1 Vanguard ETF I'm Buying in 2025 and Holding Forever
The right investment has the power to transform your portfolio, and exchange-traded funds (ETFs) can be a smart way to supercharge your savings with very little effort.
An ETF is a group of securities bundled together into a single investment. Each fund can contain dozens or hundreds of stocks, and by investing in just one share of an ETF, you'll instantly own a stake in all the companies within that fund.
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Although ETFs are lower-effort investments compared to buying individual stocks, they can still help you accumulate hundreds of thousands of dollars or more. Everyone's goals and strategies will differ, but there's one Vanguard ETF I'm loading up on in 2025 and beyond.
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A tech powerhouse with loads of potential
If you're looking to gain exposure to the technology industry without spending countless hours researching individual companies, a tech-focused ETF could be a smart option. One ETF I'm personally buying is the Vanguard Information Technology ETF (NYSEMKT: VGT).
This fund contains 316 stocks from all corners of the tech sector. Its mix of behemoth corporations and smaller companies can help balance risk and reward.
Apple, Nvidia, and Microsoft make up the top three holdings in this ETF, and combined, they account for close to 45% of the entire fund. The other 55% of the fund, then, is made up of the remaining 313 stocks.
Industry titans like Apple, Nvidia, and Microsoft can carry less risk than smaller companies, as they're more likely to survive periods of market volatility. Smaller stocks, though, can sometimes have more potential for growth. If any one of the hundreds of smaller companies in this ETF becomes a superstar performer, you could see serious returns.
A long history of above-average returns
One of the biggest advantages of investing in an industry-specific ETF over a broad-market ETF is that there's more potential to earn above-average returns. Tech stocks, in general, often see higher average returns than stocks from other industries. When you're investing in a fund full of these stocks, those returns can add up quickly.
The downside, though, is that the tech industry also tends to be far more volatile than other sectors. While the highs are often higher, the lows can hit harder, too.
VGT data by YCharts.
Whether that's a worthwhile trade-off will depend on your personal risk tolerance. If you're looking for a steadier investment with less short-term volatility, a tech ETF may not be the best fit. But if you're willing to take on more risk for the chance of earning above-average returns, this fund could be a good addition to your portfolio.
How much could you earn with this investment?
There are never any guarantees in the stock market, and past performance doesn't predict future returns. Just because this ETF has consistently outperformed the market doesn't necessarily mean it will continue to do so.
That said, if it is able to earn even slightly higher-than-average returns, you could potentially make a lot of money. Since its inception in 2004, the Vanguard Information Technology ETF has earned an average rate of return of 13.70% per year. It's fared even better over the past 10 years, with an average return of 20.75% per year -- significantly higher than the market's historic average of around 10% per year.
Let's say you were to invest $200 per month in this ETF, earning either 11%, 14%, or 20% average annual returns going forward. Depending on how many years you invest, here's approximately how much you might accumulate:
| 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 |
Data source: Author's calculations via investor.gov.
Again, nobody can say whether this ETF will be able to continue its 20% average annual returns going forward. But even with substantially lower returns, you could still earn hundreds of thousands of dollars by investing consistently for at least a couple of decades.
Tech-focused ETFs won't be the right fit for every portfolio, and if you do choose to invest, it's crucial to ensure that the rest of your investments are well diversified to minimize risk. But with enough time and consistency, the Vanguard Information Technology ETF has the potential to supercharge your savings.
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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.
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