1 Warren Buffett Index Fund Could Turn $450 Per Month Into $976,700

Motley Fool11-09

Warren Buffett believes most investors should own an S&P 500 index fund. The S&P 500 returned 2,150% over the last three decades, compounding at 10.9% annually. The Vanguard S&P 500 ETF ...

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CaseyLKC
11-09
CaseyLKC
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$976,700\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-09 15:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2024/11/09/1-warren-buffett-index-fund-can-turn-450-to-976700/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Warren Buffett believes most investors should own an S&P 500 index fund.\n\n\n\n\n\n\n\nThe S&P 500 returned 2,150% over the last three decades, compounding at 10.9% annually.\n\n\n\n\n\n\n\nThe Vanguard S&P 500 ETF ...</p>\n\n<a href=\"https://www.fool.com/investing/2024/11/09/1-warren-buffett-index-fund-can-turn-450-to-976700/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00BJLML261.HKD","symbol_name":"HSBC GLOBAL EQUITY INDEX \"HCH\" (HKD) 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Under his leadership, Berkshire Hathaway's Class A shares have returned nearly 20% annually since the mid-1960s. Comparatively, the S&P 500 (^GSPC 0.38%) has compounded at about 11% annually, including dividends, over the long term.Interestingly, while many investors avidly track which stocks Buffett buys and sells, they often ignore one of his most prudent recommendations. \"In my view, for most people, the best thing to do is to own the S&P 500 index fund,\" Buffett said at Berkshire's annual meeting in 2021. He has repeated that advice multiple times and has specifically suggested the Vanguard S&P 500 ETF (VOO 0.44%).Here's how Buffett's advice could turn $450 invested monthly into $976,700 over three decades.The Vanguard S&P 500 ETF provides heavy exposure to stocks like Apple, Microsoft, and NvidiaThe Vanguard S&P 500 ETF tracks the performance of 500 large U.S. companies, including value stocks and growth stocks from all 11 stock market sectors. It covers 80% of domestic equities and 50% of global equities by market value, letting investors diversify capital across some of the most important businesses in the world. The 10 largest positions in the index fund are listed by weight below:Apple: 7.3%Microsoft: 6.6%Nvidia: 6.1%Alphabet: 3.6%Amazon: 3.6%Meta Platforms: 2.6%Berkshire Hathaway: 1.7%Broadcom: 1.6%Tesla: 1.5%Eli Lilly: 1.4%As mentioned, Warren Buffett believes an S&P 500 index fund is the best way for most people to invest in stocks. That doesn't mean investors should avoid individual stocks, but rather that a large portion of their portfolios should be allocated to an S&P 500 index fund. And there are three big reasons why that strategy is sensible.First, professional money managers struggle to beat the S&P 500. In fact, less than one-tenth of large-cap funds managed to outperform the index over the last decade. \"Huge institutional investors, viewed as a group, have long underperformed the unsophisticated index-fund investor who simply sits tight for decades,\" Buffett wrote in his 2014 shareholder letter.Second, the S&P 500 has consistently delivered superior returns compared to other asset classes. The index compounded at 13% annually over the last decade, topping the average return generated by fixed income, international stocks, real estate, and precious metals, according to Morgan Stanley. The same pattern has been observed over the last two decades.Third, the S&P 500 has consistently made patient investors wealthier. In fact, the index has been a profitable investment over every 16-year period since its inception in 1957, according to Bespoke