You don’t need to be wealthy to make a lot of money in the stock market. In fact, with the right stocks, you could generate hundreds of thousands of dollars or more with just a single $1,000 investment.

Exchange-traded funds (ETFs) can be a fantastic option for those looking to build long-term wealth with minimal effort. Each ETF contains a collection of stocks, bundled together into a single fund. They require a fraction of the research involved in buying individual stocks, making them low-maintenance passive investments.

Each ETF will have its own unique strengths and weaknesses. But if you’re looking to maximize your earnings in the stock market while barely lifting a finger, the Vanguard Information Technology ETF (VGT +1.56%) could be a fantastic buy.

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A safer way to invest in tech stocks

The Vanguard Information Technology ETF contains 314 stocks, all from the technology industry. Investing in a tech-focused fund can be a simpler way to gain exposure to this sector, and because you’re investing in hundreds of stocks at once, that can increase your diversification and mitigate risk.

This ETF covers all corners of the tech sector, and it also offers a healthy balance of risk and reward. Nvidia, Microsoft, and Apple round out the top three holdings, and together they make up nearly 44% of the entire fund. The remaining 56% of the fund comprises an additional 311 stocks.

Investing in a mix of industry leaders and smaller corporations can help limit risk while still maximizing your earnings. Smaller stocks have potential for explosive earnings, while massive corporations like Nvidia, Microsoft, and Apple can add some stability. While even the strongest companies can face short-term volatility, these blue chip juggernauts are more likely to pull through even severe market slumps.

Vanguard Information Technology ETF

Today’s Change

(1.56%) $11.88

Current Price

$774.14

One risk factor to consider with this fund is that it can experience more severe fluctuations in the short term. The tech industry in general is prone to significant ups and downs. While the prosperous periods can be lucrative, the downturns are often rough. During particularly severe slumps, this fund may even underperform the market.

Before you buy, be sure you’re willing to hold this investment for at least a few years. The market will face another downturn eventually, and staying invested until stock prices recover is the best way to avoid losing money. Just be prepared to keep a long-term outlook when investing in a tech ETF.

Turning $1,000 into $556,000 with next to no effort

Despite short-term volatility, tech stocks have significantly outperformed the S&P 500 (SNPINDEX: ^GSPC). In fact, over the last 10 years, the Vanguard Information Technology ETF has earned an average rate of return of 23.45% per year. For context, the Vanguard S&P 500 ETF (VOO +0.82%) — which tracks the S&P 500 index — has only earned a 15.26% average annual return in that time, and the market’s long-term average sits at around 10% per year.

If you were to invest $1,000 right now while not making any additional contributions, it could add up to close to $556,000 after 30 years, assuming you continue earning a 23.45% average annual return.

To really supercharge your savings, you could invest a small amount monthly. Say, for instance, you contribute $50 per month rather than making a $1,000 initial investment. Here’s roughly how much you could accumulate over time, depending on the returns you’re earning:

There is no guarantee that this ETF will continue earning returns at the rate it has over the last 10 years. But even if it earns slightly lower returns, you could still accumulate hundreds of thousands of dollars over time with just $50 per month. If you can afford higher monthly contributions, it could exponentially increase your total earnings.

Investing in a tech-focused fund like the Vanguard Information Technology ETF does come with increased risk compared to, say, an S&P 500 ETF. But if you’re willing to take on slightly more risk for the chance at earning higher returns, you could generate life-changing wealth over time.