Cryptocurrency has taken the investing world by storm over the past few months. Bitcoin reigns supreme as the most popular type of digital currency, but Dogecoin (CRYPTO: DOGE) has also skyrocketed in popularity.
Over the past month alone, Dogecoin’s price has surged nearly 400%. That doesn’t necessarily make it a smart investment, however.
Dogecoin may seem promising right now, but it’s an incredibly risky investment. Established in 2013 as a joke based on a meme, Dogecoin has risen to popularity because online investors have artificially inflated its price. Similar to the GameStop saga earlier this year, retail investors have been investing in Dogecoin in droves to drive up its price and make a quick buck.
While it is possible for some people to make a lot of money by investing in Dogecoin, it’s not a sustainable long-term investment — and it’s likely you’ll lose more than you gain. Unlike Bitcoin, very few merchants accept Dogecoin as a form of payment. Without widespread adoption, Dogecoin won’t be able to succeed over the long run.
The good news is that there are countless other investments that can help you make a lot of money without putting your finances at risk. These three exchange-traded funds (ETFs) make great long-term investments, and they can potentially help you get rich in the stock market.
1. iShares Core S&P 500 ETF
The iShares Core S&P 500 ETF (NYSEMKT: IVV) tracks the S&P 500 — which is a stock market index that includes 500 of the largest publicly traded companies in the U.S.
S&P 500 ETFs are some of the most stable investments available. While they are subject to short-term volatility, the S&P 500 itself has endured countless market downturns, corrections, and crashes over the years and recovered from each and every one.
No matter where you invest, you will experience short-term volatility. S&P 500 ETFs are no different. However, with this type of investment, you’re very likely to see positive returns over time. So while some years you may experience losses, other years you’ll earn much higher-than-average returns.
The iShares Core S&P 500 ETF was established in 2000, and since then it has earned an average rate of return of around 7% per year. If you were to invest, say, $250 per month while earning a 7% average annual return, here’s approximately how much you’d accumulate over time:
In 10 years: $41,000
In 20 years: $123,000
in 30 years: $283,000
These numbers are only estimates, and there’s no guarantee you’ll see these types of returns. But by investing consistently, you can accumulate a significant amount of money with this type of investment.
2. Invesco QQQ
Invesco QQQ (NASDAQ: QQQ) tracks the Nasdaq 100 Index, which includes 100 of the largest non-financial companies listed on the Nasdaq. Some of the largest stocks in the ETF include Apple, Microsoft, and Amazon.
This ETF was established in 1999, and since its inception, it has earned an average return of around 9% per year. Again, this is an average return, so you likely won’t experience 9% returns year after year. But over a couple of decades, your returns will average out.
If you invest $250 per month while earning a 9% average annual return, here’s approximately how much you’d have over time:
In 10 years: $46,000
In 20 years: $153,000
In 30 years: $409,000
3. Vanguard Information Technology ETF
The Vanguard Information Technology ETF (NYSEMKT: VGT) contains 333 stocks from the information technology sector. A few of its largest holdings include Apple, Microsoft, and Visa.
This ETF is a slightly higher risk because it only includes stocks from one industry. So if you choose to invest in this fund, make sure you’re also investing in a variety of other ETFs so that you have a well-diversified portfolio.
Although this fund is riskier than the others on the list, it’s also experienced higher returns. Since the fund’s inception in 2004, it has earned an average rate of return of around 13% per year.
If you were to invest $250 per month while earning a 13% average annual return, this is roughly how much you’d accumulate over time:
In 10 years: $55,000
In 20 years: $243,000
In 30 years: $880,000
There are never any guarantees in investing, but having a strategy can help you make the most of your money. By avoiding extremely risky investments like Dogecoin and instead putting your money behind more stable investments like ETFs, you can maximize your lifetime earnings.
10 stocks we like better than Vanguard Information Technology ETF
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Vanguard Information Technology ETF wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
*Stock Advisor returns as of February 24, 2021
Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Katie Brockman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, Bitcoin, Microsoft, and Visa. The Motley Fool recommends the following options: long January 2022 $1920.0 calls on Amazon, long March 2023 $120.0 calls on Apple, short January 2022 $1940.0 calls on Amazon, and short March 2023 $130.0 calls on Apple. The Motley Fool has a disclosure policy.