In my current portfolio, QQQ is not the largest portion, just within 20%.
But, before switching to current weights, QQQ is the only holding of my portion for years.
You may think “is it worth it to invest?”, especially when you want to chase higher returns.
Here, I will share my three lessons from investing QQQ for these years, to provide more thought to you about investing QQQ.
QQQ can fully satisfy my preference of investing in technology stocks with its strong base
The first lesson is, QQQ fully satisfies my love for investing in technology stocks.
When I came into the stock market, the first one I invested in was tech stock, and made a lot of money. Since then, I had an impression that these tech. companies could make more money, and did make much money from it.
You can say I am lucky, I admit. But later I took a closer look at it, and found there were strong bases to support the price hike.
In fact, the price hike for tech giants, like Apple, Microsoft, and Nvidia, is all based on their strong performances, no matter in sales, market and profit.
Also, they have strong innovation abilities in new techniques, this not only boosts their own profit, but also benefits other companies, and even in the whole society, to make the market go higher.
So, either in my own impression or its actual performance, investing in QQQ satisfies my need to grow with the tech markets.
Earn the average return from tech market without taking too much efforts
If buying VOO can earn the average return of the market, then I can say it’s the same on QQQ, which earns the tech stock market.
You don’t have to take a lot of time and effort, just to beat the market “a little more”. By holding QQQ, you can earn the average return from Nasdaq (precisely, it is the Nasdaq 100 index).
What does the average look like? Here’s the summary (from QQQ, as of Jan. 31, 2024):
| YTD | 1-year | 3-year | 5-year | 10-year | Since inception in 1999 |
| 1.82% | 42.50% | 10.55% | 20.74% | 18.10% | 9.49% |
If we look further, over 10 years, the averages can be up to 18%. Even if you hold it since 1999, it still has a 9.49% average return each year.
If you are an active trader, how can you guarantee you can earn such high yearly profit over 10 years, and even in 25 years?
Just holding QQQ can easily achieve this goal.
Highly volatile, you must have inner resources
QQQ is the representative of tech stocks, it has the merit of high return, and also comes with disadvantages.
High volatility is the biggest one.
Just imagine the following situation: you buy a share of QQQ, and the next day, it surges 2% due to some good news, but for the following several days, the price suddenly falls 10%. After the severe price drop, it recovers the loss in 3 days.
Maybe you think it’s too exaggerated, but this is the actual scene for many tech stocks.
Just see the following chart from QQQs’ price, you will know how volatile it is:
Hence, if your preference is more conservative, or have no inner resources, when facing such turmoil, it makes you feel more pressure and uncomfortable, and pushes you to sell your holdings.
Is it worth it to invest in QQQ?
So, you may ask me, is it worth it to invest in QQQ?
My answer is yes, but not too much.
If you want to get a higher return, I can say QQQ must be the best choice for you. Not only can you enjoy the high return from the tech market, but also reduce the risk of focusing on single stock, to let you hold it longer and safer.
But, the high volatility is a point to deter me from investing more in it. For example in the last paragraph, if you are not well-trained or prepared, when facing such turmoil, you could lose your mind, and feel up and down all day long, and these can last several months, even years. That’s not good for your life.
Actually, that’s what I actually experienced during 2020 and 2023.
So, QQQ is still a good choice to hold, but if you want to own it longer, just control it in 20% of your portfolio, like me.