In 2025, I Plan to Purchase a Vanguard ETF and Maintain Ownership Indefinitely
The right investment has the ability to transform your financial standing, and exchange-traded funds (ETFs) can be a savvy way to amplify your wealth with minimal effort.
An ETF is a collection of securities grouped together into a single investment vehicle. Each fund may comprise dozens or even hundreds of stocks, and by investing in just one share of an ETF, you own a piece of every company within that fund instantly.
Though ETFs require less effort compared to buying individual stocks, they can still help you accumulate a substantial sum, possibly over hundreds of thousands of dollars. Everyone's objectives and methods will differ, but there's one Vanguard ETF I'm favoring in 2025 and beyond.
A tech powerhouse teeming with potential
If you desire exposure to the technology sector without dedicating countless hours scrutinizing individual companies, a tech-oriented ETF could be an intelligent choice. One ETF I'm personally investing in is the Vanguard Information Technology ETF (VGT 1.86%).
This fund includes 316 stocks spanning various technological sectors. Its blend of industry leaders and smaller companies can help you manage risk and reward.
Apple, Nvidia, and Microsoft take the top three positions in this ETF, amounting to almost 45% of the entire fund. The remaining 55% of the fund consists of the other 313 stocks.
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Industry giants like Apple, Nvidia, and Microsoft may harbor less risk than smaller companies, as they are more resilient during market turmoil. Smaller stocks, however, can sometimes present more growth opportunities. If any one of the numerous smaller companies in this ETF becomes a standout performer, you could see considerable gains.
$154,000
A robust history of superior returns
$218,000
One of the primary advantages of investing in a sector-specific ETF as opposed to a broad-market ETF is the potential for earning above-average returns. On average, tech stocks tend to yield better returns than stocks from other industries. When you invest in a fund consisting of these stocks, these returns can compound rapidly.
$448,000
However, the tech sector can also be more volatile than other sectors. Although highs can soar higher, lows can also plunge more deeply.
Whether this level of volatility is an acceptable trade-off depends on your individual risk threshold. If you're seeking a less turbulent investment with lower short-term volatility, a tech ETF might not be the best fit. But if you're willing to take on more risk for the chance of reaping above-average returns, this fund could be a promising addition to your portfolio.
25
How much profit might you reap from this investment?
$275,000
There can never be 100% certainty in the stock market, and past performance does not guarantee future results. Just because this ETF has outperformed the market in the past does not necessarily mean it will continue to do so.
$436,000
Nonetheless, should the ETF be able to yield even slightly higher-than-average returns, you could potentially gain a significant sum. Since its inception in 2004, the Vanguard Information Technology ETF has delivered an average annual return of 13.70%. Over the past 10 years, it has averaged a return of 20.75% per year – significantly higher than the market's historical average of around 10% per year.
$1,133,000
Suppose you were to invest $200 per month in this ETF and earn either 11%, 14%, or 20% average annual returns going forward. Based on the number of years you invest, here's approximately how much you might accumulate:
$2,837,000
| Number of Years | Total Portfolio Value: 11% Average Annual Return | Total Portfolio Value: 14% Average Annual Return | Total Portfolio Value: 20% Average Annual Return || --- | --- | --- | --- || 20 | $154,000 | $218,000 | $448,000 || 25 | $275,000 | $436,000 | $1,133,000 || 30 | $478,000 | $856,000 | $2,837,000 |
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Of course, it's uncertain whether this ETF will continue to yield 20% average annual returns in the future. But even with substantially lower returns, you could still amass hundreds of thousands of dollars by consistently investing for at least a couple of decades.
$478,000
Tech-focused ETFs may not be suitable for every portfolio, and if you do decide to invest, ensuring that the remainder of your investments are well-diversified to minimize risk is crucial. But with time and consistency, the Vanguard Information Technology ETF has the potential to supercharge your wealth.
$856,000
If you're interested in investing in the technology sector without extensive research, a tech-oriented ETF could be beneficial. For instance, I recommend considering the Vanguard Information Technology ETF (VGT), which includes a variety of tech companies.
Additionally, investments in sector-specific ETFs like VGT can potentially yield better returns due to their focus on specific sectors, such as technology. However, it's essential to consider your risk tolerance before investing in a tech ETF, as this sector tends to be more volatile.