Investment Group. That means investors who patiently hold an S&P 500 index fund for at least 16 years are virtually guaranteed to make money.Image source: Getty Images.How the Vanguard S&P 500 ETF could turn $450 per month into $976,700The S&P 500 returned 2,150% over the last three decades, which equates to an annual return of 10.9%. That aligns with the long-term average of 11% annually, according to Goldman Sachs. However, I will assume a more conservative return of 10.5% annually to introduce a margin of safety. At that pace, here's what $500 invested monthly in the Vanguard S&P 500 ETF would be worth after different holding periods:10 years: $88,10020 years: $327,40030 years: $976,700The last item of consequence is the expense ratio. The Vanguard S&P 500 ETF carries a below-average low expense ratio of 0.03%. That means investors will pay just $0.30 annually on every $1,000 invested in the index fund. Comparatively, the average expense ratio across U.S. index funds was 0.36% in 2023, according to Morningstar.Here's the bottom line: Buffett has repeatedly recommended an S&P 500 index fund for good reason. The index tracks some of the most influential companies in the world, and funds that track the index -- like the Vanguard S&P 500 ETF -- have been reliable ways for patient investors to make money in the stock market.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":369144055300352,"gmtCreate":1731164604565,"gmtModify":1731164608452,"author":{"id":"4091363089250230","authorId":"4091363089250230","name":"CaseyLKC","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":7,"crmLevelSwitch":1,"idStr":"4091363089250230","authorIdStr":"4091363089250230"},"htmlText":"Great","listText":"Great","text":"Great","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/369144055300352","repostId":2482932417,"repostType":2,"repost":{"id":"2482932417","kind":"highlight","pubTimestamp":1731137400,"share":"https://ttm.financial/m/news/2482932417?lang=&edition=fundamental","pubTime":"2024-11-09 15:30","market":"fut","language":"en","title":"1 Warren Buffett Index Fund Could Turn $450 Per Month Into $976,700","url":"https://stock-news.laohu8.com/highlight/detail?id=2482932417","media":"Motley Fool","summary":"Warren Buffett has consistently recommended an S&P 500 index fund.","content":"<html><body><ul>\n<li>\n<div>\n<svg fill=\"none\" height=\"15\" viewbox=\"0 0 14 15\" width=\"14\" xmlns=\"http://www.w3.org/2000/svg\">\n<path d=\"M14 5.58984C14 2.91016 11.8398 0.75 9.16016 0.75C6.50781 0.777344 4.375 2.91016 4.375 5.5625C4.375 6.10938 4.45703 6.60156 4.59375 7.09375L0.191406 11.4961C0.0546875 11.6328 0 11.7969 0 11.9609V14.0938C0 14.4766 0.273438 14.75 0.65625 14.75H3.71875C4.07422 14.75 4.375 14.4766 4.375 14.0938V13H5.46875C5.82422 13 6.125 12.7266 6.125 12.3438V11.25H7.13672C7.30078 11.25 7.51953 11.168 7.62891 11.0312L8.28516 10.293C8.55859 10.3477 8.85938 10.375 9.1875 10.375C11.8398 10.375 14 8.24219 14 5.58984ZM9.1875 4.25C9.1875 3.53906 9.76172 2.9375 10.5 2.9375C11.2109 2.9375 11.8125 3.53906 11.8125 4.25C11.8125 4.98828 11.2109 5.5625 10.5 5.5625C9.76172 5.5625 9.1875 4.98828 9.1875 4.25Z\" fill=\"#FFB81C\"></path>\n</svg>\n</div>\n<div>Warren Buffett believes most investors should own an S&amp;P 500 index fund.</div>\n</li>\n<li>\n<div>\n<svg fill=\"none\" height=\"15\" viewbox=\"0 0 14 15\" width=\"14\" xmlns=\"http://www.w3.org/2000/svg\">\n<path d=\"M14 5.58984C14 2.91016 11.8398 0.75 9.16016 0.75C6.50781 0.777344 4.375 2.91016 4.375 5.5625C4.375 6.10938 4.45703 6.60156 4.59375 7.09375L0.191406 11.4961C0.0546875 11.6328 0 11.7969 0 11.9609V14.0938C0 14.4766 0.273438 14.75 0.65625 14.75H3.71875C4.07422 14.75 4.375 14.4766 4.375 14.0938V13H5.46875C5.82422 13 6.125 12.7266 6.125 12.3438V11.25H7.13672C7.30078 11.25 7.51953 11.168 7.62891 11.0312L8.28516 10.293C8.55859 10.3477 8.85938 10.375 9.1875 10.375C11.8398 10.375 14 8.24219 14 5.58984ZM9.1875 4.25C9.1875 3.53906 9.76172 2.9375 10.5 2.9375C11.2109 2.9375 11.8125 3.53906 11.8125 4.25C11.8125 4.98828 11.2109 5.5625 10.5 5.5625C9.76172 5.5625 9.1875 4.98828 9.1875 4.25Z\" fill=\"#FFB81C\"></path>\n</svg>\n</div>\n<div>The S&amp;P 500 returned 2,150% over the last three decades, compounding at 10.9% annually.