S&P 500, Nasdaq 100, or ETF portfolio: which strategy to choose?

When you start investing, one question always comes up:
Should we seek maximum performance or aim for a sustainable strategy? Indeed, the real question of this article is: SP500, Nasdaq 100 or ETF portfolio: which strategy to choose? The question is whether it's better to simply invest in an S&P 500, a Nasdaq 100 ETF, or to try to beat the stock market with a few ETFs?

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⚠️ The simulations presented in this article are based on average historical returns and observed volatility in the markets.
These examples are neither a forecast nor financial advice, but rather an educational illustration of different investment strategies. Investing can involve the risk of losing money. This article should not be considered investment advice.

Example between 3 investors with the same starting amount

To answer that question concretely, I simulated 3 investors, each with 100,000 USD, invested 10 years ago in different strategies.

The goal is to understand how much money each investor would have today (December 2025) with their stock market strategy?

Note that dividends are reinvested in each strategy !

Later in the article, we will also see what happens when we withdraw money each month from each stock market investment 😉

Simulation between 3 investors – (SP500, Nasdaq 100 and diversified portfolio)

Investor 1 – Investing simply with an S&P 500

100% ETF S&P 500 (VOO)*

👉 An ultra-simple strategy, very popular among long-term investors.

In reality, with this strategy, the shareholder invests in the 500 best American (USA) stocks.

Here is a table to summarize this strategy:

Sector-based or diversified investment strategy	Diversified
Shares invested	500 US stocks
Investment region	USA
Volatility	Average
Dividends expected	1.4% per year

Investor 2 – Aiming for performance with the Nasdaq 100 (QQQ ETF)

100 % ETF Nasdaq-100 (QQQ)*

👉 High exposure to technology and growth, but also more volatility.

In reality, with this strategy, the shareholder invests in the 100 best American (USA) stocks according to the Nasdaq.

Here is a table to summarize this strategy:

Sector-based or diversified investment strategy	Poorly Diversified
Shares invested	100 US stocks
Investment region	USA
Volatility	Very high
Dividends expected	0.5% per year

Investor 3 – Diversified ETF portfolio (SP500, Nasdaq and global)

25 % VOO (S&P 500)
25 % QQQ (Nasdaq-100)
10 % VT (world)
10 % VGT (US tech)
5 % SMH (semiconductors)
5 % VHYL (high dividends worldwide)
5 % VOOG (US growth)
5 % CHDVD (Swiss dividends)
5 % MGK (mega-caps growth US)
5 % VYM (high US dividends)

👉 A more complex, but balanced strategy between growth, diversification and dividends.

In reality, with this strategy, the investor mixes high-growth ETFs, sector ETFs in technology, mixed-growth ETFs, high-dividend ETFs, global ETFs and a regional ETF (in this case, the CHDVD which invests in Swiss shares).

Here is a table to summarize this strategy:

Sector-based or diversified investment strategy	Highly Diverse
Shares invested	More than 2,200 shares
Investment region	Global (but with a high percentage in the USA)
Volatility	high
Dividends expected	1.2% per year

If we analyze the number of shares and the investment regions, here is a summary of the three strategies.:

	Number of shares invested	Investment region
SP500	500 shares	100% USA
Nasdaq 100	100 shares	100% USA
Investor 3	More than 2,200 shares	~ 85% USA ~ 6% Switzerland ~ 9% Rest of the world (excluding Switzerland and the USA)

👉 We conclude that investor 3 probably has the most diversified stock portfolio and the one that contains the most stocks.

SP500 VS Nasdaq 100 VS ETF Mix

Return simulation: SP500 vs Nasdaq 100 vs ETF portfolio

I imagined that the three investors had invested $100,000 USD ten years ago. Since then, they haven't invested a single cent of their own money. In reality, they've simply reinvested the dividends they've earned.

Note that the objective for the 3 shareholders is to promote a simple passive investment with a stock portfolio of ETFs.

For investor 1, I considered the VOO ETF which tracks the S&P 500. For investor 2, I considered the QQQ ETF which tracks the Nasdaq 100.

According to the official website of each ETF, here is the return over 10 years (from the end of 2015 to the end of 2025):

ETF VOO (SP500) = 14% annualized over 10 years, according to the Vanguard website

ETF QQQ (Nasdaq 100) = 19% annualized over 10 years, according to the Invesco website

Regarding investor 3, I asked ChatGPT for investor 3's average annualized return:

Investor 3 (ETF Mix) = 15.2% annualized over 10 years

👉 We have a first surprise with investor 3. Although their portfolio is more diversified and contains 4.5 times more stocks than the SP500 ETF, investor 3's long-term return is approximately 1% higher per year.

