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An ETF that invests in, for example, the Nasdaq 100, is likely going a more aggressive play than an all-market ETF that invests in thousands of stocks. Its returns are likely to be higher over the long term, but it will be a riskier bet, too. If the time horizon before you’ll need to withdraw your money is shorter, you may want to opt for the safety of a broader market ETF.
How Much I Feel
Even a smaller yacht — often referred to as a cabin cruiser — is going to be priced in the $100,000 to $300,000 range. Costs can range much higher, depending on the boat’s size, so you’ll want to build your investment strategy with a number in mind. (Also, you’ll want to factor in maintenance — as a rough estimate, figure that will run you annually about 10% of your purchase price.)
If you are 45 years old and plan to spend that first day of your retirement wasting away in Margaritaville, that means you have about 20 years to get there.
If you invested $500 now in a growth-oriented ETF like, for example, the Vanguard Information Technology ETF (NYSEMKT: VGT), you could get on your way to that goal with a disciplined strategy. That particular ETF tracks the MSCI USA IMI Information Technology Index, which includes about 350 IT stocks from across the market-cap spectrum. Its three largest holdings are Apple, Microsoft, and Nvidia. The Vanguard Information Technology ETF has produced an average annual return of 21.6% over the past 10 years through June 30. Since the fund’s inception in January 2004, it has posted an annualized return of 13.6%.
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