</div>\n</li>\n<li>\n<div>\n<svg fill=\"none\" height=\"15\" viewbox=\"0 0 14 15\" width=\"14\" xmlns=\"http://www.w3.org/2000/svg\">\n<path d=\"M14 5.58984C14 2.91016 11.8398 0.75 9.16016 0.75C6.50781 0.777344 4.375 2.91016 4.375 5.5625C4.375 6.10938 4.45703 6.60156 4.59375 7.09375L0.191406 11.4961C0.0546875 11.6328 0 11.7969 0 11.9609V14.0938C0 14.4766 0.273438 14.75 0.65625 14.75H3.71875C4.07422 14.75 4.375 14.4766 4.375 14.0938V13H5.46875C5.82422 13 6.125 12.7266 6.125 12.3438V11.25H7.13672C7.30078 11.25 7.51953 11.168 7.62891 11.0312L8.28516 10.293C8.55859 10.3477 8.85938 10.375 9.1875 10.375C11.8398 10.375 14 8.24219 14 5.58984ZM9.1875 4.25C9.1875 3.53906 9.76172 2.9375 10.5 2.9375C11.2109 2.9375 11.8125 3.53906 11.8125 4.25C11.8125 4.98828 11.2109 5.5625 10.5 5.5625C9.76172 5.5625 9.1875 4.98828 9.1875 4.25Z\" fill=\"#FFB81C\"></path>\n</svg>\n</div>\n<div>The Vanguard S&amp;P 500 ETF carries an ultra-low expense ratio of 0.03%</div>\n</li>\n</ul><div><p>Warren Buffett is one of the most successful investors in American history and one of the most respected figures on Wall Street. Under his leadership, <strong>Berkshire Hathaway</strong>'s Class A shares have returned nearly 20% annually since the mid-1960s. Comparatively, the <strong>S&amp;P 500</strong> <span>(^GSPC<span> 0.38%</span>)</span> has compounded at about 11% annually, including dividends, over the long term.</p><p>Interestingly, while many investors avidly track which stocks Buffett buys and sells, they often ignore one of his most prudent recommendations. \"In my view, for most people, the best thing to do is to own the S&amp;P 500 index fund,\" Buffett said at Berkshire's annual meeting in 2021. He has repeated that advice multiple times and has specifically suggested the <strong>Vanguard S&amp;P 500 ETF</strong> <span>(VOO<span> 0.44%</span>)</span>.</p><p>Here's how Buffett's advice could turn $450 invested monthly into $976,700 over three decades.</p><div><app :collapse_on_load=\"false\" :instrument_id=\"248475\" :show_benchmark_compare=\"false\" amount_change=\"2.42\" average_volume=\"\" company_name=\"Vanguard S&amp;P 500 ETF\" current_price=\"549.95\" daily_high=\"551.24\" daily_low=\"548.06\" default_period=\"FiveYear\" dividend_yield=\"N/A\" exchange=\"NYSEMKT\" fifty_two_week_high=\"551.24\" fifty_two_week_low=\"402.82\" gross_margin=\"0.00\" logo=\"https://g.foolcdn.com/art/companylogos/mark/VOO.png\" market_cap=\"\" pe_ratio=\"\" percent_change=\"0.44\" symbol=\"VOO\" volume=\"6,797,976\"></app></div><h2><strong>The Vanguard S&amp;P 500 ETF provides heavy exposure to stocks like Apple, Microsoft, and Nvidia</strong></h2><p>The Vanguard S&amp;P 500 ETF tracks the performance of 500 large U.S. companies, including value stocks and growth stocks from all 11 stock market sectors. It covers 80% of domestic equities and 50% of global equities by market value, letting investors diversify capital across some of the most important businesses in the world. The 10 largest positions in the index fund are listed by weight below:</p><ol><li><strong>Apple:</strong> 7.3%</li><li><strong>Microsoft:</strong> 6.6%</li><li><strong>Nvidia:</strong> 6.1%</li><li><strong>Alphabet:</strong> 3.6%</li><li><strong>Amazon:</strong> 3.6%</li><li><strong>Meta Platforms:</strong> 2.6%</li><li><strong>Berkshire Hathaway:</strong> 1.7%</li><li><strong>Broadcom:</strong> 1.6%</li><li><strong>Tesla:</strong> 1.5%</li><li><strong>Eli Lilly:</strong> 1.4%</li></ol><p>As mentioned, Warren Buffett believes an S&amp;P 500 index fund is the best way for most people to invest in stocks. That doesn't mean investors should avoid individual stocks, but rather that a large portion of their portfolios should be allocated to an S&amp;P 500 index fund. And there are three big reasons why that strategy is sensible.