The Best Technology ETF to Invest in with $100 Today

The tech sector is really thriving right now, especially with the incredible rise of artificial intelligence (AI). However, choosing which tech companies will succeed long-term can be pretty tricky. So, it might be wiser to spread your investments across multiple firms.

This approach leads us to consider buying a technology exchange-traded fund (ETF). With an ETF, you can invest in a range of major tech companies and potentially benefit no matter who turns out to be the better performer. Depending on your brokerage, you might only need to start with as little as $100 or even less.

If that sounds interesting to you, let me suggest one option. The Vanguard Information Technology ETF (VGT +0.71%) could be an excellent choice to consider right now.

Technology is poised to drive market revenue for years ahead

This fund diversifies investments among 300 small and large-cap tech companies, tracking the MSCI US Investable Market Information Technology 25/50 Index. That diversity allows investors to tap into a variety of leading semiconductor and software firms, including major players like Nvidia and Microsoft.

Currently, over half—51%—of the fund’s investments are in semiconductors and software, with the rest in high-tech hardware, application software, communications equipment, and similar sectors. So, it’s not just about big names; this fund also opens doors to emerging tech companies, which is pretty exciting.

Moreover, tech stocks have been a major force in driving stock market gains since the 1990s. The current AI boom is just the latest chapter in technology’s influence on markets, and there seems to be no end in sight.

If you’re invested in the Vanguard Information Technology ETF, that’s a positive position. Since it started in 2004, the fund has seen an average annual return of around 14.4%.

Of course, there’s no guarantee that this trend will continue—but it does reflect how well the fund might perform during extended technological advancements, like those seen with the internet and mobile devices.

Low fees mean more earnings stay with you

When you’re looking for an investment fund, remember that each fund will have an expense ratio, which is essentially a small annual fee for managing the fund.

Here’s the good news: ETFs typically have lower expense ratios compared to mutual funds. If you choose Vanguard ETFs, you’re getting even better value since they boast some of the lowest fees in the business.

With an expense ratio of just 0.09%, the Vanguard Information Technology ETF is certainly appealing compared to the average fee of 0.94% for similar funds. This means if you invest $10,000, you’d only pay $9 in annual fees.

These lower fees translate to retaining more of your profits over time, which can really enhance your investment compared to a pricier fund offering similar returns.

Stick to the buy-and-hold strategy for ETFs as you would with stocks

Lastly, keep in mind that buying ETFs is about adopting that buy-and-hold mindset—just like with regular stocks. Trying to react to short-term market fluctuations can diminish your potential returns.

The idea is to invest in the Vanguard Information Technology ETF and hold onto it for at least five years, if not longer. And maybe even add to it along the way. Over the years, this could really help you build a strong and diverse portfolio.