Investing in exchange-traded funds (ETFs) can be a smart alternative to buying individual stocks, as they often require less effort while offering greater diversification.
Growth ETFs, specifically, aim to outperform the market over time. Each fund contains a variety of growth stocks, sometimes from one particular industry and other times from multiple market sectors. This approach could help you earn above-average returns without hand-picking every stock in your portfolio.
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Where you choose to invest matters, though. All ETFs offer their own advantages and disadvantages, and these three funds could help you turn just $100 per month into hundreds of thousands of dollars over time.
1. Vanguard Information Technology ETF
The Vanguard Information Technology ETF (NYSEMKT: VGT) is a tech-centered ETF covering all corners of the technology industry. It contains 316 stocks, with the top 10 holdings including household names like Apple, Microsoft, Nvidia, and Salesforce.
If you're looking to invest in the tech sector without spending countless hours researching the ins and outs of individual stocks, this ETF could be an appealing option. You'll instantly own a stake in hundreds of tech stocks, which can create some diversification and help limit your risk.
Just keep in mind that any industry-specific ETF will carry more risk than a fund containing stocks from multiple market sectors. Tech, in particular, tends to be more volatile than many other industries, so expect more severe fluctuations in the short term with this investment.
That said, this ETF has a strong history of earning above-average returns. Over the last 10 years, it's earned an average return of 20.75% per year. At that rate, investing $100 per month could add up to roughly $639,000 after just 25 years.
As with any investment, it's wise to keep a long-term outlook. The short-term can be turbulent, especially with a tech ETF, but staying invested for at least a decade or two can help reduce the impact of that volatility.
2. Invesco QQQ Trust
Invesco QQQ Trust (NASDAQ: QQQ) is similar to the Vanguard Information Technology ETF in that it's heavily focused on stocks in the tech sector. However, it's not solely dedicated to tech stocks, with only around 60% of the fund allocated to companies in the technology industry.
This ETF contains stocks in nine sectors in addition to tech, including consumer discretionary, healthcare, industrials, and more. This added diversification makes QQQ slightly less risky than the Vanguard fund, as your money is spread across a wider variety of stocks.
While this ETF hasn't performed quite as well as the Vanguard ETF, earning an average return of 18.28% per year over the past decade, that's still substantially higher than the market's historic average of 10% per year. Investing $100 per month at that rate would add up to around $430,000 after 25 years.
3. Schwab U.S. Large-Cap Growth ETF
If you're looking for an ETF that offers the earnings potential of a growth fund with the relative safety of a broad-market ETF, the Schwab U.S. Large-Cap Growth ETF (NYSEMKT: SCHG) could be a great option.
This ETF only contains large-cap stocks, and because larger companies are more likely to survive tough economic times, that can help reduce your risk. Also, with just under half of the fund allocated to tech stocks, reducing your reliance on the tech sector could better protect you against volatility, too.
Over the last 10 years, this ETF has earned an average rate of return of 16.65% per year. While that is the lowest of the three in this list, keep in mind that there's often a trade-off between risk and reward. If limiting your risk is a priority, you'll often see slightly lower returns over time.
That said, 16.65% average annual returns are still above the market's long-term average. At that rate, investing $100 per month could add up to around $332,000 after 25 years.
ETFs can be a more approachable and affordable way for many people to get involved in the stock market, and growth ETFs could help you earn higher-than-average returns over time. Regardless of where you choose to buy, make sure you're considering both the risks and rewards to decide on the best investment to meet your individual needs.
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Katie Brockman has positions in Vanguard World Fund-Vanguard Information Technology ETF. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Salesforce. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
