The second stimulus check is in the process of being distributed to every eligible American taxpayer, giving many a chance to catch up on their finances. While many will use it to pay overdue bills or secure food, others may see it as a lifeline to make an investment and boost their income in the future. For that, the best method is an index fund.
According to a Motley Fool report, a high-growth index fund is likely the most efficient way to multiply your $600 stimulus check, if you have the financial stability to do so. In particular, the outlet recommends the Invesco QQQ Trust, a relatively high-risk but high-reward exchange-traded fund (ETF). A $600 investment in that trust in January of 2011 would today be worth $3,768. While there is no guarantee that the trajectory will be just as good over the next ten years, the theory is appealing.
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The trust works by spreading out your investment across the 100 largest non-financial stocks listed on the NASDAQ stock market. This is an easy way to diversify an investment without shelling out for individual stocks — and all the fees associated with each trade. Additionally, one bad investment is less likely to ruin the entire sum.
Even after a surprisingly lucrative decade, the Invesco QQQ Trust is still paying out big time for current investors. Over the last year, it has reportedly grown investors’ money by 47.5 percent. Over the course of the decade, it has delivered a 528.1 percent return in total.
Right now, this ETF’s ten largest holdings are Apple, Microsoft, Amazon, Tesla, Facebook, Google’s parent company Alphabet, NVIDIA, PayPal and Adobe. All are considered relatively stable and well-established investments, though of course, there is always some risk when making investments.
Perhaps the most appealing part of an ETF like the Invesco QQQ Trust is the simple and cheap process of paying trading fees. The trust has a 0.2 percent expense ratio, meaning a $600 investment would cost only $1.20 in investment fees per year. For many, that’s a small price to pay for such a huge pay-out in a decade.
The Invesco QQQ Trust — and other ETFs like it — can be purchased through a stock exchange like any individual stock. Those interested in investing will need to select a bank or service where they can open a brokerage account. The trust is currently trading at about $309, so you will either need a brokerage that can purchase fractional shares, or else you will need to pay a little more to buy two full shares.
Alternatively, you could buy one share now and save the rest of the stimulus check. Visit the IRS’ website for information on stimulus check disbursement.
