How to invest in the NASDAQ Composite Index

Wanting to get into stock market investing, and have a particular interest in some of the largest technology stocks?
By: Harry Atkins
Harry Atkins
Harry joined us in 2019, drawing on more than a decade writing, editing and managing high-profile content for blue chip companies,… read more.
Updated: May 24, 2021
Tip: our preferred broker is, eToro: visit & create account

The NASDAQ Composite is the leading stock index in the world for tech stocks, so it could be the investment opportunity for you. There are many different ways to invest in the NASDAQ Composite Index, so we’ll go through them with you in detail to help you select the right option.

Where can I buy into the NASDAQ Composite Index?

1
Min. Deposit
$50
Exclusive promotion
Our score
10
Trade/invest in stocks with just $50
Invest for dividends and get payout on stocks on Ex-Dividend day
Over 11 payment methods, including PayPal
Start Trading
Description:
eToro is a multi-asset investment platform with more than 2000 assets, including FX, stocks, ETF’s, indices and commodities. eToro users can connect with, learn from, and copy or get copied by other users. Buying stocks on eToro is free and you can invest with as little as $50.
Payment Methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.
2
Min. Deposit
$10
Exclusive promotion
Our score
9.3
0% Commission Account
Low Spreads
Eco-Account Option
Start Trading
Description:
CedarFX is an eco-conscious broker offering 0% commission trading on 170+ assets, including Forex, Cryptocurrency Pairs, Stocks, Indices and Commodities. With up to 1:500 leverage, no-fee transactions and low spreads, traders can make the most of their funds. CedarFX also offers an Eco Account option to support tree planting and sustainability projects.
Payment Methods
Bitcoin, Credit Card, Debit Card
Full regulations list:
Please ensure that you fully understand the risks involved, taking into account your investments objectives and level of experience, before trading, and if necessary seek independent advice.
3
Min. Deposit
$1
Exclusive promotion
Our score
8.7
0 Commissions and no deposit minimums
Registered with and regulated by SEC and FINRA
Loss of cash protection
Start Trading
Description:
Financial company driven by technology and offering all-in-one self-directed investment platform that provides excellent user experience.
Payment Methods
Full regulations list:

What is the NASDAQ Composite Index?

The NASDAQ Composite Index is one of the three largest stock indices in the United States, alongside the S&P 500 and the Dow Jones Industrial Average. It consists of hundreds of different stocks, with a focus on technology accompanied by other stocks representing different growth industries.

Is it a good investment?

The NASDAQ Composite Index features a collection of stocks that tend to be both higher-growth and higher-volatility than more traditional indexes such as the Dow Jones Industrial Average. So it can be a good investment if you’re willing to accept more risk in exchange for a bigger potential reward. 

The NASDAQ Composite index’s volatility increased in 2020, with the index plunging as global COVID-19 fears kicked in, then rebounding sharply once the US government began spending trillions to revive and stimulate the economy. Before investing in the NASDAQ Composite index it is important to account for prevailing market conditions, as these will affect your chances of investment success.

How do I invest in the NASDAQ Composite Index?

Here are three important steps that you should follow when investing in the NASDAQ Composite Index:

  1. Choose an investment type
  2. Use our top tips to succeed
  3. Choose a platform to invest with

1. Choose investment type

The investment type that’s best for you will depend on multiple factors, such as how much each approach charges in transaction fees, and how high the level of customer service and investment advice provided by each option is. Here are some of the most popular methods that you can use to invest in the NASDAQ Composite Index:

ETFs

An Exchange-Traded Fund (ETF) is an investment fund that can be traded on a stock exchange during regular stock market hours, in a similar way to individual stocks. ETFs usually include a collection of assets such as commodities or bonds, or a collection of stocks – and can be structured to track the performance of an index such as the NASDAQ Composite Index. A NASDAQ Composite Index ETF gives you access to a large, diversified batch of stocks, without the obligation to pay the management fees that come with a mutual fund (explained in more detail below).

Individual stocks

If you want to focus on the top-performing stocks in the large NASDAQ Composite Index, you can buy each of the index’s stocks in separate trades instead. This allows you to evaluate each stock on its own merits, then whittle down your holdings until you own only the index’s top-performing stocks. 

The problem with this approach is that the NASDAQ Composite Index contains about 3,300 stocks. So that’s 3,300 transactions you’ll have to make just to buy all of those stocks, let alone the many more you’ll need to execute to get down to the smaller number you want. Unless you are both very wealthy and have all the time in the world on your hands, this approach isn’t likely to be practical with the NASDAQ Composite index.

Mutual funds

A mutual fund is an investment fund run by a professional money manager. You can buy a mutual fund through a broker, or through the company that administers the fund. The money manager pools money from many different investors, then invests the combined capital into different assets. A NASDAQ Composite Index mutual fund (also known as an index fund) allows you to invest in all of the NASDAQ Composite Index’s stocks at once. 

