One of the best things to happen to stock investing is the introduction of exchange-traded funds (ETFs). Instead of having to invest in many different stocks to achieve diversification, investors can invest in a single or a few ETFs and instantly be invested in hundreds or thousands of companies.

Leaning on ETFs doesn't have to mean sacrificing return potential, either. There are plenty of ETFs on the market that historically outperform many top companies. One of those is the Vanguard Information Technology ETF (NYSEMKT: VGT). This tech-focused ETF has the potential to turn monthly investments as low as $100 into $500,000 or more.

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This ETF checks off the tech boxes

If you're looking to add tech stocks to your portfolio, this ETF can be a great starting point. It contains over 300 stocks from various industries within the tech sector, including semiconductors (26.8% of the ETF), systems software (21%), technology hardware (18.8%), application software (15.9%), and IT consulting (3.8%).

The tech sector includes many different industries, so the ETF's diversity even within the tech sector gives you broader exposure to its full potential. You don't want to put all your focus on semiconductors and miss the growth of software, put all your focus on hardware and miss the growth of cloud computing, or put all your focus on IT services and miss the growth of cybersecurity.

How to build a $500,000 portfolio with this ETF

Since its January 2004 inception, this ETF has noticeably outperformed the market (based on S&P 500 returns), up 1,190% compared to 420%. That's an annual average of around 12% versus 8%.

When you look at just the past decade, the ETF's returns have been even more impressive, averaging 19% annual returns.

VGT data by YCharts

Averaging 19% and 12% over the long term is an ideal scenario, but it shouldn't be expected. The market historically averaged around 10% annual returns over the long haul, which is a safer expectation.

In either case, here's how much you could earn from this ETF by investing $500 monthly and averaging different returns:

Years Invested	10% Average Annual Returns	12% Average Annual Returns	19% Average Annual Returns
15	$189,200	$222,000	$394,500
20	$340,100	$427,800	$981,700
25	$582,100	$789,000	$2.37 million
30	$970,300	$1.42 million	$5.69 million

Data source: Calculations by author. Values are rounded down to the nearest hundred and take into account the ETF's expense ratio.

Even if you don't have $500 available to invest monthly, you can still hit the $500,000 mark by only investing $100. What you don't have in money, you can make up with time and taking advantage of the power of compound earnings.

Years Invested	10% Average Annual Returns	12% Average Annual Returns	19% Average Annual Returns
15	$37,800	$44,400	$78,900
20	$68,000	$85,500	$196,300
25	$116,400	$157,800	$475,500
30	$194,000	$284,500	$1.13 million

Data source: Calculations by author. Values are rounded down to the nearest hundred and take into account the ETF's expense ratio.

Past results don't guarantee future performance, so you never want to assume that this ETF (or any stock) will maintain these returns. However, it's positioned to return great long-term value.

This ETF should be a complementary piece to your portfolio

One downside to this ETF is its concentration in Apple, Microsoft, and Nvidia stocks. The three combine to make up over 45% of the ETF. That's a lot for any ETF, but especially one with over 300 companies.

Here are the ETF's top 10 holdings:

Company	Percentage of the ETF
Apple	17.15%
Microsoft	14.32%
Nvidia	14.20%
Broadcom	4.44%
Salesforce	1.75%
Palantir Technologies (Class A)	1.73%
Oracle	1.59%
Cisco Systems	1.59%
IBM	1.55%
ServiceNow	1.36%

Data source: Vanguard. Percentages as of April 30.

Granted, Apple, Microsoft, and Nvidia are some of the world's top companies, but that's still a lot riding on just them. Ideally, this ETF would be a complementary piece to your portfolio, rather than the bulk of it. This is especially true for people invested in the S&P 500, because these companies also make up a good portion of the index.

The tech sector as a whole can be volatile, so the same applies to this ETF. The best you can do is expect it, ignore it, stay consistent, and trust the long-term returns.

Should you invest $1,000 in Vanguard Information Technology ETF right now?