</p><div><div><div></div></div></div><p>First, professional money managers struggle to beat the S&amp;P 500. In fact, less than one-tenth of large-cap funds managed to outperform the index over the last decade. \"Huge institutional investors, viewed as a group, have long underperformed the unsophisticated index-fund investor who simply sits tight for decades,\" Buffett wrote in his 2014 shareholder letter.</p><p>Second, the S&amp;P 500 has consistently delivered superior returns compared to other asset classes. The index compounded at 13% annually over the last decade, topping the average return generated by fixed income, international stocks, real estate, and precious metals, according to <strong>Morgan Stanley</strong>. The same pattern has been observed over the last two decades.</p><div></div><p>Third, the S&amp;P 500 has consistently made patient investors wealthier. In fact, the index has been a profitable investment over every 16-year period since its inception in 1957, according to Bespoke Investment Group. That means investors who patiently hold an S&amp;P 500 index fund for at least 16 years are virtually guaranteed to make money.</p><div><img loading=\"lazy\" src=\"https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F796979%2Fsavings-4.jpg&amp;op=resize&amp;w=700\" srcset=\"https://g.foolcdn.com/image/?url=https%3A//g.foolcdn.com/editorial/images/796979/savings-4.jpg&amp;w=300&amp;op=resize 300w, https://g.foolcdn.com/image/?url=https%3A//g.foolcdn.com/editorial/images/796979/savings-4.jpg&amp;w=1000&amp;op=resize 1000w, https://g.foolcdn.com/image/?url=https%3A//g.foolcdn.com/editorial/images/796979/savings-4.jpg&amp;w=2000&amp;op=resize 2000w\"/><p>Image source: Getty Images.</p></div><h2>How the Vanguard S&amp;P 500 ETF could turn $450 per month into $976,700</h2><p>The S&amp;P 500 returned 2,150% over the last three decades, which equates to an annual return of 10.9%. That aligns with the long-term average of 11% annually, according to <strong>Goldman Sachs</strong>. However, I will assume a more conservative return of 10.5% annually to introduce a margin of safety. At that pace, here's what $500 invested monthly in the Vanguard S&amp;P 500 ETF would be worth after different holding periods:</p><div><div><div></div></div></div><ul><li><strong>10 years:</strong> $88,100</li><li><strong>20 years:</strong> $327,400</li><li><strong>30 years:</strong> $976,700</li></ul><p>The last item of consequence is the expense ratio. The Vanguard S&amp;P 500 ETF carries a below-average low expense ratio of 0.03%. That means investors will pay just $0.30 annually on every $1,000 invested in the index fund. Comparatively, the average expense ratio across U.S. index funds was 0.36% in 2023, according to <strong>Morningstar</strong>.</p><p>Here's the bottom line: Buffett has repeatedly recommended an S&amp;P 500 index fund for good reason. The index tracks some of the most influential companies in the world, and funds that track the index -- like the Vanguard S&amp;P 500 ETF -- have been reliable ways for patient investors to make money in the stock market.