This simple ETF could turn $250 a month into $1 million

By now, most investors know that the technology sector now dominates the stock market.

Currently, the seven most valuable companies traded on US stock exchanges are all from the technology sector. These are Apple, Nvidia, Microsoft, alphabet, Amazon, MetaplatformsAnd Taiwan semiconductor manufacturingand these stocks combined have a market capitalization of around $17 trillion, accounting for more than a third of the total S&P 500.

The sector has risen to the top of the stock market because this group of stocks represents the emerging technologies that have become some of the biggest economic drivers, including consumer electronics, semiconductors, software and cloud infrastructure, digital advertising, e-commerce and social media, and chip manufacturing .

If you want to take advantage of this technology boom, the easiest way would be to buy this Invesco QQQ Trust (NASDAQ:QQQ)the largest ETF that tracks this Nasdaq-100 Index composed of the 100 largest companies in the world Nasdaq Compositeand that would have grown considerably in the last 10 years.

As you can see from the chart, if you had invested $10,000 in the Invesco QQQ Trust a decade ago, you would have more than $50,000 now.

QQQ data from YCharts

Based on these gains, the Nasdaq-100 grew at an average annual rate of 18% over the past decade.

It is by no means guaranteed that the Nasdaq 100 will continue to deliver a compound annual growth rate (CAGR) of 18%. However, if this is the case, this type of growth would allow you to invest $250 per month and grow that investment to $1 million after 25 years.

Will the QQQ trust grow so quickly?

A 25-year compound annual growth rate of 18% may seem unlikely, especially since the Nasdaq-100 is currently trading at a price-to-earnings ratio of 32, meaning gains from here are unlikely to come from multiple expansion.

Still, technology stocks are at a unique point as the artificial intelligence (AI) revolution could arguably be as transformative as the Internet, and this could lead to accelerated growth, particularly for some of the larger technology stocks. For example, analysts expect Nvidia’s earnings per share to double in the current quarter, and in fiscal 2026, which begins in February 2025, the consensus expects EPS to rise 43% to $4.06 -Dollar will rise.

Taiwan Semiconductor just reported a 54% increase in earnings per share, showing that the AI ​​growth boom could still have plenty of room to continue.

Additionally, the push toward artificial general intelligence that some tech CEOs expect over the next five years will also likely lead to a boom in the tech sector, as this technology could drive further gains for the biggest tech stocks.

There’s also the potential for autonomous vehicle technology to spark massive gains in stocks like Alphabet, which owns Waymo Teslaas Cathie Wood has speculated that its value could reach $5 trillion if its robot taxis take off.

Image source: Getty Images.

Why QQQ Trust could continue to be a winner

It is impossible to predict the compound annual growth rate of Invesco QQQ Trust, especially over a period of up to 25 years.

However, the tech-heavy index appears to be a good bet to deliver strong returns and outperform the S&P 500 as the tech industry takes more market share from other industries. Like the S&P 500, the Nasdaq-100 benefits from refreshing its holdings as companies move into or out of the list of the 100 most valuable Nasdaq companies.

This formula has been a big winner since the dot-com bubble burst and should continue to deliver strong results in the AI ​​era.

Should you invest $1,000 in Invesco QQQ Trust now?

Before you buy Invesco QQQ Trust shares, you should consider the following:

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