Great comparison, thanks for showing! Here’s my thinking - as a new investor (I really didn’t start seriously investing until last year). With the nasdaq, much like the S&P 500, there are companies that join and leave it continuously based on performance. As opposed to just relying on one company doing well and the higher peaks and lower valleys you take advantage of certain companies gains and shielded from other companies losses. With a specific stock or smaller bundle like the mag 7 you will probably at some point need to have a sell event for 20% + in taxes. The Mag 7 may very well be completely different companies in 10 years, Apple might hire a terrible CEO, etc. But for the NASDAQ, like Ron popeil, you can set it and forget it. Companies will cycle in and out of the top 100 but you can still benefit from the next big AI company that you currently aren’t invested in, etc
Now I’m not talking about hitting the lottery with a stock like investing in Nividia 5 years ago or buying some Tesla when it was down 44% 3 months ago, and currently my portfolio is 12% riskier things - mine are bitcoin, METC, Netflix, Tesla, and Nividia. But I’m thinking this might be too high and any of my future investments this year I’m thinking I’ll put in the QQQ so that I’ll be 90% index funds and I’ll never have it under that. But, also, I have no idea what I’m talking about and I’m new to this but those are my thoughts. Is this a commonly held thought process or am I totally missing something?
Your logic and reasoning are very sound. Picking individual stocks and investing enough money in them to make a huge difference is both risky and difficult. If you are young, in my view, letting time and compounding work for you by using funds and ETFs seems wise and prudent. You might think about coming up with an allocation among those that you choose. More important than the allocation itself is the commitment to a regular savings plan to contribute into your retirement nest ... as there is ONLY one way to save ... and that is to simply save !!
Others will chime in here with thoughts and ideas, but I would offer for your consideration investments like:
VFIAX - Vanguard 500 Index Fund
or SWPPX - Schwab S&P 500 Index (or some other S&P 500 index fund)
BRK-B Berkshire Hathaway Inc. (Warren Buffett's group)
QQQ - Invesco QQQ Trust
MAGS - Roundhill Magnificent Seven ETF
Just come up with an allocation percentage that you like ... example: 55%. 15%, 15% 15% ... and REGULARLY contribute in that ratio.
If trying to pick out individual stocks is not something you're comfortable with, or don't ttrust yourself or others to do, simply STAY with funds.
These are my thoughts ... fwiw.
My two cents ...
GOOD LUCK to you !!
To help you decide between investment alternatives, you might use stock/fund screeners and comparison charts.
You may already know how to use comparison charts, but if not, here is
but one of the many YouTube videos out there.
Whatever trading platform you use probably has various comparison tools, but YaHoo's chart comparison is pretty easy, handy and it's
FREE.
You can put as many symbols in it as you want, along with comparing to various market indices like DOW, S&P 500 and NASDAQ.
This is what I used to develop the comparison between AAPL, QQQ and MAGS, fwiw.
For starters ... you might compare VFIAX, BRK-B, QQQ and MAGS, along with any other favorite funds you currently have.
Never forget about RISK versus REWARD ... keep that in mind as you consider any alternatives. Balance may be the best way to go in allocation.
As a final comment, you might also want to consider T
arget Date Retirement Funds as another allocation option ... as per below from AI ...
Retirement target date funds are mutual funds designed for individuals with a specific retirement year in mind. These funds automatically adjust their mix of investments, initially holding more stocks for growth, and gradually shifting to a more conservative mix of bonds and other lower-risk assets as the target date approaches to preserve capital. This "set-it-and-forget-it" approach offers diversification, professional management, and an automated way to manage risk for long-term retirement goals, making them a popular choice for workplace retirement plans.
Target-date funds are offered by numerous investment companies, including Vanguard, Fidelity, BlackRock, Schwab, T. Rowe Price, and American Funds, each providing series with funds named for specific retirement years (e.g., Vanguard Target Retirement 2045). You can find examples like the Fidelity Freedom Index, Vanguard Target Retirement series, and BlackRock LifePath Index funds across various financial platforms and rankings from sources like US News Money and Bankrate.
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