Mutual funds come with multiple drawbacks, unfortunately. First, you can only buy a mutual fund at the end of the stock market’s trading day, not during regular market trading hours – as you can with an ETF. Another downside to mutual funds is that they charge higher fees than ETFs do. So if you’re going to invest in a NASDAQ Composite fund, your best bet might be to try to buy and hold for as long as possible in search of long-term gains, since a mutual fund is more difficult and more expensive to trade than an ETF.

2. Use our top tips to be a successful investor

Before you invest in the NASDAQ Composite Index, it’s worth your while to go over our top investment tips:

  • Do your research. Take the time to analyse the NASDAQ Composite Index’s recent and historical performance, and how it stacks up against other investment opportunities. Once you’ve made your decision, you should create a tailored investment plan for yourself, deciding what your goals are in terms of gains, and how much you’re willing to lose. The more prepared you are, the better equipped you’ll be to keep your emotions in check if the market starts becoming volatile.
  • Set a budget. The budget you set should account for your risk tolerance, as well as how much money you can afford to lose. Letting your losses pile up can crush your confidence. It can also eat up the investment capital you’ll need for future trades.
  • Select the right platform. Figure out your specific investment goals before you look for a platform to handle your investments. The platform you choose can vary a lot if you’re interested in, say, low transaction fees (for which brokers are best), as opposed to top-of-the-line investment advice (in which case financial advisors have the edge). 
  • Grow your investments gradually. If you’re a novice investor, we recommend starting by investing a smaller amount of money. That way if you make a mistake due to inexperience, it won’t cost you very much. You can always ramp up the size of your trades as you gain experience and expertise. 
  • Think long-term. One viable investment strategy is to buy and hold the NASDAQ Composite Index, with an eye on landing bigger gains. That strategy can work during a bull market but not a bear market, since in bear market conditions indices tend to fall in value considerably.

3. Choose a platform to invest with

Here are some of the more popular options that investors use to invest in the NASDAQ Composite Index:

  • Brokers & trading platforms. Online brokers offer easy-to-use tools that allow you to invest in the NASDAQ Composite Index quickly and inexpensively. However, what online stockbrokers don’t do is offer a lot of in-depth investment advice. So if you’re looking for more advanced, immersive investing advice, you should consider other options.
  • Robo advisors. Robo advisors execute trades using algorithms, which keeps trading costs down. Despite their automated trade execution function, some robo advisors will allow you to discuss your investment strategy ahead of time with an actual human being. Still, a robo advisor doesn’t offer as hands-on an investing approach as a dedicated financial advisor does.
  • Financial advisors. Financial advisors offer the most comprehensive level of investment advice. They’ll review your financial goals, run through lots of different investment options that you can choose, and help you meet your investing goals well after you’ve made your initial investment. Financial advisors do charge more for their services than what you’ll pay with other investment methods, though. That extra cost can be worth the price given the high level of customer service that financial advisors provide. But investing in the NASDAQ Composite Index isn’t overly complicated, so choosing a financial advisor likely won’t be worth the cost in this instance.
  • Banks. Investing in the NASDAQ Composite Index with your bank gives you the convenience of storing all your financial ventures (such as your checking and savings accounts, your mortgage, and your investments) with one institution. But banks usually charge high fees, without providing the level of service that top financial advisors offer. 
1
Min. Deposit
$50
Exclusive promotion
Our score
10
Trade/invest in stocks with just $50
Invest for dividends and get payout on stocks on Ex-Dividend day
Over 11 payment methods, including PayPal
Start Trading
Description:
eToro is a multi-asset investment platform with more than 2000 assets, including FX, stocks, ETF’s, indices and commodities. eToro users can connect with, learn from, and copy or get copied by other users. Buying stocks on eToro is free and you can invest with as little as $50.
Payment Methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.

What should I do now? 

If you’re ready to invest in the NASDAQ Composite, log into your online broker’s website, decide whether you want to buy NASDAQ Composite ETF, a NASDAQ fund, or every individual stock in the NASDAQ Composite Index in separate trades, then click buy. Once you’re invested, keep a close eye on your investment, so you can make an educated decision about when to hold and when to sell.

Try some of our investment courses for beginners

Not ready to invest in NASDAQ yet? No problem. Improve your investing skills by reading and reviewing the educational investing courses and news updates that we offer right here at Invezz.

Stocks Courses
If our Stock Markets 101 course was your introduction to stock market investing, think of the Stock Investing course as the next step, your intermediate-level guide to investing. Just remember, this is not a get-rich-quick scheme and takes time, patience, and emotional stability.
Stocks Courses
Luckily, it’s far easier to begin trading than it was in the 90s when Wall Street and big money were the only options. Get started with our introduction to stock trading. You’ll come away feeling more confident about the task ahead, while acquiring a base knowledge of all the most…
Harry Atkins
Financial Writer
Harry joined us in 2019, drawing on more than a decade writing, editing and managing high-profile content for blue chip companies, Harry’s considerable experience in the… read more.