History Says Investing $400 per Month in This ETF Could Set You Up for Life. Here's How.

The Invesco QQQ ETF (NASDAQ: QQQ) tracks the Nasdaq-100 index and was launched in March 1999. That was a year before the dot-com bubble burst, which dragged the fund down by more than 80% over the two years that followed. The decline took nearly five full years to recover from.

Since its launch (including the dot-com crash), the Invesco QQQ ETF has returned more than 10% per year. If you were to invest $400 a month for 30 years and earn similar average annual returns, your portfolio would be worth more than $1 million.

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How QQQ gets you to a $1 million portfolio

The Invesco QQQ ETF holds the 100 largest non-financial companies listed on the Nasdaq Stock Market with qualifying components weighted by market cap.

As a result, this fund is concentrated and top-heavy. Nvidia, Apple, Alphabet, and Microsoft alone make up about 28% of the portfolio's composition.

While the artificial intelligence (AI) trade has driven fund returns over the past few years, broader technological innovation has been driving them for 27 years. Poor timing led to QQQ's launch just before the tech bubble burst, but it captured the index's full recovery, the boom in cybersecurity, and the AI revolution.

Given that the fund is approximately 65% invested in tech and another 17% in tech-adjacent companies, including Alphabet, Meta Platforms, Amazon, and Tesla, it's safe to say this fund will be on the cutting edge of future technological developments. Investing in these, despite their higher short-term volatility, is usually the path to higher return potential over time.

How this strategy works with just $400 a month

Returns for the Invesco QQQ ETF can vary wildly depending on which time frame you consider. For example, these were the three best calendar year returns for the QQQ ETF:

• 1999: +102%*
• 2023: +55%
• 2009: +55%

And the three worst years were...

• 2008: -42%
• 2002: -38%
• 2000: -37%

* This is a partial-year return from the fund's inception in March through year-end.

Notice that some of the best years are "coupled" with some of the worst: 1999 and 2000; 2008 and 2009. That's what makes buying and holding with this ETF so important. Not only for the ability to ride out the volatility to achieve long-term returns, but for the ability to buy shares at lower prices when the market is down.

If we assume that the Invesco QQQ ETF can earn its historical average of 10.6% annually, a consistent monthly investment of $400 would compound to approximately $1.03 million.

Coming up with $400 a month may not be as challenging as you think. A workplace retirement plan like a 401(k) would be a great start for investing regularly. A 10% contribution rate on a $50,000 salary would get it done. Matching contributions from your employer would be a bonus. One issue to be aware of is that the QQQ ETF currently trades at around $721 per share, so if you are investing $400 a month, you will want to make sure your broker allows you to buy fractional shares.

The Invesco QQQ ETF is one of the better growth ETFs on the market. Consistently investing in it for years could yield big results.

David Dierking has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.