Do you want to retire rich? 2 ETFs to Buy Now and Hold for Decades

Exchange-traded funds (ETFs) offer investors an easy and cheap way to spread their bets across hundreds and even thousands of companies, eliminating the need to find individual winning stocks. This broad diversification can help you reduce your risk while still taking advantage of powerful trends like the rise of artificial intelligence (AI).

Here are two ETFs that are particularly well-built to deliver fortune gains to their shareholders in the years and decades to come.

Here’s how you can benefit from the growth of big tech and AI

The Invesco QQQ ETF (NASDAQ: QQQ) is designed to track the Nasdaq-100 index, which consists of the 100 largest non-financial companies in the world Nasdaq Composite. It’s packed with tech titans, including the popular ‘Magnificent Seven’ stocks, all of which are among the fund’s top holdings.

Data source: Invesco.

These are some of the most powerful and profitable companies in the world. Their significant representation within this Invesco ETF can provide your portfolio with a lucrative combination of proven performance and attractive long-term growth potential.

The ETF is also packed with AI stocks outside the Magnificent Seven that could have even better growth prospects. Chipmakers love Broadcom And Advanced micro devices and AI-powered cybersecurity leaders love it Palo Alto Networks And CrowdStrike are among the fund’s assets.

Importantly, the fund has a reasonable expense ratio of 0.2%, which equates to a fee of just $2 per $1,000 invested annually. By keeping costs low, the Invesco QQQ ETF gives you a simple and cost-effective way to benefit from the growth of 100 of the biggest and best companies within the technology- and AI-heavy Nasdaq Composite index.

This small-cap fund can boost your returns

While size and strength are certainly advantages for many of the companies within the Nasdaq-100, there are other benefits to be gained from owning stakes in smaller, faster-growing companies. That’s where the Vanguard Russell 2000 ETF (NASDAQ: VTWO) comes in.

The Vanguard Russell 2000 ETF can give you exposure to a wide range of small- and mid-cap stocks. It owns nearly 2,000 stocks, with an average market capitalization of $3 billion. That’s in stark contrast to the Invesco QQQ ETF, which has a weighted market cap of more than $980 billion due to the outsized impact of the mega-cap companies it owns. So these two ETFs fit well together. Together they can provide your portfolio with a wealth-building mix of larger strong players and smaller, promising starters.

The story continues

Interestingly, shares of the Vanguard Russell 2000 ETF are currently trading at a steep discount to their larger rivals. The fund’s weighted price-to-earnings (P/E) ratio of 15 is about 57% lower than the Invesco QQQ ETF’s P/E of 35. This discount is one reason why Fundstrat analyst Tom Lee thinks the Russell 2000 – the index that tracks the Vanguard Russell 2000 ETF – could rise 45% in 2024.

Rate cuts could also lead to a rally in the Vanguard Russell 2000 ETF. With inflation slowing, the Federal Reserve is expected to start cutting interest rates later this year. Small companies tend to benefit more than larger companies when interest rates fall, because they can get the growth financing they need on more attractive terms.

Better yet, the Vanguard Russell 2000 ETF’s annual expense ratio of just 0.1% lets you keep more of these potential gains for yourself, rather than paying them out as management fees.

Should You Invest $1,000 in the Vanguard Russell 2000 ETF Now?

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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Joe Tenebruso has positions at Amazon. The Motley Fool holds positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, CrowdStrike, Meta Platforms, Microsoft, Nvidia, Palo Alto Networks, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.

Do you want to retire rich? 2 ETFs to Buy Now and Hold for Decades was originally published by The Motley Fool