Investing in an industry-specific ETF can make it easier to gain exposure to the tech sector without choosing individual stocks.
Compared to some other investments, this particular ETF helps balance risk and reward.
With enough time, even small investments can add up to life-changing wealth.
10 stocks we like better than Vanguard Information Technology ETF ›
You don’t need to be wealthy to make a lot of money in the stock market. In fact, with the right stocks, you could generate hundreds of thousands of dollars or more with just a single $1,000 investment.
Exchange-traded funds (ETFs) can be a fantastic option for those looking to build long-term wealth with minimal effort. Each ETF contains a collection of stocks, bundled together into a single fund. They require a fraction of the research involved in buying individual stocks, making them low-maintenance passive investments.
Each ETF will have its own unique strengths and weaknesses. But if you’re looking to maximize your earnings in the stock market while barely lifting a finger, the Vanguard Information Technology ETF(NYSEMKT: VGT) could be a fantastic buy.
Image source: Getty Images.
The Vanguard Information Technology ETF contains 314 stocks, all from the technology industry. Investing in a tech-focused fund can be a simpler way to gain exposure to this sector, and because you’re investing in hundreds of stocks at once, that can increase your diversification and mitigate risk.
This ETF covers all corners of the tech sector, and it also offers a healthy balance of risk and reward. Nvidia, Microsoft, and Apple round out the top three holdings, and together they make up nearly 44% of the entire fund. The remaining 56% of the fund comprises an additional 311 stocks.
Investing in a mix of industry leaders and smaller corporations can help limit risk while still maximizing your earnings. Smaller stocks have potential for explosive earnings, while massive corporations like Nvidia, Microsoft, and Apple can add some stability. While even the strongest companies can face short-term volatility, these blue chip juggernauts are more likely to pull through even severe market slumps.
One risk factor to consider with this fund is that it can experience more severe fluctuations in the short term. The tech industry in general is prone to significant ups and downs. While the prosperous periods can be lucrative, the downturns are often rough. During particularly severe slumps, this fund may even underperform the market.
Before you buy, be sure you’re willing to hold this investment for at least a few years. The market will face another downturn eventually, and staying invested until stock prices recover is the best way to avoid losing money. Just be prepared to keep a long-term outlook when investing in a tech ETF.
Despite short-term volatility, tech stocks have significantly outperformed the S&P 500(SNPINDEX: ^GSPC). In fact, over the last 10 years, the Vanguard Information Technology ETF has earned an average rate of return of 23.45% per year. For context, the Vanguard S&P 500 ETF (NYSEMKT: VOO) — which tracks the S&P 500 index — has only earned a 15.26% average annual return in that time, and the market’s long-term average sits at around 10% per year.
If you were to invest $1,000 right now while not making any additional contributions, it could add up to close to $556,000 after 30 years, assuming you continue earning a 23.45% average annual return.
To really supercharge your savings, you could invest a small amount monthly. Say, for instance, you contribute $50 per month rather than making a $1,000 initial investment. Here’s roughly how much you could accumulate over time, depending on the returns you’re earning:
Number of Years
Total Portfolio Value: 23% Avg. Annual Return
Total Portfolio Value: 15% Avg. Annual Return
Total Portfolio Value: 10% Avg. Annual Return
15
$56,000
$29,000
$19,000
20
$161,000
$61,000
$34,000
25
$459,000
$128,000
$59,000
30
$1,296,000
$261,000
$99,000
Data source: Author’s calculations via investor.gov.
There is no guarantee that this ETF will continue earning returns at the rate it has over the last 10 years. But even if it earns slightly lower returns, you could still accumulate hundreds of thousands of dollars over time with just $50 per month. If you can afford higher monthly contributions, it could exponentially increase your total earnings.
Investing in a tech-focused fund like the Vanguard Information Technology ETF does come with increased risk compared to, say, an S&P 500 ETF. But if you’re willing to take on slightly more risk for the chance at earning higher returns, you could generate life-changing wealth over time.
Before you buy stock in Vanguard Information Technology ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Information Technology ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $590,357!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,141,748!*
Now, it’s worth noting Stock Advisor’s total average return is 1,033% — a market-crushing outperformance compared to 193% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of October 20, 2025
Katie Brockman has positions in Vanguard Information Technology ETF and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. 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.
Is the Vanguard Information Technology ETF (VGT) the Smartest Investment to Buy With $1,000 Right Now? was originally published by The Motley Fool
