A Vanguard ETF Worth Buying in 2025 and Holding for Life

Investing wisely can genuinely enhance your portfolio, especially with the right tools and strategies in place. One such powerful investment option is an exchange-traded fund (ETF). Using ETFs can help boost your savings while requiring minimal effort.

An ETF acts as a collection of various securities rolled into a singular investment. When you buy a share of an ETF, you gain ownership in all the underlying companies that the fund represents, which could be dozens or even hundreds.

While investing in ETFs is typically simpler than picking individual stocks, they can still help you build substantial wealth over time. Each investor's goals and methods may vary, but there's one Vanguard ETF I plan to invest in starting in 2025 and hold for the long run.

A tech-focused investment with great potential

If you want to tap into the thriving tech industry without dedicating countless hours to analyze individual tech stocks, a technology-based ETF can be a smart choice. One ETF that I will be buying is the Vanguard Information Technology ETF (VGT).

This fund encompasses a wide array of 316 stocks from across the technology sector. Its balanced mix of major corporations alongside smaller firms offers a blend of risk and potential reward.

Leading companies like Apple, Nvidia, and Microsoft represent the top three holdings in this ETF, collectively accounting for nearly 45% of the entire fund. The remaining 313 stocks make up the other 55%.

While giants such as Apple, Nvidia, and Microsoft generally pose lower risks due to their market stability, smaller firms may offer higher growth possibilities. If one of these lesser-known stocks achieves significant growth, the returns could be impressive.

Strong historical returns

One notable benefit of concentrating on industry-specific ETFs, like a technology-focused one, is the potential for above-average returns compared to broader market ETFs. Typically, tech stocks outperform other industries in terms of average returns. Investing through a fund loaded with these stocks could expedite your wealth accumulation.

However, it is essential to note that the technology sector is known for its higher volatility than other areas of the market. While the upsides may be more substantial, the downsides can be more severe as well.

Your comfort level with risk will determine whether this investment suits you. If you prefer a steadier approach with less volatility, a tech-focused ETF might not align with your investment philosophy. Conversely, if you are willing to embrace higher risks for potentially greater returns, this ETF could be a wise choice for your portfolio.

Potential earnings from this investment

It is essential to keep in mind that stock market returns are unpredictable, and past performance is not an assurance of future outcomes. Even if this ETF has historically outperformed the market, it does not guarantee sustained performance.

However, if it continues to achieve slightly above-average returns, the financial rewards could be substantial. Since its inception in 2004, the Vanguard Information Technology ETF boasts an average annual return of 13.70%. Over the past decade, it has outdone itself with a stellar average return of 20.75% annually, well above the market's typical 10% average.

To illustrate, if you decided to invest $200 every month into this ETF, here's a look at your potential portfolio value based on different average annual returns (11%, 14%, or 20%):

Years	Value at 11% Return	Value at 14% Return	Value at 20% Return
20	$154,000	$218,000	$448,000
25	$275,000	$436,000	$1,133,000
30	$478,000	$856,000	$2,837,000

Even if the returns are significantly lower, investing consistently for a couple of decades could still allow you to accumulate hundreds of thousands of dollars.

That being said, technology-focused ETFs may not suit every investor's strategy. If you opt to invest in such a fund, diversifying your other investments is critical to manage overall risk. With patience and regular contributions, the Vanguard Information Technology ETF has substantial potential to enhance your savings significantly.

investment, ETF, technology, Vanguard, growth