors, choosing between the two options could come down to risk
Tracking the S&P 500 has been the default option for many long-term investors.
The Nasdaq-100, however, has delivered far superior returns in recent years.
For investors, choosing between the two options could come down to risk tolerance.
Tracking the S&P 500 over the years has been a great move for investors. The index, which includes the leading stocks on U.S. markets, has risen by about 10% on average over the long term. There have been plenty of challenging long periods along the way, but, generally, a buy-and-hold strategy has worked well for long-term investors. A popular exchange-traded fund (ETF) that tracks the index is the SPDR S&P 500 ETF (NYSEMKT: SPY) .
A more popular option for growth investors has been to track the top stocks on the Nasdaq exchange via the Nasdaq-100 index. That has yielded stronger results in recent years due to the strong performance of tech stocks, but it also carries more risk. It can be tracked through the Invesco QQQ Trust (NASDAQ: QQQ) .
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Which one is the better option today: tracking the S&P 500 or the Nasdaq-100?
The allure of tracking the Nasdaq-100 is that its upside can be far higher than that of the S&P 500, which holds many more stocks, but which may not be nearly as appealing to growth-oriented investors. Over the past decade, the Invesco QQQ Trust has generated a return of over 550%, which is far higher than SPY's gains of around 250% over that stretch.
