The bull market is official: One epic index fund can turn $300 into $862,800 per month

Index funds don’t have the excitement of individual stocks. But a boring investment strategy is not necessarily a bad investment strategy. In fact, the opposite is often the case. Investors who treat their portfolios as a pastime can easily find themselves in the red. Additionally, it is difficult to outperform major stock indexes over long periods of time. Even experts have a hard time overcoming it.

In fact, Warren Buffett once wrote, “By investing regularly in index funds, for example, an uninformed investor can actually outperform most investment experts.”

Now is a good time to invest in the stock market.of S&P500 This is the first time in two years that January has reached a new record high. This means the stock has officially entered a bull market, a threshold that typically portends significant price increases over a sustained period of time.

Method is as follows Nasdaq Composite Index funds can turn $300 a month into $862,800 over 30 years.

Fidelity Nasdaq Composite ETF provides exposure to many innovative technology companies

of Fidelity Nasdaq Composite ETF (ONEQ 1.17%) This is an index fund that focuses on growth. The firm has its capital spread across more than 1,000 stocks across all 11 market sectors, but is heavily skewed toward the information technology (48%), communications services (15%), and consumer staples (14%) sectors. Investors can think of index funds as ready-made portfolios that provide diversified exposure to many of the most innovative companies on the planet, including the “Magnificent Seven.”

The top 10 holdings of the Fidelity Nasdaq Composite ETF are as follows:

1. microsoft:12.1%
2. apple:11.7%
3. alphabet:6.7%
4. Amazon:6.5%
5. Nvidia:6.2%
6. meta platform:3.5%
7. tesla:2.4%
8. broadcom:2.3%
9. costco wholesale:1.2%
10. adobe:1.2%

All of the companies mentioned above have the potential to create value for shareholders in the future. Microsoft, Alphabet, and Amazon are the largest cloud service providers, so they should benefit from complex workloads such as artificial intelligence and analytics driving demand for cloud infrastructure. Apple is the world’s second-largest smartphone maker and is expanding its services business with strengths in mobile applications, financial services, and digital advertising.

Nvidia graphics processing units are the gold standard for accelerating data center workloads such as machine learning, and the company expands its data center portfolio to include networking equipment, central processing units, and specialized software for artificial intelligence. Did. Meta Platforms owns some of the most popular social media properties and ranks as the second largest digital advertising company in the world. Tesla is the market leader in battery electric vehicles, and some analysts see significant upside to the company’s self-driving ambitions.

Finally, Broadcom is a leader in application-specific integrated circuits, or chips designed for narrow applications such as artificial intelligence. Costco is the world’s third-largest retailer and enjoys tremendous consumer loyalty, as evidenced by its 93% membership renewal rate. Adobe is also an industry standard in certain creative software industries, with products like Photoshop and Illustrator, and a leader in multichannel marketing platforms.

These 10 companies represent approximately 53% of the Fidelity Nasdaq Composite ETF from an asset allocation perspective, so the competitiveness I just mentioned is especially important. But even if some of these stocks underperform, none of the positions would be large enough to result in a catastrophic loss for index fund shareholders.

Fidelity Nasdaq Composite ETF has produced monster returns over the past 20 years

The Nasdaq Composite Index has historically been volatile due to its concentration in growth stocks. For example, during the last bear market, this index fell 36%, while the more diversified S&P 500 fell only 25%. But investors have compensated for that volatility.

The Fidelity Nasdaq Composite ETF has an impressive long-term investment history. Index funds have returned 825% over the past 20 years, increasing by 11.7% each year. Investing $300 a month in an index fund at this rate would be worth $65,500 in 10 years, $263,700 in 20 years, and $862,800 in 30 years.

Some investors may want to save less, while others may want to save more. The chart below shows how various monthly contributions increase over time.

Calculations by the author. The numbers shown above assume an annualized return of 11.7%. All dollar amounts are rounded down to the nearest $100.

The Fidelity Nasdaq Composite ETF has a below-average expense ratio of 0.21%, meaning a $10,000 portfolio would have an annual fee of $21. After all, you’ll be hard-pressed to find an index fund that’s cheaper and has a better track record. That’s why patient investors accustomed to volatility should buy a few shares of the Fidelity Nasdaq Composite ETF on a regular basis.