</p><div></div></div></body></html>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>1 Warren Buffett Index Fund Could Turn $450 Per Month Into $976,700</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n1 Warren Buffett Index Fund Could Turn $450 Per Month Into $976,700\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-09 15:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2024/11/09/1-warren-buffett-index-fund-can-turn-450-to-976700/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Warren Buffett believes most investors should own an S&P 500 index fund.\n\n\n\n\n\n\n\nThe S&P 500 returned 2,150% over the last three decades, compounding at 10.9% annually.\n\n\n\n\n\n\n\nThe Vanguard S&P 500 ETF ...</p>\n\n<a href=\"https://www.fool.com/investing/2024/11/09/1-warren-buffett-index-fund-can-turn-450-to-976700/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F796979%2Fsavings-4.jpg&op=resize&w=165&h=104","relate_stocks":{"IE00BJLML261.HKD":"HSBC GLOBAL EQUITY INDEX \"HCH\" (HKD) ACC","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","SSO":"两倍做多标普500ETF","VOO":"Vanguard标普500ETF","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","SPXU":"三倍做空标普500ETF","BK4579":"人工智能","BK4550":"红杉资本持仓","FDN":"First Trust Dow Jones Internet I","IE00BK4W5M84.HKD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (HKD) ACC","BK4503":"景林资产持仓","BRK.A":"伯克希尔","LU0006306889.USD":"SCHRODER ISF US LARGE CAP \"A\" (USD) INC AV","IE00B19Z8X17.USD":"FTGF CLEARBRIDGE US LARGE CAP GROWTH  \"AG\" (USD) ACC","SPY":"标普500ETF","OEX":"标普100","OEF":"标普100指数ETF-iShares","BRK.B":"伯克希尔B","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","SDS":"两倍做空标普500ETF","IE000YTNTUN2.SGD":"PIMCO BALANCED INCOME AND GROWTH \"M\" (SGDHDG)INC","LU1548497426.USD":"安联环球人工智能AT Acc","LU0971096721.USD":"富达环球金融服务 A","IE00B19Z8W00.USD":"FTGF CLEARBRIDGE US LARGE CAP GROWTH \"A\" INC","LU0251131958.USD":"FIDELITY AMERICA \"A\" (USD) ACC","IE00B3SWFQ91.USD":"PIMCO BALANCED INCOME AND GROWTH \"E\" (USD) INC","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC",".SPX":"S&P 500 Index","IE00B5TLWC47.USD":"BNY MELLON LONG-TERM GLOBAL EQUITY \"B\" (USD) ACC","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","UPRO":"三倍做多标普500ETF","IE0034235295.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"A\" (USD) ACC","IE00BFXG0V08.USD":"BNY MELLON GLOBAL LEADERS \"B\" (USD) ACC","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","IVV":"标普500指数ETF","SH":"标普500反向ETF","LU0048573561.USD":"FIDELITY AMERICA \"A\" (USD) INC","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","IE00BDCRKT87.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC","LU0098860793.USD":"FRANKLIN INCOME \"A\" INC","BK4567":"ESG概念","BK4585":"ETF&股票定投概念","LU0267386448.USD":"FIDELITY FIRST ALL COUNTRY WORLD \"A\" (USD) INC","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4576":"AR","LU0640476718.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQ \"AU\" (USD) ACC","MSFT":"微软"},"source_url":"https://www.fool.com/investing/2024/11/09/1-warren-buffett-index-fund-can-turn-450-to-976700/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2482932417","content_text":"Warren Buffett believes most investors should own an S&P 500 index fund.\n\n\n\n\n\n\n\nThe S&P 500 returned 2,150% over the last three decades, compounding at 10.9% annually.