This is probably a stupid question, but why not buy TQQQ instead of a QQQ

Question is in the title. If you are in it for the long haul (20+ years), why not invest your money in a triple leveraged ETF like say TQQQ as opposed to the normal QQQ?

Over the long haul wouldn't you expect triple the appreciation? If this is a dumb question, I'm asking for a friend :)

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Best Response

They are supposed to match 3 times the daily return of the underlying, so if the underlying goes down 20%, and the levered etf is at $100/share before that happens, it is supposed to go down to ~40. Then if the underlying goes up 20%, the etf will only go up to ~$64/share. There is also decay in the net asset value of these ETFs because of the options and derivatives they use to maintain a multiple of the daily returns.

 

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