Warren Buffett recommends S&P 500 index funds for most investors, citing 126% returns over a decade in a high-profile bet.
Warren Buffett has repeatedly endorsed S&P 500 index funds as the optimal investment for most individuals. During Berkshire Hathaway’s 2020 annual meeting, he stated these funds are “the best thing” for the average investor, emphasizing their long-term reliability and diversification benefits.
In 2008, Buffett wagered $1 million that an S&P 500 fund would outperform five hedge funds over a decade. The S&P 500 delivered 126% total returns, while the hedge funds averaged just 36%. He also directed that 90% of his wife’s inheritance be invested in such funds, specifically naming Vanguard’s S&P 500 ETF (VOO).
The S&P 500’s historical performance and low-cost structure make it a cornerstone for passive investing strategies, offering exposure to 500 of the largest U.S. companies in a single fund.