This Unstoppable Vanguard ETF Would Have Nearly Tripled Your Money in the Last 5 Years. Could It Set You Up for Life?
The right investment can transform your finances, and exchange-traded funds (ETFs) are a low-effort way to build long-term wealth.
The Vanguard Information Technology ETF (VGT 2.03%) has been skyrocketing, earning total returns of more than 150% in the last five years alone. This means that if you’d invested $10,000 back then, you’d have over $25,000 by today.
Past performance doesn’t predict future returns, but there’s reason to believe this ETF could still have plenty of room for growth. Here’s why.
Image source: Getty Images.
A powerhouse investment
The Vanguard Information Technology ETF holds 316 stocks from all areas of the technology industry, but its largest focus is semiconductor stocks — with around 38% of the portfolio dedicated to this subsector.
Semiconductor companies have been lucrative lately. Perhaps most notable is Micron Technology, which has earned total returns of nearly 700% over the last 12 months. This ETF provides exposure to fast-growing companies like Micron, along with established giants like Nvidia, Apple, and Microsoft.
One advantage of the Vanguard Information Technology ETF, in particular, is its built-in risk protection. With over 300 stocks spanning the broader tech sector, that extra diversification can help cushion the blow if semiconductors falter in the future.
Vanguard Information Technology ETF
Today’s Change
(-2.03%) $-2.38
Current Price
$114.87
Key Data Points
Day’s Range
$110.47 – $118.74
52wk Range
$77.67 – $126.00
Volume
289
This ETF has also become increasingly lucrative in more recent years. It’s earned an average annual return of around 15% since its inception in 2004, around 25% over the last 10 years, and 33% over the last three years.
To play it safe, let’s assume this ETF earns an average annual return of 15% going forward. At that rate, if you’re investing $200 per month, here’s approximately how your contributions could add up over time:
| Number of Years | Total Portfolio Value: 15% Avg. Annual Return |
|---|---|
| 10 | $49,000 |
| 15 | $114,000 |
| 20 | $246,000 |
| 25 | $511,000 |
| 30 | $1,043,000 |
Data source: Author’s calculations via investor.gov.
If this ETF continues to outperform, as it has over the last couple of years, it could be a lucrative long-term investment. However, given the volatility of tech stocks, prepare for short-term turbulence if you choose to invest.
As part of a well-diversified portfolio, the Vanguard Information Technology ETF can help build life-changing wealth. While there are no guarantees in the stock market, this fund offers a solid track record for those seeking exposure to the fast-growing tech sector.
Katie Brockman has positions in Vanguard Information Technology ETF. The Motley Fool has positions in and recommends Apple, Micron Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
