If the Stock Market Crashes, Young Investors in Their 20s Might Want to Buy This Nasdaq ETF and Hold It Until Retirement
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The benchmark S&P 500 (SNPINDEX: ^GSPC) index is having a strong year, led by technology stocks. But a growing chorus of risks could threaten this bull market. They include a rising inflation rate, interest rate hikes, geopolitical tensions, and a potential slowdown in artificial intelligence (AI) development from labs like Anthropic and OpenAI.
To make matters worse, the S&P 500 is trading at a Shiller cyclically adjusted price-to-earnings (CAPE) ratio of 41.2, its second-highest valuation since the peak of the dot-com internet bubble in 2000. The index plummeted by 49% when the bubble eventually burst, and while I’m not predicting it will fall by a similar magnitude this time around, a sharp correction could certainly be on the horizon.
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The stock market has always trended higher over the long term, so history suggests investors would be wise to buy the dip if a crash does eventuate. Purchasing an S&P 500 index fund is one of the surest ways to build wealth in the stock market in the long run, but enduring a little more volatility for an opportunity to earn even higher returns might be a worthwhile trade-off for young investors in their 20s.
The Invesco QQQ Trust (NASDAQ: QQQ) is an exchange-traded fund (ETF) that mimics the Nasdaq-100, an index with roughly two-thirds of its assets parked in technology stocks. Here’s why it could be a great buy for young investors in the event of a broader market correction.
Image source: Getty Images.
Technology companies are at the heart of the fastest-growing industries
The technology sector has consistently produced higher returns than the rest of the stock market over the last 20 years, thanks to the widespread adoption of smartphones, enterprise software, cloud computing, and AI.
The Nasdaq-100 is made up of 100 of the largest companies listed on the Nasdaq exchange (excluding banks and financial institutions), which is normally the stock exchange of choice for budding technology enterprises looking to go public. Therefore, as I highlighted earlier, tech stocks represent around 66% of the value of the Nasdaq-100 and, by extension, the Invesco QQQ ETF.
In fact, the five largest holdings in the Invesco ETF are from the technology sector, and they have a combined portfolio weighting of 30.8%.
Data source: Invesco. Portfolio weightings are accurate as of Sept. 26, 2026, and are subject to change.
Nvidia and AMD supply the world’s best graphics processing units (GPUs) for data centers, which are the primary chips used in AI training and inference workloads. Both companies recently told investors that their data center GPU sales could double next year, so it appears they still have plenty of growth potential.
Micron is another semiconductor company, except it supplies memory chips. High bandwidth memory (HBM) is a critical data center component for AI processing because it keeps information flowing seamlessly to GPUs. Without it, data bottlenecks would throttle the performance of AI chatbots and agents.
Apple is working to integrate the Apple Intelligence suite of AI features and applications into the iPhone, iPad, and Mac line of computers. There are more than 2.5 billion active Apple devices worldwide, so this company could soon be the largest player in the consumer AI space. Microsoft, on the other hand, is squarely focused on capturing the enterprise AI opportunity with the Copilot virtual assistant and Azure cloud platform.
Despite focusing heavily on tech, the Invesco QQQ ETF does offer a splash of diversification. It holds small positions in retailers Walmart and Costco Wholesale, and beverage giants PepsiCo, Starbucks, and Monster Beverage.
The Invesco ETF can help young investors supercharge their retirement fund
The Invesco QQQ ETF has delivered a compound annual return of 10.8% since launching in 1999, even after accounting for every sell-off, correction, and bear market along the way. It has comfortably outpaced the S&P 500, which returned 8.6% per year over the same period.
The 2.2-percentage-point difference in annual returns might not sound like much, but it would have a significant impact in dollar terms over the long run thanks to the magic of compounding. Past performance isn’t always a reliable indicator of future results, but here’s how much money a 25-year-old investor could have at retirement if they park $20,000 in the Invesco ETF versus the S&P 500, assuming their average returns remain the same.
Calculations by author.
Investors could have more than double the amount of money in retirement by owning the Invesco QQQ ETF instead of an S&P 500 index fund. But this strategy isn’t right for everyone, because technology stocks are notoriously volatile, so investors who exclusively own the Invesco ETF will have to stomach much steeper drawdowns when the broader market hits turbulence.
Investors who have a lower appetite for risk might prefer to put some of their money in the Invesco ETF while parking the rest in an S&P 500 index fund. This strategy could still lead to strong returns through to retirement age, with a little less volatility.
In any case, it might be a good idea for investors to take advantage of any broad stock market sell-off by purchasing the Invesco QQQ ETF.
Should you buy stock in Invesco QQQ Trust right now?
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Costco Wholesale, Micron Technology, Microsoft, Monster Beverage, Nvidia, Starbucks, and Walmart. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
