If You Invest $100 a Month in VGT Starting Today, Here's What History Says You Could Have in 20 Years
Key Points
The Vanguard Information Technology ETF is one of the very best technology and growth ETFs you can buy.
If you invested $5,000 and contributed $100 per month, youʻd amass half a million dollars after 20 years.
The Vanguard Information Technology ETF (NYSEMKT: VGT) invests in the sector that has driven the market for the past 25 years and may continue to do so over the next 25 years. Its returns over time have stacked up better than most technology ETFs, including the Invesco QQQ (NASDAQ: QQQ).
Over the last 10 years, the VGT has had an average annualized return of about 25% per year, beating the QQQʻs 20.8% average annualized return.
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If you go back 20 years, the Vanguard Information Technology ETF has posted a 21% average annualized return, compared to 19.5% for the QQQ. And due to its low 0.09% expense ratio, compared to the QQQʻs 0.18% fee, investors kept more of that return.
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How about $503,000 after 20 years?
So, if you had invested $5,000 in the VGT back on Aug. 13, 2006, and contributed $100 per month to the fund, youʻd have a pretty good-sized chunk of change right now.
In fact, those investments would have grown to roughly $503,000 over 20 years. That alone could provide enough retirement income for many people, when paired with their Social Security payouts.
It speaks to the power of compound interest, patience, and consistently setting aside money to invest in yourself and your long-term future.
That's not to say that the next 25 years will yield a 21% annualized return for VGT -- it may be less, or it may be more. But even if it was just an annualized 15% return, the investments would have grown to about $213,000 after 20 years.
Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.