What is Nasdaq & How to Invest in Nasdaq?  

You must have heard terms like Dow, the S&P 500, and NASDAQ while talking to your finance bro. Even though your bro might be throwing a lot of redundant terms your way to sound cool, NASDAQ is actually something that he is right about. NASDAQ is the cool kid of the financial playground. It is also not the easiest to crack. 

Well, we are not as ‘knowledgeable’ as your finance bro, but we do understand what you need. You are here to understand the right way to invest in NASDAQ, and that is what we will help you with. Minus all the jargon that makes your head hurt. So, let us hold your hand and help you understand how you can also invest in NASDAQ and what the payoff is. 

But first, we will be taking a moment to understand the fundamentals. So, let us start understanding the fundamentals of NASDAQ and how you can be an expert in it.  

Understanding NASDAQ 

NASDAQ, or the National Association of Securities Dealers Automated Quotation,s is basically an online stock marketplace. It is where stocks are bought and sold without all the chaos. Going back in time, NASDAQ was first introduced in 1971.  

NASDAQ was the first of its kind to go completely digital. As a result, it changed how stocks were bought and sold. It made the trading process much more reactive and responsive. In today’s world, NASDAQ is one of the largest exchanges and lists nearly 3,000 companies.  

NASDAQ primarily lists technology-based companies. However, there are other forms of listings as well, such as medical and industrial. The NASDAQ-100 zeroes in on the biggest names of the industry, and they decide the surge and dip of the landscape to a great extent. 

Why Should You Invest In NASDAQ? 

The biggest question that you need to understand: Why should you invest in NASDAQ? The answer is partly financial and partly social-political. NASDAQ is not just your random stock exchange. It is easily one of the biggest and most venerated exchanges in the world. In some ways, NASDAQ is a symbol of progress, and it shows. 

Companies listed on NASDAQ are among the largest. They are known for being growth-oriented and most profitable. However, all that glitters is radioactive gold. In other words, NASDAQ offers some of the most outrageous returns but also brings volatility. Think of the landscape as a roller coaster with no brakes.  

NASDAQ also offers great liquidity. In other words, buying and selling stocks is easier. Therefore, investors could easily play around and make a good profit or a worse loss. Back in 1971, this liquidity was seen as revolutionary, as no other exchange was doing it. Therefore, it was NASDAQ that opened the door for its predecessors.  

How To Invest In NASDAQ? 

NASDAQ might give you the best returns, but only when it is done right. In other words, you must know how to invest in NASDAQ to get the best returns. Unlike your finance bro, we will keep things simple. Therefore, if you actually want to learn about NASDAQ, here are some of the things that you must understand. Let’s go! 

Direct Stock Purchase 

The very first way to trade on NASDAQ is through DSP, or Direct Stock Purchase. DSP is the most straightforward way of trading on NASDAQ. Think of it like this: you want a piece of major companies like Apple, Microsoft, or Tesla? Just get a stock. 

In other words, DSP allows traders to have a brokerage account and own stocks of big companies. However, trading on NASDAQ is not just about buying the most profitable stock. There is also an understanding of the investment portfolio and long-term financial goals.  

For that, you need to have functional knowledge of how to proceed. This will take time and cannot be done overnight.  

ETFs 

If you are feeling lazy and do not want to pick or think too much about stocks, ETFs (exchange-traded funds) are your friend. These are a fund bundle that tracks specific NASDAQ-listed stocks.  

In general, most ETFs track an index such as the NASDAQ-100. One of the most popular NASDAQ ETFs is the Invesco QQQ Trust (QQQ). The pool allows users to gain exposure to large-cap stocks such as Amazon and Alphabet.  

The best part is that investors do not need to own the stocks of the companies directly. ETFs offer guidance and the best price. Ideal for beginners who want to learn more about trading.  

Mutual Funds 

Mutual Funds, or MFs, are very similar to ETFs. These are indices that pool money from multiple investors to buy a mix of NASDAQ and other stocks. Professionals generally manage Mutual Funds and take on the responsibility for the investment side of things.  

However, this means that you do not always control the movement. In other words, the professional would decide and take on the responsibility for the investment movement. Therefore, it is perfect for casual investors. 

The biggest downside is that you will not have the freedom to choose the movement. Subsequently, it is also not the right one for someone who wants to learn how to invest effectively.  

Advanced Options For Big Players 

While some people just want simplicity, others wish for autonomy and complexity. This is where advanced strategies come into play. Apart from the three means we have mentioned, NASDAQ also offers advanced strategies such as futures, options, and even leveraged ETFs. 

These variants are more complex than the ones we have talked about. If you are a beginner, avoid these and use the ones we mentioned in the previous sections. Otherwise, you can run into financial problems.  

Strategies To Invest In NASDAQ 

The proper way to invest in NASDAQ is not just about buying low and selling high. It is also about using the right kind of strategy. Here are some things that we have picked up from our personal experience: 

• Focus on companies that show promise and revenue growth. 

• Invest in fundamentally strong companies.  

• Keep an eye on industry trends and the global socio-political landscape.  

Should You Invest In NASDAQ? 

Everything is well and good when the waters are calm. However, finance moves at its own pace. Therefore, just know that whatever goes up comes down. Trading and stocks can be treacherous unless you understand what’s going on.  

Therefore, please engage in stock trading or NASDAQ trading only if you have a financial cushion. You will always run the risk of falling into the abyss. Therefore, understand what is required of you and avoid unnecessary risks.  

FAQ 

We have discussed everything there is to know about stocks and how they work. However, some questions need answering. Here are some of the questions you need to answer: