1 Spectacular Warren Buffett-Approved Index Fund That Could Turn $500 Per Month Into $1 Million

Warren Buffett will retire from his role as CEO of the Berkshire Hathaway holding company at the end of 2025, where for the last 60 years he has overseen numerous wholly owned subsidiaries, in addition to a stock portfolio that's today worth $300 billion. Had you invested just $500 in Berkshire shares when he took the helm in 1965, it would be worth a staggering $24.8 million today.

However, Buffett is a seasoned expert, and he knows the average investor would struggle to replicate his incredible ability to pick stocks. Therefore, he often recommends they buy a low-cost exchange-traded fund (ETF) that tracks a diversified index like the S&P 500 (SNPINDEX: ^GSPC) instead.

The Vanguard S&P 500 ETF (NYSEMKT: VOO) is one great option he has named in the past. Here's how it could turn a consistent investment of $500 per month into $1 million over the long term.

Image source: The Motley Fool.

A great index fund for investors of all experience levels

The S&P 500 is made up of 500 companies from 11 different sectors of the economy. The index is weighted by market capitalization, meaning its largest constituents have a greater influence over its performance than the smallest. Nvidia, Apple, and Microsoft are the world's most valuable companies, with a combined market capitalization of $11.9 trillion, and all three are in the information technology sector. Hence, this is the largest sector in the S&P 500 by a wide margin.

Here are the top five sectors in the index, along with their weightings, and some of their most noteworthy stocks.

Data source: Vanguard, State Street. Sector weightings are accurate as of Nov. 19, 2025, and are subject to change.

The other six sectors in the S&P 500 are industrials, consumer staples, energy, utilities, real estate, and materials, so the index is highly diversified.

However, it's hard to ignore the significant influence of the information technology sector. The S&P 500 soared by 214% over the last 10 years, and the information technology sector was responsible for more than half of that overall gain, thanks to its own eye-popping return of 640%. In fact, if we exclude the sector entirely, the S&P's return over the last decade shrinks to just 79%.

This dynamic is likely to remain in place thanks to emerging technologies like artificial intelligence (AI), robotics, quantum computing, and more, which could fuel significant returns in stocks like Nvidia in the years to come.

The Vanguard S&P 500 ETF is one of the most cost-effective ways for investors to gain like-for-like exposure to the S&P 500. It has an expense ratio of just 0.03%, which is the proportion of the fund deducted each year to cover management costs. In dollar terms, an investment of $10,000 would incur an annual fee of just $3, whereas that fee could be as high as $74 in other funds, according to Vanguard.

Turning $500 per month into $1 million

The S&P 500 has delivered a compound annual return of 10.5% since its inception in 1957, and if it continues to grow at that pace, it could turn a consistent monthly investment of $500 into $1 million in under 30 years:

Calculations by author.

The S&P has delivered an even better average annual return of 14.4% over the last five years, as themes like AI fueled incredible growth for some of the index's largest constituents, including Nvidia, Microsoft, Amazon, and more. Just last week, Nvidia CEO Jensen Huang told investors that annual AI infrastructure spending could hit an eye-popping $4 trillion by 2030, so momentum in this space is unlikely to slow anytime soon.

However, even though the S&P might continue generating accelerated returns over the next few years, it's also important to remember that volatility is a normal part of the investing journey. According to Capital Group, the index experiences a decline of 10% or more once every two and a half years, on average, and it slips into a bear market (a decline of 20% or more) every six years. These bumps in the road are the price of admission for an opportunity to earn life-changing returns over the long term.

The key to success is investing consistently, even during uncertain times. Warren Buffett is known for buying stocks in all market conditions, but especially during periods of weakness because as a value investor, he loves a bargain.

Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Alphabet, Amazon, Apple, Berkshire Hathaway, JPMorgan Chase, Meta Platforms, Microsoft, Netflix, Nvidia, Tesla, and Vanguard S&P 500 ETF. The Motley Fool recommends Johnson & Johnson 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.