Before you buy stock in Vanguard Information Technology ETF, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

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*Stock Advisor returns as of June 9, 2025

Stefon Walters has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Apple, Cisco Systems, International Business Machines, Microsoft, Nvidia, Oracle, Palantir Technologies, Salesforce, and ServiceNow. The Motley Fool recommends Broadcom and 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.

As you near retirement, there are a few important decisions you have to make, especially financially. In addition to decisions such as your retirement withdrawal strategy and estate planning, you also need to begin thinking about when you want to claim Social Security.

The age at which you claim Social Security is an important decision because it permanently affects how much you receive in benefits, which could directly affect your retirement lifestyle.

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To see the impact of different claiming decisions, let's compare them for ages 62, 67, and 70. Those are notable ages because it's the earliest you can claim Social Security, the full retirement age (FRA) for people born in 1960 or later, and the latest you can delay benefits and receive an additional monthly increase.

How your claiming age affects your monthly benefit

The monthly amount you receive by claiming at your full retirement age is called your primary insurance amount (PIA). Using your PIA, Social Security calculates your monthly benefit based on when you claim relative to your FRA.

Claiming benefits before your FRA increases the monthly amount by 5/9 of 1% each month for the first 36 months. Each additional month will reduce benefits by 5/12 of 1%. Assuming your FRA is 67, this would result in a 30% decrease by claiming at 62.

Delaying benefits past your FRA increases them by 2/3 of 1% each month, working out to 8% annually. Again, assuming an FRA of 67, waiting to claim benefits until 70 would result in a 24% increase.

Here's how benefit amounts would be adjusted at different PIAs (the amount you'd receive by claiming at 67):

Primary Insurance Amount	Benefit if Claimed at 62	Benefit if Claimed at 70
$1,500	$1,050	$1,860
$2,000	$1,400	$2,480
$2,500	$1,750	$3,100

Table by author.

As you can see, benefit amounts can vary widely depending on when you decide to claim. Depending on your PIA, the differences can be up to $1,000 or more.

Who should claim benefits at 62?

Claiming as early as possible makes sense for people who are in immediate financial need. The higher monthly benefit may not be worth it if you have to struggle financially while waiting years to claim.

Even if you're stable financially, claiming benefits at 62 could be a good route if you want more financial flexibility. You may not need your Social Security check for bills, but you could use it to fund your retirement goals (such as travel or hobbies) or to invest and ideally begin generating income.

On a more practical note, claiming at 62 is a good option for those who may have personal or family health history concerns. If your life expectancy is shorter than average, then claim and enjoy the fruits of your labor while you can.

Who should claim benefits at 67?

Claiming at 67 (or at your FRA) is a good mix between keeping your PIA intact and doing so early enough to maximize your time and benefits.

For people who plan to work while receiving Social Security, claiming at FRA is beneficial because there is no longer an earnings limit, unlike for those who work while claiming Social Security early. You can work and earn as much as you'd like without having to worry about your benefits being temporarily reduced.

Who should claim benefits at 70?

Delaying benefits until 70 and receiving the maximum increase sounds enticing, but it's not for everyone.

For the millions of people who will rely on Social Security for a large portion of their retirement income, waiting until 70 may not be feasible. However, if you can reasonably survive via other retirement income sources, then the delay could be worthwhile.

One big question you have to ask yourself before delaying benefits until 70 is what your life expectancy reasonably looks like. You may enjoy the larger benefit, but your lifetime benefits from claiming early will still be greater until you hit your 80s.

There's no decision that fits every person

When you decide to claim Social Security should be a multifaceted decision that considers many aspects of your life. You should consider your health (both personal and family), financial situation, break-even age, and other long-term retirement goals.

Although people can recommend when to claim based on general rules of thumb, the final decision should align with your personal situation.

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View the "Social Security secrets" »

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Tech stocks have been some of the best-performing stocks over the past decade. As a result, eight of the world's 10 most valuable public companies are now tech companies.

Admittedly, 2025 has gotten off to a rough start to 2025 for many of these top companies. Yet it's not time to panic. If anything, this is a time to scoop up some great companies that are trading at relative discounts.

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If you're looking to add tech stocks to your portfolio, consider the following two companies. They're in good positions to return great long-term value.