Numerical simulation of the return on investment for the 3 investors

I went to Moneyland's compound interest calculator. Then, I simulated the return of each stock market strategy over 10 years. Remember that the initial amount is USD 100,000.

Initial amount	Strategy	Annualized return over 10 years	Final amount (10 years later)
100,000 USD	SP500	14%	USD 370,000
100,000 USD	Nasdaq 100	19%	USD 569,000
100,000 USD	ETF Mix	15,2%	USD 411,000

During the period analyzed, we conclude that the ranking regarding past performance is:

Nasdaq ETF
Investor 3 (ETF Mix)
S&P 500 ETF

FIRE simulation: performance of SP500 ETFs, Nasdaq 100 and mixed portfolio with monthly withdrawal of 0.5%

Important – About simulations
The graphs and results presented in this article are simulations based on average historical returns and realistic volatility.
They do not exactly reproduce real markets month by month and serve only to illustrate possible behaviors of different strategies.

I created a graph using historical data. Specifically, I created a graph showing the performance of each investor. However, I simulated a monthly withdrawal of 0.5% (6% per year)!

Indeed, in this simulation, each investor withdrew 0.5% per month from their stock portfolio (dividends included).

How much would each investor have after 10 years (using figures from the end of 2015 to the end of 2025)? 🥸

Here is the graph:

In this case, according to the simulation performed using historical yields:

Investor 1 (S&P 500), by withdrawing 0.5% from their portfolio per month, would have approximately USD 200,000 10 years later.

Investor 2 (Nasdaq 100), by withdrawing 0.5% from their portfolio per month, would be approximately $340,000 USD 10 years later.

Investor 3 (ETF Mix), by withdrawing 0.5% from their portfolio per month, would be approximately $240,000 USD 10 years later.

👉 Over the period studied (2015-2025), we conclude that the Nasdaq 100 strategy is the most effective for achieving FIRE (financial freedom), followed by the mixed ETF strategy, and the S&P 500 in last place.

Simulation of the return for the 3 investors, with a monthly withdrawal of 0.5% (realistic values)

We analyzed the previous graph, which was very interesting. However, he is not realistic as a shareholder!

In reality, The stock market experiences periods of market depression and sharp rises. As a result, returns are highly irregular. !

Consequently, I asked ChatGPT for a chart that uses the actual monthly stock values, from November 2015 to November 2025, removing 0.5% from the portfolio each month.

We will understand that each strategy reacts very differently compared to the previous graph!

👉 In this example, we observe that during the first 3 years, the 3 strategies have similar returns. However, from the 40th month onwards, the Nasdaq 100 and the mixed ETF strategy increase sharply in value, particularly the Nasdaq 100!

Here is the final yield:

Nasdaq 100 = 490,000 USD, 10 years later
ETF mix = USD 240,000, 10 years later
SP500 = $120,000 USD, 10 years later

For investor 3 (ETF mix), how to withdraw each month?

With regard to an S&P 500 ETF or a Nasdaq 100 ETF, it's simple to withdraw 0.5% each month. Because there's only one ETF!

However, in this example, the ETF mix strategy includes 10 ETFs. How do you know which ETF to withdraw each month?

For a long-term investment, in reality, simply withdraw according to market growth !

For example, during a stock market depression, it is better to withdraw 0.5% per month from high dividend ETFs, while during a strong rise, it is better to withdraw 0.5% from growth ETFs.

Most importantly, in my opinion, It involves selling a small percentage of your stock market strategy each month, maintaining a balance between:

Maintaining a sensible stock portfolio strategy
Adapting to the value of the stock market

In terms of taxation, which investor will pay the least tax?

In Switzerland and in most countries, promoting stock market growth is taxed less compared to high dividends!

Therefore, if the stock market taxation in your country of residence is similar to the Swiss tax framework, The investor who achieves the most stock market growth and receives the fewest dividends will be the big winner in terms of stock market taxation. !

Here, according to historical data, are the dividends received and the growth of each strategy for the period studied:

Strategy	Dividends received per year (on average)	Annual growth without dividends
SP500	1,5%	12,5%
Nasdaq 100	0.5%	18,5%
Investor 3 ETF Mix	1,2%	14%

👉 In conclusion, regarding taxation, during the period I analyzed, for a Swiss resident, the Nasdaq 100 is the least taxable, followed by investor 3 (ETF mix), while the S&P 500 is the least attractive of the three strategies. !

Which investment has the lowest commissions??

In relation to commissions and annual management fees, all 3 investments have acceptable commissions.

Regarding the trading account, if with each investment, the shareholder invests once a month in a cheap trading account, the fees related to the trading account will be around 3 USD or 0.5% + exchange fees.

