Which index fund or ETF?
Which Index fund or ETF would you recommend that follows the NASDAQ composite. It needs to follow the index almost exactly, have little or no fees, and must pay the dividends back to me. Preferable one that can reinvest directly into the fund.
Update:I am planning on going with the NASDAQ for about 5 years, then switching over to the S&P. Should I just start out with the S&P?
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The ETF QQQ tracks the NASDAQ 100 (top 100 NASDAQ stocks) and seems to do it pretty closely with relatively low fees.
I'm curious why you plan to invest in the NASDAQ for 5 years then switch to the S&P 500. Are you thinking technology stocks (which there are a lot of in the NASDAQ) are going to do better than the general market for 5 years and then not after that?
One possible advantage to just investing in the S&P 500 now is that if the QQQ (or whatever NASDAQ fund/ETF you invest in) does well during the 5 years, you'd owe capital gains taxes at the time you sell it in 5 years and so would have less money to invest in the S&P 500 after you pay the taxes. If you just buy the S&P 500 now, then you wouldn't have to pay capital gains taxes until whenever you finally sell that. Of course, if the NASDAQ does significantly better over the 5 years, you might still have more money even paying the taxes. Almost nothing in investing is a sure thing.