1. Taiwan Semiconductor Manufacturing Company

Taiwan Semiconductor Manufacturing Company (NYSE: TSM), also referred to as TSMC, is one of the world's most important tech companies. It's the world's largest semiconductor foundry, with a market share in contract chipmaking space of around 67%.

For perspective, the second-largest semiconductor foundry is Samsung, which has a roughly 7% market share.

Instead of designing and producing its own semiconductors for general sale, TSMC manufactures chips on behalf of other companies. They come to TSMC with the designs, and it uses its top-of-the-line manufacturing facilities to bring those products to life. Its success with this model has made TSMC the go-to chip fabricator for well-known companies like Apple, Nvidia, Advanced Micro Devices, and dozens of others.

These high-dollar clients have treated TSMC well, too. In the first quarter, TSMC's revenue increased 35% year over year to $25.5 billion, and its cash from operations increased 43%. Both gains were continuations of impressive runs over the past five years.

TSM Revenue (Quarterly) data by YCharts.

The next few years should be lucrative: Management estimates that TSMC's revenue will grow at a compound annual rate of 20% from 2024 to 2029. If that forecast proves accurate, TSMC will be bringing in well over $200 billion by 2029.

Much of this optimism stems from the surging demand for AI-capable semiconductors as the broader AI boom continues. TSMC's high-performance computing (HPC) segment, which contains its AI-related semiconductors, accounted for 59% of the company's revenue in Q1. In Q1 2024, it was only 46%.

TSMC is in a complex spot geopolitically due both to the tense relationship between Taiwan and China and the ongoing U.S. push to boost domestic manufacturing. How all those issues play out remains to be seen, but TSMC has been proactively expanding its manufacturing footprint in the U.S. to hedge against some of these risks.

2. Alphabet

Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), the parent company of Google, YouTube, Waymo, and others, is one of the world's most valuable companies. However, its stock has been stagnant recently: It's up by less than 1% in the past 12 months (through June 9).

There are several reasons investors seem hesitant about Alphabet, starting with their fears of how recession or economic slowdown would impact its business. Of the $90.2 billion in revenue Alphabet made in Q1, 74% came from advertising. And when the economy is less than ideal or appears to be headed in that direction, advertising is one of the first budget lines that companies cut.

The cyclical nature of Alphabet's business may not be comfortable for investors who prefer more predictable income, but it doesn't take away from the company's long-term value. Alphabet has consistently delivered impressive growth, despite the bumps in the road.

GOOGL Revenue (Quarterly) data by YCharts.

If Alphabet wants to maintain that trend, it will rely a lot on the growth of its cloud service. So far, so good. In Q1, Google Cloud's operating income (profit from core operations) grew 142% year over year to $2.2 billion. This was a significant milestone in the platform's pursuit of sustained profitability.

Another concern among investors is the uncertainty about how Alphabet will fare in the ongoing antitrust cases brought against it by regulators. The final outcomes of these court cases likely won't be clear for years, but Alphabet's diversified business and ability to adapt put it in a solid position.

Trading at just 18.3 times its forward earnings (the S&P 500 is currently around 21.7), there's much more upside to Alphabet's stock than downside. It's a stock I would definitely consider buying at current prices.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Stefon Walters has positions in Apple and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Proper retirement planning is more than just budgeting, tax planning, and investing. It should also include estate planning.

Estate planning is the process of laying out how your assets will be managed and distributed after your death. Although it could seem a little morbid to do, being proactive about it can save your loved ones a lot of time, stress, and money.

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There are a few ways to leave behind your assets, including via a living trust. Although a living trust may not be the best option for everyone, it offers several benefits that make it worth considering. Let's discuss three.

1. You can avoid the probate process

Probate is a process where a court confirms the validity of a will and oversees the distribution of your assets.

Having a court oversee the process can help prevent disputes or fraud. On the other hand, the probate process isn't all smooth sailing. It can be lengthy and expensive.

Depending on your state's laws, the probate process could take months or even years, and the beneficiaries likely won't have access to the assets during this time. This could be a major inconvenience if they need the funds for urgent expenses (like funeral costs or mortgage payments).

