When deciding between investing in the S&P 500 or Nasdaq 100, new investors face a core dilemma concerning risk versus higher returns. The Nasdaq, while offering potential for greater gains, has demonstrated increased volatility and risks during market downturns, notably the dot-com bubble. Historical analysis suggests that evenly distributing investments between the two ETFs, the SPY and QQQ, may mitigate risks while capitalizing on tech growth. Understanding past market events is crucial to navigate today’s investment landscape, especially amid the current tech boom fueled by significant advancements like AI.
The choice between the S&P 500 and the tech-heavy Nasdaq 100 is a critical decision for new investors, balancing potential rewards against inherent risks.
Investors must weigh the higher returns from Nasdaq against the significant risks unveiled in downturns, particularly with lessons from past market crashes.
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