We’re now just over two years into the current bull market, and as prices continue to rise, investing now can be a fantastic way to build long-term wealth.

Exchange Traded Funds (ETFs) can be a cheaper way to get involved in the stock market. Buying a single share of an ETF can give you a stake in hundreds of stocks at once, without having to research dozens of different companies like you would when investing in individual stocks.

However, where you choose to buy is important, as not all ETFs are solid investments. If you’re looking for a higher-yielding fund that could potentially help you make a lot of money over time, there’s a Vanguard ETF you might want to consider.

A technology ETF to boost your portfolio

THE Vanguard Information Technology ETF (VGT -0.10%) is a technology-focused ETF that contains 316 stocks in various areas of the technology industry – from semiconductors to system software to hardware and storage and more.

Image source: Getty Images.

The three largest holdings in this ETF include Apple, MicrosoftAnd Nvidiarespectively. Together, these three stocks alone represent just over 44% of the entire fund.

Investing in an ETF can be a smart way to invest in high-impact stocks while still gaining exposure to hundreds of potential stars in the making. Not only will you gain a stake in major stocks like Nvidia, but if one of the fund’s smaller stocks becomes a superstar, you’ll reap the rewards.

An important factor to consider, however, is that sector-specific ETFs – particularly technology ETFs – may carry more risk than many other types of funds. Although this ETF contains more than 300 stocks, because they are all in the same sector, this will not provide as much diversification as a broad market fund containing stocks from all sectors of the stock market.

This isn’t necessarily a bad thing, but if you choose to invest in this ETF, you’ll want to check that the rest of your the portfolio is well diversified with stocks or funds from other sectors. In general, the more variety you can add to your portfolio, the lower your risk.

How much could you earn with this ETF?

Technology ETFs can be much more volatile than general market funds, especially in the short term. This sector tends to have bigger ups and downs, so it’s anyone’s guess how this fund will perform in the coming months, or even the next two years.

That said, over the past 10 years, this ETF has generated a staggering average annual return of 20.37%. Its performance since its creation in 2004 is slightly less impressive at 13.45% per year, although it remains above average. historical stock market average of 10% per year.

^SPX data by Y Charts

Again, it is unclear whether future returns on this investment will be closer to the average 20% per year or 13% per year, and it is even possible that it will underperform completely and generate yields below average. But it’s a risk you’ll need to be willing to take if you’re investing in a potentially profitable ETF.

Let’s say that in the future you get an average annual return of 18%. If you were to invest $1,000 now and make no additional contributions, that initial investment could grow to approximately $143,000 over 30 years without any effort.

However, to potentially earn exponentially more, you can continue to invest a small amount each month. If you invest $1,000 now and continue to invest just $50 per month in the future, here’s approximately how much you could accumulate in total based on the returns you earn:

Data source: Author’s calculations via invest.gov.

If this ETF continues to generate returns in line with its 10-year average, you could potentially earn almost $1 million by investing just $50 per month. But even if its future returns are insufficient, it is still possible to earn a lot of money with even small monthly contributions.

Investing in ETFs can be a smart way to build wealth with less effort than buying individual stocks, but choosing the right investment is essential. If you’re willing to take a little more risk for the chance to generate potentially life-changing income over time, the Vanguard Information Technology ETF could be a smart addition to your portfolio.