The cost associated with probate will vary by state and the complexity of your estate, but you can generally expect it to be a percentage of your estate's value.

2. You have more privacy

When a will goes through the probate process, it becomes part of the public record. This means that anyone can access information such as beneficiary names, assets left behind, and the value of those assets.

For some families, having this information in the public record may not matter because their estates are relatively modest and they have no privacy concerns. However, for public figures or high-net-worth individuals, this could present some issues.

For example, imagine if a wealthy person leaves a young beneficiary with a large lump sum of cash. This could attract unwanted attention from people with bad intentions or cause tension with someone else who may have felt entitled to some of the inheritance.

A living trust provides the privacy that could help prevent some of these issues.

3. It helps manage assets better if you become incapacitated

Incapacitation is when someone becomes physically or mentally unable to make important life decisions.

Unfortunately, in most cases, this means a court would need to appoint someone to handle your affairs, which isn't the easiest process. Luckily, living trusts allow you to include instructions on how your trust should be managed and handled if you're unable to do so due to an illness or other causes.

Whoever you choose as your successor trustee will have the power to manage your assets and other financial affairs without needing to get a court to appoint someone.

The $23,760 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy.

During the latest annual shareholder meeting, legendary investor Warren Buffett announced that he would be retiring as CEO of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) by the end of the year.

Since taking control of Berkshire Hathaway, Buffett has turned the conglomerate into one of the world's most successful businesses, achieving a market cap of over $1 trillion and a personal net worth of around $160 billion (as of the start of May). Given Buffett and Berkshire Hathaway's success, investors have spent decades closely examining all of Buffett's moves and hanging on to every piece of advice he offers.

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Buffett has offered tons of wisdom through the years, and although the investing strategies of a billionaire and a large corporation aren't typically aligned with your average investor, there are Buffett-inspired strategies that your everyday investor can (and in many cases, should) adapt. Let's take a look at three of those.

1. Keep it simple and lean on the S&P 500

Buffett has long said that the best approach for the average investor is to invest in the S&P 500 (SNPINDEX: ^GSPC).

The S&P 500 tracks the largest 500 American companies on the market, so it's generally considered a snapshot of the broader U.S. economy. The two aren't directly tied, but when the economy grows, the companies within the index tend to follow.

The S&P 500, of course, has its ups and downs (as any stock or index), but it has historically averaged around 10% annual returns over the long haul. Those are good enough returns to build up a nice nest egg heading into retirement.

To see it in action, let's imagine your investments average 10% annual returns for 20, 25, and 30 years. Below is how much you could accumulate by investing $500 monthly:

Years Invested	Ending Investment Value
20	$343,000
25	$590,000
30	$986,000

Table by author. Ending investment values don't take into account expense ratios. Values rounded down to the nearest thousand.

Returns aside, investing in an S&P 500 fund simplifies investing. You don't need to spend hours looking at financial statements or monitoring earnings; you simply invest in the fund and trust its long-term potential.

2. Focus on companies with strong economic moats

If you prefer investing in individual stocks, Buffett advises investing in companies with sustainable economic moats. An economic moat is a company's competitive advantage that its competitors can't easily replicate.

Coca-Cola and Apple's economic moats are their powerful brands; Visa's economic moat is its wide reach and network effect; and Moody's economic moat is the science and proprietary nature of its credit rating models. This explains why these companies are some of Berkshire Hathaway's top holdings.

Companies with lasting economic moats make good investments because their earnings are typically more stable and their business models are reliable and proven. Growth potential is important in investing, but sustainability ensures a company is a good long-term investment.

Looking for companies with economic moats can help investors fight the urge to chase "the next big thing" and focus on companies with lasting value.

3. Invest in companies that pay and increase their dividends

Stock price growth (or lack thereof) gets a lot of attention in the stock market, but dividends can be just as valuable over time. Although Berkshire Hathaway doesn't pay dividends, most of its investments do.

