1 Vanguard ETF I'm Buying in 2025 and Holding Forever

Investing wisely can significantly alter the trajectory of your financial future. One accessible way to elevate your investment game is through exchange-traded funds (ETFs). These funds allow you to invest in a collection of securities, making it simple and hassle-free to enhance your savings.

An ETF is essentially a bundle of various securities packaged into a single investment. By purchasing just one share of an ETF, you gain exposure to numerous stocks, which can help diversify your investments without requiring an extensive amount of time or effort.

While investing in ETFs provides an easier alternative to selecting individual stocks, they can still play a crucial role in helping you accumulate substantial wealth over time. Although individual strategies and goals differ, there is a specific Vanguard ETF that I plan to invest in heavily in 2025 and maintain as a long-term hold.

A tech powerhouse with loads of potential

If you're interested in tapping into the technology sector but are hesitant to dive deep into researching individual companies, a tech-focused ETF might be the right solution. One such fund that I am considering is the Vanguard Information Technology ETF (VGT).

This fund comprises 316 different stocks, representing a broad spectrum of the technology industry. Its combination of large established companies and promising smaller firms helps to balance risk and potential rewards.

Notable holdings within this ETF include tech giants like Apple, Nvidia, and Microsoft. Together, these three companies make up around 45% of the entire fund, while the other 55% consists of the remaining 313 stocks.

While larger corporations generally pose a lower risk since they are more likely to withstand market fluctuations, smaller firms may offer greater growth potential. Should one of the many smaller companies within this ETF shine in the market, the returns could be incredibly rewarding.

A long history of above-average returns

Investing in a targeted industry ETF like this one usually presents a greater opportunity for above-average returns compared to a more general market ETF. Generally, tech stocks tend to yield higher average returns than those in other sectors. Thus, investing in a fund filled with tech stocks can lead to impressive gains over time.

However, it’s essential to acknowledge that the technology sector is often more volatile than many other industries. While the peaks can be substantial, the lows may also be more pronounced.

This volatility is a critical factor to consider when assessing whether this investment is right for you. If you prefer stability and less short-term fluctuation in your investments, a tech ETF may not align with your goals. But if you're open to higher risks in exchange for potentially greater rewards, this ETF might be a valuable addition to your portfolio.

How much could you earn with this investment?

The stock market is inherently unpredictable, and past performance does not guarantee future results. Just because this ETF has previously outperformed the market, it does not ensure it will keep doing so.

However, if it can maintain even modestly higher-than-average returns, the potential for significant earnings exists. Since its inception in 2004, the Vanguard Information Technology ETF has achieved an average annual return of 13.70%. Over the past decade, it has done even better, with an average return of 20.75% annually—substantially exceeding the market's historical average of about 10% per year.

For example, if you were to invest $200 each month into this ETF and it achieved average annual returns of 11%, 14%, or 20% in the future, you might accumulate the following over various time periods:

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

While past performances cannot predict future outcomes, even with significantly lower returns, consistent investments over a few decades can still yield hundreds of thousands of dollars.

A tech-focused ETF may not suit every investor's strategy, so it’s vital to ensure your overall investment portfolio is well-diversified to minimize risks. However, with commitment and time, the Vanguard Information Technology ETF could significantly enhance your savings.

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.

investment, ETF, technology