\n\n\n\n\n\n\n\nThe Vanguard S&P 500 ETF carries an ultra-low expense ratio of 0.03%\n\nWarren Buffett is one of the most successful investors in American history and one of the most respected figures on Wall Street. Under his leadership, Berkshire Hathaway's Class A shares have returned nearly 20% annually since the mid-1960s. Comparatively, the S&P 500 (^GSPC 0.38%) has compounded at about 11% annually, including dividends, over the long term.Interestingly, while many investors avidly track which stocks Buffett buys and sells, they often ignore one of his most prudent recommendations. \"In my view, for most people, the best thing to do is to own the S&P 500 index fund,\" Buffett said at Berkshire's annual meeting in 2021. He has repeated that advice multiple times and has specifically suggested the Vanguard S&P 500 ETF (VOO 0.44%).Here's how Buffett's advice could turn $450 invested monthly into $976,700 over three decades.The Vanguard S&P 500 ETF provides heavy exposure to stocks like Apple, Microsoft, and NvidiaThe Vanguard S&P 500 ETF tracks the performance of 500 large U.S. companies, including value stocks and growth stocks from all 11 stock market sectors. It covers 80% of domestic equities and 50% of global equities by market value, letting investors diversify capital across some of the most important businesses in the world. The 10 largest positions in the index fund are listed by weight below:Apple: 7.3%Microsoft: 6.6%Nvidia: 6.1%Alphabet: 3.6%Amazon: 3.6%Meta Platforms: 2.6%Berkshire Hathaway: 1.7%Broadcom: 1.6%Tesla: 1.5%Eli Lilly: 1.4%As mentioned, Warren Buffett believes an S&P 500 index fund is the best way for most people to invest in stocks. That doesn't mean investors should avoid individual stocks, but rather that a large portion of their portfolios should be allocated to an S&P 500 index fund. And there are three big reasons why that strategy is sensible.First, professional money managers struggle to beat the S&P 500. In fact, less than one-tenth of large-cap funds managed to outperform the index over the last decade. \"Huge institutional investors, viewed as a group, have long underperformed the unsophisticated index-fund investor who simply sits tight for decades,\" Buffett wrote in his 2014 shareholder letter.Second, the S&P 500 has consistently delivered superior returns compared to other asset classes. The index compounded at 13% annually over the last decade, topping the average return generated by fixed income, international stocks, real estate, and precious metals, according to Morgan Stanley. The same pattern has been observed over the last two decades.Third, the S&P 500 has consistently made patient investors wealthier. In fact, the index has been a profitable investment over every 16-year period since its inception in 1957, according to Bespoke Investment Group. That means investors who patiently hold an S&P 500 index fund for at least 16 years are virtually guaranteed to make money.Image source: Getty Images.How the Vanguard S&P 500 ETF could turn $450 per month into $976,700The S&P 500 returned 2,150% over the last three decades, which equates to an annual return of 10.9%. That aligns with the long-term average of 11% annually, according to Goldman Sachs. However, I will assume a more conservative return of 10.5% annually to introduce a margin of safety. At that pace, here's what $500 invested monthly in the Vanguard S&P 500 ETF would be worth after different holding periods:10 years: $88,10020 years: $327,40030 years: $976,700The last item of consequence is the expense ratio. The Vanguard S&P 500 ETF carries a below-average low expense ratio of 0.03%. That means investors will pay just $0.30 annually on every $1,000 invested in the index fund. Comparatively, the average expense ratio across U.S. index funds was 0.36% in 2023, according to Morningstar.Here's the bottom line: Buffett has repeatedly recommended an S&P 500 index fund for good reason. The index tracks some of the most influential companies in the world, and funds that track the index -- like the Vanguard S&P 500 ETF -- have been reliable ways for patient investors to make money in the stock market.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":1,"commentSize":1,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2482932417"}