One thing about the stock market is that you can't predict how stock prices will move, no matter who you are or what technology and data you can access. If it were that easy, firms on Wall Street would never lose money. However, what you can be sure of is consistent income coming in when you invest in sound dividend stocks.

Dividend stocks can help soften the blow when stock prices are falling by providing income, and they can also compound your gains when stock prices are rising. It's like a built-in margin of safety.

Aside from the income (which is nice, no doubt), Buffett likes dividend-paying companies because it signals a company is in a good financial position -- especially if they're able to increase their dividend payouts year after year. Of course, there are exceptions, and some companies maintain dividends even when their finances don't support it. But for the most part, a growing dividend indicates a company has steady earnings and is shareholder-friendly.

When in doubt, trust the power of dividends.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 967%* — a market-crushing outperformance compared to 171% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of May 12, 2025

Stefon Walters has positions in Apple. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Moody's, and Visa. The Motley Fool has a disclosure policy.

There's a lot of uncertainty in the stock market and the U.S. economy right now, and that's probably putting it lightly. As the Trump administration implements new tariffs, businesses and consumers are prepping for price increases and supply chain disruptions, and recession fears are as high as they've been in a while.

All major indexes and blue chip stocks are down for the year in the stock market, leaving investors searching for safer investments to lean on during this time. One to consider is AT&T (NYSE: T), which has trended in a positive direction, up over 15% year to date and more than 56% in the past 12 months.

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After an impressive run -- especially for a company whose share price struggled for years before the recent turnaround -- investors might wonder if AT&T's stock is still a buy or if they missed the boat. I believe it's the former.

How the current tariff plan could affect AT&T

AT&T's business requires quite a bit of physical equipment. The company relies a lot on foreign imports, from consumer electronics (smartphones, tablets, and the like) to network equipment (routers and switches), to cell towers. This goes for both finished products and components needed to build certain equipment.

Increased tariffs on countries like China, South Korea, and Finland likely mean higher costs for AT&T. Whether it will pass these costs on to consumers remains to be seen, but the telecom business -- especially with postpaid phone plans -- is very competitive, and increasing prices too much could mean losing customers.

If the tariff plan stands as is, you can expect AT&T's margins to thin as it absorbs most of the added costs, especially in the near term. It could find a way to pass some of these costs on to customers without losing them, but that's not an overnight move and will take time to hash out.

AT&T's dividend could give investors some stability

The main reason most people invest in the company is its high-yield dividend. Its quarterly payout is $0.2775, with an average yield of around 5.3% in the past 12 months. That's more than four times the S&P 500's average during that time.

Dividends are always good, but they can be especially helpful when the stock market is extra volatile. Last year, the business' free cash flow was $17.6 billion, and it paid out around $8.2 billion in dividends.

Assuming that stays consistent (it projects 2025 free cash flow to be between $17 billion to $18 billion), it should give management enough flexibility to deal with increased costs while still paying its dividend and focusing on reducing debt.

You can't predict how AT&T's stock (or any stock) will perform, but you can trust that its dividend will remain steady, even with the real potential of rising costs due to the newly implemented tariffs.

The telecom business isn't going anywhere

Most of AT&T's revenue comes from its wireless business (over 51% in the fourth quarter), but that's a relatively slow-growth business because most people already have mobile plans, and there's limited room for expansion.

Growth in the foreseeable future will come from its fiber business, which has been making impressive strides. In 2024, it added over a million subscribers, the seventh consecutive year it has hit that mark.

The up-front costs for building the fiber network are high, but it pays off in the long run because people typically pay a premium for faster internet services.

T Revenue (Quarterly) data by YCharts.

With a diverse telecom business that includes wireless, broadband (fiber, 5G, and the like), and enterprise solutions (network security and remote work tools), AT&T has become one of the more important companies powering the U.S. digital infrastructure.

The telecom industry has essentially become indispensable in today's world. If you're a long-term investor, AT&T is a stock that can provide consistent income and relative stability, especially as the company has refocused on its core telecom business. That doesn't mean it won't face declines or hit rough patches, but it's built to last.

Should you invest $1,000 in AT&T right now?