Regarding TER management (ETF management fees), here is how much the shareholder will pay for each strategy.

ETF VOO (SP500) = 0.03%
ETF QQQ (Nasdaq) = 0.20%
ETF mix (investor 3) = ∼0.12%

👉 We conclude that the S&P 500 ETF is the most attractive in terms of fees. However, all three stock market strategies have very low fees.

Conclusion – SP500, Nasdaq 100 or ETF portfolio: which strategy to choose?

Here is a table to summarize this article. S&P 500, Nasdaq 100, or ETF portfolio: which strategy should you choose? 😉

	SP500 ETF, Nasdaq 100 ETF or ETF Mix?
The most diversified investment?	Investor 3 (ETF mix)
The investment with the most stocks?	Investor 3 (ETF mix)
Historically, which investment makes it easiest to achieve FIRE?	1) Nasdaq ETF 2) ETF Mix 3) SP500 ETF
Which investment is subject to the least taxation?	1) Nasdaq ETF 2) ETF Mix 3) SP500 ETF
Which investment requires the fewest commissions?	ETF SP500
Which investment has the least price fluctuation?	ETF SP500

-> Key takeaways from this article:

To achieve FIRE (Financial Incentive Reduction) during the analyzed period, the best strategy is the Nasdaq ETF. Furthermore, it's the least taxable investment. However, it's also the most volatile and least diversified investment!

Investor 3, who mixes growth ETFs and high dividend ETFs, obtained, during the period compared, a return higher than that of the SP500.

In this scenario, investor 3 paid less tax on returns compared to the S&P 500 ETF. However, investor 3 paid more tax than the Nasdaq ETF.

Investor 3 is the most diversified of the three strategies. It holds at least four times more shares than the others and is the only investment to allocate approximately 15% of its portfolio to foreign stocks in the US.

-> Final quote from this article 😎

”The best investment strategy is not always the one that generates the most profit, but the one that best adapts to the stock market.”

AI FAQ – Investing: Maximum Performance VS Sustainable Strategy ?

FAQ – S&P 500, Nasdaq 100 and FIRE strategy

❓ SP500 or Nasdaq 100: which one to choose to start with?

For a beginner investor, the S&P 500 is generally more suitable.
It offers broad sector diversification, moderate volatility and exposure to the largest American companies.

THE Nasdaq 100, more focused on technology, can offer superior performance over certain periods, but with greater fluctuations, sometimes difficult to bear psychologically.

👉 For a smooth start, the S&P 500 is often the best choice.

❓ Is the Nasdaq 100 too risky for the long term?

The Nasdaq 100 is not “bad” in the long term, but it is more volatile.
Over some decades, it can significantly outperform… and over others, experience long periods of stagnation or sharp declines.

👉 It is particularly suitable for investors who are able to:

withstand strong variations
remain invested during downturns
accepting a strong dependence on the technology sector

❓ Can you achieve financial freedom (FIRE) with an SP500 ETF?

Yes, absolutely.
Many investors have achieved financial freedom by investing primarily in the S&P 500, thanks to:

American economic growth
the effect of compound interest
a long-term investment discipline

👉 The key is not to beat the market, but to stay invested long enough.

❓ Should growth or dividends be prioritized for FIRE?

It depends on your stage of life.

Accumulation phase Growth is often more efficient
Withdrawal phase Dividends provide greater psychological stability

A mixed portfolio (growth + dividends) often allows you to reduce stress while maintaining good yield potential.

❓ Is withdrawing 0.5 % per month realistic?

A withdrawal of 0.5 % per month (6 % per year) is possible, but it carries risks, especially in the event of sharp market declines at the beginning of the withdrawal period.

👉 The main danger is the sequence of returns risk :
In other words, withdrawing money during a bad period can greatly impact long-term capital.

❓ Is a diversified portfolio necessarily more profitable?

No.
Diversification primarily reduces the extreme risk, not necessarily the maximum yield.

A highly diversified portfolio can:

better withstand crises
to offer a more comfortable experience
reduce emotional errors

👉 In frugal investing, performance must be sustainable, Not spectacular.

❓ Should we try to beat the market?

In most cases, no.

Numerous studies show that:

beating the market in the long term is difficult
Simplicity is often more effective.
Costs, emotional errors, and timing do more damage than poor performance.

👉 Do less, but better, is often the best strategy.

❓ What is the best strategy for a minimalist investor?

A strategy:

easy to understand
easy to maintain
adapted to your stress level
aligned with your lifestyle

👉 The best wallet is not universal,
👉 This is the one that You can hold on during difficult times.

And you, what strategy would allow you to sleep soundly during a stock market crash? 🤭

SP500, Nasdaq 100 or ETF portfolio: which strategy to choose?

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