Pursue a Million-Dollar Retirement through Investing in Two Straightforward Index Funds, Maintained over Extended Periods.
Pursue a Million-Dollar Retirement through Investing in Two Straightforward Index Funds, Maintained over Extended Periods.
Investing in stocks can be an excellent way to accumulate wealth over time, but it's no secret that picking the right ones can be challenging. Professional investors often have more resources than individual investors, but that shouldn't deter you from investing. Instead, consider investing in stocks through an index exchange-traded fund (ETF).
If you have a long-term investment horizon, investing in ETFs focused on growth stocks, particularly those with a heavy weighting towards the technology sector, can be a smart move. Over the long term, businesses that can strongly grow their revenues and profits become bigger companies, and their stock prices follow.
Technology is one sector that has consistently shown outsized growth. In fact, eight of the top 10 companies in the S&P 500 fall under this category. Two great ETF options for long-term investors are the Vanguard Information Technology ETF and the Vanguard S&P 500 Growth ETF.
The Vanguard Information Technology ETF, often referred to as VGT, aims to mimic the performance of the MSCI U.S. Investable Market Information Technology 25/50 index. It's currently heavily weighted towards its top three holdings, Apple, Nvidia, and Microsoft, with a portfolio composition that allows its winners to become larger positions while its losers fade away.
VGT's long-term performance has been impressive, averaging nearly 20.4% annual returns over the past decade, leading to a 538.53% cumulative return. Its low expense ratio of 0.10% and high concentration in tech giants make it a good option for those seeking exposure to the technology sector.
If you're looking for a slightly more diversified option, consider the Vanguard S&P 500 Growth ETF, VOOG. This ETF tracks the CRSP US Large Cap Growth Index, investing in large-cap growth companies like Amazon and Tesla, as well as drugmaker Eli Lilly. VOOG's expense ratio is lower than VGT at 0.04%, but with a focus on large-cap growth stocks, it still falls into the more aggressive category.
Both ETFs have shown strong performance over the years and could be excellent long-term investments, particularly if artificial intelligence is indeed in its early stages of development. Just remember, investing always carries risk, and past performance is not a guarantee of future results.
Sources: 1, 2, 3
Enrichment Data:
- The Vanguard Information Technology ETF (VGT) has a strong historical performance, with a 75% accuracy of rising higher in 15 out of 20 years across the past 20 years.
- VGT has a broad portfolio of tech stocks, including small and mid-caps, and a low expense ratio of 0.1%.
- The Vanguard S&P 500 Growth ETF (VOOG) focuses on growth stocks within the broader S&P 500 index, not just the technology sector.
- VOOG has a strong long-term track record like other Vanguard ETFs, but specific historical data is not detailed for VOOG.
- While VOOG is more diversified, VGT is specifically designed to target the technology sector, making it a more specialized investment for those looking to capitalize on its growth potential.
Managing your finances wisely may involve considering investing some of your money in ETFs, such as the Vanguard Information Technology ETF and Vanguard S&P 500 Growth ETF. These ETFs, like VGT with its focus on tech giants and VOOG with its large-cap growth stocks, can potentially generate returns over the long term, given their strong historical performance.