Buffett Urges New Investors to Buy 0.03% S&P 500 Funds as Index Returned 1,770%
Updated
Updated · The Motley Fool · Jun 9
Buffett Urges New Investors to Buy 0.03% S&P 500 Funds as Index Returned 1,770%
3 articles · Updated · The Motley Fool · Jun 9
Summary
Low-cost S&P 500 index funds are Buffett’s recommended starting point for new investors, arguing most people lack the time or skill to pick stocks and that active managers usually trail the benchmark.
Vanguard’s S&P 500 ETF, VOO, is highlighted as one option because its 0.03% expense ratio keeps more returns with investors while providing broad exposure to all major sectors.
The case rests on long-run market gains: the S&P 500 has returned 1,770% over 30 years, turning $10,000 invested in 1996 into about $187,000, with a 316% total return over the past decade.
Buffett’s simple approach comes with a caveat that valuations are historically high, so dollar-cost averaging can reduce timing risk; a $10,000 initial investment plus $100 monthly at a 10% annual return would reach roughly $382,000 in 30 years.