Warren Buffett Has Been Saying This for Years. 1 Vanguard ETF Puts That Advice Into Practice.
Key Points
For decades, Warren Buffett has said most retail investors are better off owning a long-term portfolio of large-cap stocks instead of stock picking.
At past Berkshire Hathaway shareholder meetings, he's advocated for a mix of 90% in an S&P 500 index fund and 10% in Treasury bills.
He's specifically called out the Vanguard S&P 500 ETF (VOO) as his fund of choice.
- 10 stocks we like better than Vanguard S&P 500 ETF ›
While Warren Buffett has endorsed a value style of investing for decades, the other thing he frequently advocates for is simplicity. He's not a frequent trader or chasing the next hot thing, and he doesn't make exotic bets. He simply invests in durable, long-lasting businesses and lets them do their thing.
This same concept applies to retail investors. By building a portfolio around large, financially healthy companies, you can set yourself up for years of long-term wealth creation. In a 2013 letter to Berkshire Hathaway shareholders, Buffett said the following:
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors.
Buffett couldn't be much clearer than that. He believes investors should have the Vanguard S&P 500 ETF (NYSEMKT: VOO) in their portfolios.
Image source: Getty Images.
Key takeaways
- VOO tracks the S&P 500, charges just 0.03% annually, and has grown to more than $950 billion in assets, making it one of the largest investment funds in the world.
- Q1 2026 S&P 500 earnings are on pace to grow by roughly 28% year over year, the best result since 2021.
- Buffett designed a 90/10 framework so non-expert investors could achieve results that outperform most professional managers without the cost or complexity.
Why Buffett's investing principles still apply
Many investors are overweight tech and growth stocks right now, whether that's via an ETF targeting one of those themes or just through an S&P 500 ETF. The index's 33% tech allocation is substantially higher than it was just a decade ago, when it accounted for about 20% of assets.
But over time, the S&P 500's sector allocation adjusts to where the economy is moving. At different points over the past few decades, tech, energy, and financials were the biggest individual sector holdings. Investing in the S&P 500 doesn't require market timing or frequent trading. Its simplicity is its biggest selling point. It's truly a long-term buy-and-hold index that allows investors to capture the U.S. economic growth engine.
Buffett acknowledges that most people shouldn't be trying to pick individual winners. Even most professional money managers fail to do it on a consistent basis. By simply investing in the index via the Vanguard S&P 500 ETF, you get long-term growth potential with rock-bottom fees.
VOO: Performance and key metrics
| Metric | Data |
|---|---|
| Expense ratio | 0.03% |
| Assets under management | $958 billion |
| Top sectors | Tech (33%), financials (13%), communication services (10%) |
| One-year total return | 28.2% |
| Five-year annualized return | 14.4% |
| 10-year annualized return | 15.5% |
Data source: Vanguard.
Buffett's investing philosophy isn't necessarily popular during periods like the artificial intelligence (AI) boom, when tech stocks are roaring. But over the long term, it's proven effective in building wealth slowly and steadily over time. That's something most investors should be doing.
Should you buy stock in Vanguard S&P 500 ETF right now?
Before you buy stock in Vanguard S&P 500 ETF, 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 Vanguard S&P 500 ETF 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 $469,293!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,332!*
Now, it’s worth noting Stock Advisor’s total average return is 993% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 16, 2026.
David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
Recommended Articles
