With just one investment you could potentially make millions of dollars.
Investing in exchange-traded funds (ETFs) is a great way to build wealth with less effort than buying individual stocks.
ETFs are baskets of securities bundled together into one investment. Many funds contain hundreds of stocks, making it easier and more affordable to build a diversified portfolio. However, not all ETFs are good investments, so it's important to choose wisely when deciding where to buy.
It's possible to become a stock market millionaire with the right ETF, but there are some caveats. Vanguard Information Technology ETF (VGT 0.64%) is a tech-focused fund with a track record of above-average returns, but can it make you a millionaire? Here's what you need to know.
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Strong performer
This ETF is a great option for anyone looking for an easier way to gain exposure to the technology industry. This ETF contains 320 technology stocks, including some of the industry's largest companies, such as Microsoft, Apple, and Nvidia.
These three stocks alone make up more than 47% of the fund's overall portfolio, making this ETF a smart buy if you want exposure to some of the biggest companies in tech while still getting more diversification than you can get from individual stocks.
Vanguard Information Technology ETF is another strong fund with a track record of beating the market, delivering an average annual return of 20.63% over the past 10 years.
By comparison, the Vanguard S&P 500 ETF has returned an average of 13.11% per year over the same period. Even the growth-focused Vanguard Growth ETF has returned an average of 15.33% per year over the past 10 years. When it comes to growth ETFs, the Information Technology ETF has been one of the best-performing Vanguard funds.
Become a millionaire
This ETF has a history of above-average returns, so over the long term, you'll likely make more than $1 million with it. But there's a big caveat: this ETF is riskier than many other ETFs.
Growth funds are generally more volatile than broad market funds, such as the S&P 500 ETF. Because the technology sector is often hit hardest during market turmoil, this fund may see more extreme fluctuations than other ETFs.
And while Vanguard Information Technology ETF has significantly outperformed the market over the past decade, there's no guarantee it will continue to do so in the future. If you're willing to take on risk in hopes of higher returns, the fund may still be a good fit for your portfolio.
How much you can make will depend on how this ETF performs over the long term. Because tech-focused ETFs can be volatile, it may be wise to consider multiple potential rates of return.
For example, if you were to invest $200 per month in this fund, here's roughly what you'd earn over time, depending on whether you wanted to earn an average annual return of 20% (matching this ETF's 10-year average performance), an average annual return of 15%, or an average annual return of 11% (slightly higher than the market's long-term average of 10% per year).
Number of years Total Portfolio: 20% Average Annual Return Total Portfolio: 15% Average Annual Return Total Portfolio: 11% Average Annual Return 20 $448,000 $246,000 $154,000 25 $1,133,000 $511,000 $275,000 30 $2,837,000 $1,043,000 $478,000
Data source: Authors' calculations via investor.gov.
With this ETF, it is possible to make well over $1 million, even if you only earn less than the average return over the past 10 years. However, there is always the possibility of earning average or below average returns, so there are no guarantees with this type of investment.
The right investment for you will depend on your goals and risk tolerance. Technology-focused ETFs like the Vanguard Information Technology ETF carry more risk than many other investments, but they have the potential to generate significant wealth over the long term if you're willing to take on that risk.
Katie Brockman invests in Vanguard Index Funds-Vanguard Growth ETF, Vanguard S&P 500 ETF, and Vanguard World Fund-Vanguard Information Technology ETF. The Motley Fool invests in and recommends Apple, Microsoft, Nvidia, Vanguard Index Funds-Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends buying Microsoft January 2026 $395 calls and selling Microsoft January 2026 $405 calls. The Motley Fool has a disclosure policy.