Before you buy stock in AT&T, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AT&T wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,779!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $659,306!*

Now, it’s worth noting Stock Advisor’s total average return is 787% — a market-crushing outperformance compared to 152% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Well, it's official: The Nasdaq Composite has entered bear territory. A bear market occurs when a major index drops over 20% from recent highs, and that's precisely what has happened with the Nasdaq Composite, which is down around 24% from its Dec. 16 high.

The index was already having a rough 2025, but it was sent plunging after President Donald Trump announced his new tariff plan on April 2. The new tariffs, which affect imports from around 180 countries, will raise costs on lots of goods, including key products from countries that top companies in the tech-heavy Nasdaq Composite rely on.

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Although the index is in a bear market, that doesn't mean investors should avoid it. There are still ways to have it set up long-term investors nicely. One of them is an exchange-traded fund (ETF): the Direxion Nasdaq-100 Equal Weighted Index ETF (NASDAQ: QQQE).

^IXIC data by YCharts.

What differentiates this ETF from other Nasdaq ETFs

This ETF doesn't include every stock in the Nasdaq Composite. However, it does work off the Nasdaq-100, a subset that contains the 100 largest nonfinancial companies listed on the exchange.

The Direxion ETF stands out because it's equal-weighted instead of market cap-weighted like many other Nasdaq ETFs. This means investments are spread virtually equally among all companies in the Nasdaq-100 instead of larger companies receiving more of the investment and having a larger influence on the movement of ETFs.

Megacap tech stocks -- and the "Magnificent Seven" in particular -- make up the vast majority of the standard Nasdaq-100. In fact, the seven stocks (Apple, Nvidia, Microsoft, Amazon, Meta Platforms, Alphabet, and Tesla) account for over 45% of the index. As they go, so goes the index, for better or worse.

^NDX data by YCharts. Percentages from Jan. 1 to April 7.

This ETF relies less on the tech sector's performance

With a handful of tech stocks making up a large chunk of the Nasdaq-100, it's no surprise that the tech sector is heavily represented in the index.

Tech is still the largest sector in the equal-weight ETF, but it's much less than with the standard index. Below are the sectors and how much they account for in each:

Sector	Percentage of Equal-Weight Nasdaq-100	Percentage of Standard Nasdaq-100
Information technology	40.65%	51.29%
Communication services	9.98%	15.11%
Consumer discretionary	12.01%	14.73%
Consumer staples	7.09%	5.48%
healthcare	10.15%	4.98%
Industrials	10.96%	4.61%
Materials	1.00%	1.27%
Utilities	4.05%	1.24%
Energy	2.10%	0.56%
Financial	0.99%	0.54%
Real estate	1.01%	0.19%

Source: Direxion. Percentages as of Dec. 31, 2024.

The tech sector has been the most rewarding over the past couple of decades, but you never want to lose sight of the importance of diversification. Many other indexes, like the S&P 500, are already tech-heavy at the top, so investing in the standard Nasdaq-100 could make your portfolio a little too tech-leaning.

Tech stocks tend to do well when the economy is expanding. However, they can be a liability when the economy is in a downturn and recessions (or recession fears) lead investors to favor dividend and value stocks.

This ETF gives you a bit of both. You still get exposure to big-name tech stocks and benefit from growth periods, but you also avoid overconcentration, and you cushion the potential blow of a tech industry stumble.

A history of long-term returns

This ETF hit the market in March 2012 and has produced good returns in the 13 years since.

QQQE data by YCharts. Gray area represents a recession period.

Averaging 11% annual returns over a 13-year period (outperforming the S&P 500 in that span) is impressive for a diversified ETF. By no means does this mean the ETF will continue at this pace, but it does show how being equal-weight focused doesn't take away from its growth potential.

I wouldn't make the Direxion Nasdaq-100 Equal Weighted Index ETF the bulk of my portfolio, but it can be a good supplemental piece to help reduce concentration risk and give you exposure to the broader Nasdaq-100 index.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $249,730!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $32,689!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $469,399!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

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*Stock Advisor returns as of April 5, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Stefon Walters has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. 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.