Warren Buffett Has Offered the Same Investing Advice for Decades. History Says He's Never Been Wrong (So Far).
Past data doesn't guarantee future results, but it's hard to argue with the track record.
Warren Buffett's investing wisdom has been highly influential since he started managing capital at Berkshire Hathaway. Despite being offered the same advice for decades, history shows he has never been wrong in his recommendations. One of his long-standing tips is to invest in an S&P 500 index fund, which he famously bet against hedge fund managers in 2008 and won.
In 2013, he stated that 90% of his wife's inheritance after his death should be placed in an S&P 500 index fund, specifically Vanguard's VOO. This index fund boasts a low expense ratio of just 0.03%, making it a cost-effective choice compared to active managers who often underperform the market. Since its inception in 1957, the S&P 500 has delivered an average annualized total return of 10%, resulting in a $10,000 investment growing to over $174,000 in 30 years.
Over the past decade, the index has outperformed with a total return of 315% (15% yearly). While the S&P 500 has historically been a reliable wealth-building tool, its current high valuation multiple (CAPE ratio of 41.8) suggests potential future disappointment. However, the index's concentration in the technology sector and its historical performance make the Vanguard S&P 500 ETF a sound investment option.
Despite not being included in the Motley Fool Stock Advisor's top 10 list, Vanguard S&P 500 ETF remains a compelling choice for long-term investors.
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