Ten years ago, the idea of investing $1,000 in a technology ETF might not have seemed likely to make a huge difference in your portfolio.
But that decade would start with interest rates near all-time lows, be followed by a multitrillion-dollar stimulus package during the COVID pandemic, and end with the artificial intelligence (AI) boom, the greatest technological innovation since the internet.
Missed AI’s “Act 1”? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
Clearly, it would have been a great time to invest in tech stocks.
The market-beating ETF
The Vanguard Information Technology ETF (NYSEMKT: VGT) is one of the best ways to invest in the sector more broadly. Over the past 10 years, it would have returned an astonishing 793% or around 24.5% annually.
That means an initial $1,000 investment would have turned into $8,930.
But earning that return would have required patience and discipline. Over the last decade, the Vanguard Information Technology ETF experienced 15%+ drawdowns on five separate occasions. The largest was the 35% decline during the 2022 bear market.
Investors would have needed to buy and hold through all those pullbacks to achieve that nearly 800% return.
You should also know that the VGT portfolio is heavily invested in the AI boom. As of Sept. 18, 37% of its holdings are in the semiconductor industry, and another 20% are in the hardware subsector of technology.
If that’s what you’re looking for, that’s great. However, some investors see concentration risk in this setup.
The past decade provides an important lesson. Even smaller investments made over years or decades can turn into substantial sums of money thanks to the power of long-term compounding.
Should you buy stock in Vanguard Information Technology ETF right now?
Before you buy stock in Vanguard Information Technology ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Information Technology ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $387,158!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,365,749!*
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
