January 2022 could be a good time to review financial goals and start investing regularly. Long-term investors know that time is always on their side.
Here’s why: Let’s assume you are now 30 years old, with $10,000 in savings and that you plan to retire at age 65. You decide to invest that $10,000 in a fund now, and make an additional $3,000 of contributions annually at the start of the year.
You have 35 years to invest. And the annual return is 7%, compounded once a year. At the end of 35 years, the total amount saved will be over $550,000.
Saving $3,000 a year would mean being able to put aside less than $9 a day. And if you were to increase the amount of annual contributions from $3,000 to $4,000, the total amount saved comes in closer to $700,000. In other words, time and compound interest would work together to help an individual save for their retirement years.
Today’s article introduces two exchange-traded funds (ETFs) that could appeal to investors who are not looking to time the market in the short-run but instead have long-term goals.
1. Invesco NASDAQ Next Gen 100 ETF
- Current Price: $31.79
- 52-Week Range: $29.91 – $36.24
- Dividend Yield: 0.26%
- Expense Ratio: 0.15% per year
Most of our readers would know that the index comprises 100 of the leading non-financial companies listed on the Stock Exchange based on their market capitalizations (caps). Those who want to track the returns of the index typically buy the Invesco QQQ Trust (NASDAQ:), one of the most traded ETFs in the US. In the past year, QQQ returned about 27%.
On the other hand, our first fund, the Invesco NASDAQ Next Gen 100 ETF (NASDAQ:), invests in the 101st to the 200th largest names on the NASDAQ. Therefore, we could regard them as the next generation of non-financial companies listed on the exchange. The fund started trading in October 2020.
The top 10 holdings in QQQJ account for close to 18% of net assets of $1.21 billion. In terms of the sub-sectors, we see information technology (36.18%), health care (21.47%), communication services (13.70%), consumer discretionary (12.44%) and industrials (10.64%).
Less-than-truckload (LTL) freight name Old Dominion Freight Line (NASDAQ:); Trade Desk (NASDAQ:), which operates a cloud-based advertising platform; biopharma group AstraZeneca (NASDAQ:); document database firm MongoDB (NASDAQ:); and Zebra Technologies (NASDAQ:), which is well-known for barcode scanners, lead the names on the roster.
In the past 12 months, the ETF is up about 6.7%, and hit a record high in November 2021. However, since then, many of the names in the fund have come under pressure, and QQQJ has lost about 9.5%. Forward P/E and P/B ratios stand at 32.42x and 5.63x.
We like the fund as it invests in mid-cap growth names across various sectors. Interested readers could consider buying the dips.
2. ProShares S&P MidCap 400 Dividend Aristocrats ETF
- Current Price: $73.39
- 52-Week Range: $61.77 – $75.67
- Dividend Yield: 2.48%
- Expense Ratio: 0.4% per year
Many investors rely on dividend shares for building a passive income stream. The ProShares S&P MidCap 400 Dividend Aristocrats (NYSE:) focuses on mid-cap names that have been growing their dividends for well over a decade. Analysts highlight that stable dividend payers typically have strong fundamentals with solid earnings growth.
REGL, which has 53 holdings, tracks the S&P MidCap 400 Dividend Aristocrats Index. The fund started trading in February 2015.
Financials have the highest slice with 28.07%. Next in line are industrials (21.08%), utilities (20.19%), materials (11.03%) and consumer staples (8.82%). The leading 10 names make up about 22% of the fund’s net assets of $1.05 billion.
Nu Skin Enterprises (NYSE:), which develops personal care products and wellness products; Renaissancere Holdings (NYSE:), which provides insurance and reinsurance products; utility group ONE Gas (NYSE:) and Essential Utilities (NYSE:); and manufacturer of coatings, sealants as well as building materials RPM International (NYSE:) are among the leading names in the ETF.
In the past 52 weeks, REGL returned 18.6% and saw a record high in May 2021. P/E and P/B ratios are 17.26x and 2.11x. A potential decline toward the $72 level would improve the margin of safety for buy-and-hold investors.