ETFs require minimal effort but can seriously supercharge your savings.
We’re now just over two years into the current bull market, and as prices continue to surge, investing now can be a fantastic way to generate long-term wealth.
Exchange-traded funds (ETFs) can be a lower-effort way to get involved in the stock market. Buying just one share of an ETF can give you a stake in hundreds of stocks at once, without all the effort of researching dozens of different companies like you would by investing in individual stocks.
Where you choose to buy matters, though, as not all ETFs are strong investments. If you’re looking for a higher-earning fund that could potentially help you make a lot of money over time, there’s one Vanguard ETF you may want to consider.
A tech ETF to supercharge your portfolio
The Vanguard Information Technology ETF (VGT -0.10%) is a tech-focused ETF that contains 316 stocks across various corners of the technology industry — from semiconductors to systems software to hardware and storage and more.
Image source: Getty Images.
The three largest holdings in this ETF include Apple, Microsoft, and Nvidia, respectively. Combined, those three stocks alone make up just over 44% of the entire fund.
Investing in an ETF can be a smart way to invest in heavy-hitting stocks while still gaining exposure to hundreds of potential stars in the making. Not only will you gain a stake in major stocks like Nvidia, but if any of the smaller stocks within the fund become superstar performers, you’ll reap the rewards.
One important factor to consider, though, is that industry-specific ETFs — especially tech ETFs — can carry more risk than many other types of funds. While this ETF contains over 300 stocks, because they’re all from the same industry, that won’t provide as much diversification as a broad-market fund containing stocks across all sectors of the stock market.
This isn’t necessarily a bad thing, but if you choose to invest in this ETF, you’ll need to double-check that the rest of your portfolio is well-diversified with stocks or funds from other industries. In general, the more variety you can add to your portfolio, the lower your risk.
How much could you earn with this ETF?
Tech ETFs can be far more volatile than broad-market funds, especially in the short term. This industry tends to experience more severe ups and downs, so it’s anyone’s guess how this fund will perform in the coming months or even over the next year or two.
That said, over the past 10 years, this ETF has earned a staggering 20.37% average annual return. Its performance since its inception in 2004 is a slightly less impressive 13.45% per year, though that’s still higher than the stock market’s historic average of 10% per year.
^SPX data by YCharts
Again, it’s unclear whether this investment’s returns going forward will be closer to the 20% per year or 13% per year average, and there’s even a chance it could underperform altogether and earn below-average returns. But that’s a risk you’ll need to be willing to take if you’re investing in a potentially high-earning ETF.
Let’s say that going forward, you earn an 18% average annual return. If you were to invest $1,000 right now and make no additional contributions, that initial investment could grow into roughly $143,000 over 30 years with zero effort.
To potentially earn exponentially more, though, you could continue investing a small amount each month. If you invest $1,000 now and then continue investing just $50 per month going forward, here’s approximately how much you could accumulate in total depending on the returns you’re earning:
| Number of Years | Total Portfolio Value: 10% Avg. Annual Return (In Line with Market’s Long-Term Avg.) | Total Portfolio Value: 13% Avg. Annual Return | Total Portfolio Value: 18% Avg. Annual Return | Total Portfolio Value: 20% Avg. Annual Return |
|---|---|---|---|---|
| 20 | $41,000 | $60,000 | $115,000 | $150,000 |
| 25 | $70,000 | $115,000 | $268,000 | $379,000 |
| 30 | $116,000 | $215,000 | $618,000 | $947,000 |
Data source: Author’s calculations via investor.gov.
If this ETF continues earning returns in line with its 10-year average, you could potentially earn close to $1 million by investing just $50 per month. But even if its future returns fall short, it’s still possible to make a lot of money with even small monthly contributions.
Investing in ETFs can be a smart way to build wealth with less effort than buying individual stocks, but choosing the right investment is key. If you’re willing to take on slightly more risk for the chance at potentially life-changing earnings over time, the Vanguard Information Technology ETF could be a smart addition to your portfolio.
Katie Brockman has positions in Vanguard World Fund-Vanguard Information Technology ETF. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
