Warren Buffett and the Vanguard S&P 500 ETF: A Path to Wealth
Under Warren Buffett’s leadership, Berkshire Hathaway stock has achieved impressive annual returns of 19.7% from 1965 to 2025, significantly outperforming the S&P 500’s 10.5% annual return. Buffett advocates for the S&P 500 index fund as a solid investment choice, emphasizing its simplicity and reliability for the average investor. At a 2021 shareholder meeting, he recommended owning an S&P 500 index fund, like the Vanguard S&P 500 ETF (VOO).
Turning $400/month into $820,000
Investing $400 monthly in the Vanguard S&P 500 ETF could potentially grow to $820,000 over 30 years, assuming the S&P 500 continues its historical performance. This aligns with the index’s track record, which has yielded a remarkable 1,790% return (about 10.2% annually) over the past three decades, despite facing multiple market corrections and recessions.
Why Choose the S&P 500?
- Broad Exposure: The S&P 500 represents around 80% of U.S. equities and includes both growth and value stocks across 11 sectors.
- Professional Challenge: Beating the S&P 500 is tough for even seasoned investors. Buffett famously wagered on an index fund’s superior performance over hedge funds and won decisively.
- Economic Robustness: The S&P 500 is a reflection of the U.S. economy, known for its resilience. Buffett stated that betting against America has historically been a poor choice.
- Low Costs: The Vanguard S&P 500 ETF boasts an expense ratio of just 0.03%, meaning minimal costs for investors compared to higher fees charged by professional managers.
Summary
Warren Buffett’s endorsement of the S&P 500 index fund shines a light on a strategy that allows investors to build substantial wealth over time. With its low costs and broad market exposure, the Vanguard S&P 500 ETF is an attractive option for those looking to invest for the long term.