The Smartest Index ETF to Buy With $2,000 Right Now

Key Points

• While stocks are near all-time highs, it could be a mistake to wait for a better entry point.

• The Invesco QQQ gives investors instant exposure to most of the world's top AI companies.

• The key, though, is to adopt a dollar-cost-averaging strategy.

• 10 stocks we like better than Invesco QQQ Trust ›

With the market sitting near all-time highs, a lot of investors might start second-guessing whether now is the right time to put money to work in stocks. However, waiting for a pullback could hurt you in the long run.

A J.P. Morgan study looked at every trading day going back to 1950 and found that the market actually hits a new high about 7% of the time. Meanwhile, on nearly a third of those occasions, investors never saw a lower price. This can lead to a cycle of regret and continuing to sit in cash while stocks keep climbing higher.

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The better way to approach this is to start investing now and then keep adding to your position on a regular basis, regardless of what the market does. This is called dollar-cost averaging, and it helps take emotion out of the equation. It's also been proven to be one of the simplest and most effective ways to build wealth over time.

If you have $2,000 to put to work today, one of the smartest places you can start using this strategy with is the Invesco QQQ Trust (NASDAQ: QQQ).

Image source: Getty Images.

Why the Invesco QQQ Trust is a great investment

The Invesco QQQ Trust is an exchange-traded fund (ETF) that tracks the Nasdaq-100, which is comprised of the 100 largest non-financial companies listed on the Nasdaq exchange. Its portfolio is heavily tilted toward technology stocks, with more than 60% of its holdings in the sector.

The ETF's weighting toward technology and growth stocks has helped the fund to outperform over the past decade. During this stretch, it delivered a total return of about 491%, compared with roughly 291% for the S&P 500. This also isn't due to one or two good years. In fact, on a rolling 12-month basis, it's outperformed the S&P 500 nearly 90% of the time during this period.

Part of what makes the Invesco QQQ Trust effective is that it is market-cap weighted, which means that when companies like Nvidia, Microsoft, or Apple outperform, their weightings rise automatically. Conversely, if a company struggles and its market cap falls, its weighting in the index drops naturally, which helps keep the portfolio focused on market leaders. That's a very different approach than most actively managed funds, where portfolio managers tend to trim back on their winners and often double down on their losers.

Another big reason to own the Invesco QQQ Trust right now is that it puts you right at the center of the most powerful growth trend driving the market: artificial intelligence (AI). AI looks like it has the potential to be the defining technology of the next decade, and while many stocks have already been AI winners, it appears we are still in the early innings of this phenomenon.

How to build wealth with the Invesco QQQ Trust

Dropping $2,000 into the Invesco QQQ Trust is a great start, but just doing that alone isn't going to make you wealthy. This is where dollar-cost averaging comes in. You need to consistently invest over a long period, regardless of where the market is trading, and let compounding do the rest of the work.

For example, if you start with $2,000 and add $1,000 a month for the next 30 years, you'd have $5.7 million at the end of that period at an average annual return of 15%. While 15% may sound like a lot, that's well below the 19.7% average annual return the Invesco QQQ Trust has generated over the past decade, so it's not some pie-in-the-sky number.

For investors looking to put $2,000 to work, the Invesco QQQ Trust is one of the best ETFs to own right now. It gives you instant exposure to the top AI companies in the world and has a long history of beating the S&P 500. The key is to just get started investing and to keep buying in both good and bad markets.

Should you invest $1,000 in Invesco QQQ Trust right now?

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JPMorgan Chase is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Invesco QQQ Trust. The Motley Fool has positions in and recommends Apple, JPMorgan Chase, Microsoft, and Nvidia. The Motley Fool recommends 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.