Investors seeking accelerated wealth accumulation might consider the ProShares Ultra S&P 500 ETF (SSO), which aims to deliver double the daily performance of the S&P 500. With an impressive average annual return of 14.5% since its inception in 2006, compared to the S&P 500’s average of 10%, SSO presents a compelling opportunity for those willing to embrace higher risk for potentially greater rewards.
However, the use of leverage comes with significant downsides. While SSO can amplify gains during market upswings, it also magnifies losses during downturns. Year-to-date, the S&P 500 is down approximately 3.8%, while SSO has seen a sharper decline of about 9%. This volatility can be challenging for long-term investors, especially those unprepared for the emotional toll of rapid account fluctuations.
For most investors, particularly those focused on long-term growth, traditional S&P 500 index funds may be a more prudent choice. Leveraged ETFs like SSO are better suited for short-term traders who can manage the inherent risks and volatility.
Source: fool.com