Warren Buffett Says Buy This Vanguard Index Fund -- It Could Turn $400 Per Month Into $835,000 With Help From Nvidia, Apple, and Microsoft
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By Trevor Jennewine – Dec 15, 2025 at 4:45AM ESTKey PointsWarren Buffett has frequently recommended that non-professional investors periodically buy shares of an S&P 500 index fund.The Vanguard S&P 500 ETF offers easy exposure to many of the most influential companies in the world, including Nvidia, Apple, and Microsoft.The S&P 500 advanced 1,810% during the last three decades, which is equivalent to 10.3% annually, a pace that would turn $400 per month into $835,000 over three decades.These 10 Stocks Could Mint the Next Wave of Millionaires ›NYSEMKT: VOOVanguard S&P 500 ETFMarket Cap$0.0KToday's Changeangle-down(-1.08%) $6.84Current Price$626.87Price as of December 12, 2025 at 4:00 PM ETWarren Buffett's recommended investment strategy would have been profitable 100% of the time throughout history.Warren Buffett, who took control of Berkshire Hathaway six decades ago, has earned a reputation as one of the greatest investors in American history. He has consistently given the same advice: Buy an index fund that tracks the S&P 500 (^GSPC 1.07%) "In my view, for most people, the best thing to do is to own the S&P 500 index fund," Buffett told attendees at Berkshire's annual meeting in 2021. He has suggested the Vanguard S&P 500 ETF (VOO 1.08%). Here's how that advice could turn $400 invested monthly into $835,000 over 30 years. Image source: Getty Images. The Vanguard S&P 500 ETF provides exposure to many of the most influential companies in the world The Vanguard S&P 500 measures the performance of the S&P 500, which tracks 500 large U.S. companies. It includes value stocks and growth stocks from all 11 stock market sectors, and covers about 80% of domestic equities and 40% of global equities by market value. The index fund provides exposure to many of the most influential businesses in the world. The top 10 positions are listed by weight below:Advertisement Nvidia: 8.4% Apple: 6.8% Microsoft: 6.5% Alphabet: 5% Amazon: 4% Broadcom: 3% Meta Platforms: 2.4% Tesla: 2.1% Berkshire Hathaway: 1.5% JPMorgan Chase: 1.4% One risk associated with owning an S&P 500 index fund is the extraordinary concentration of the underlying index. The top 10 companies account for 41% of the S&P 500 by market-cap weight, which means a large decline in two or three of those stocks could really drag on the entire index. However, the top 10 companies also account for approximately 33% of the S&P 500's earnings, so the statistic is not as alarming as many pundits make it out to be. Their price-to-earnings multiples are above average, but their strong competitive positions warrant premium valuations. Warren Buffett likes S&P 500 index funds because they have regularly generated attractive returns over long periods There is a simple reason Warren Buffett believes an S&P 500 index fund is the best way for the average investor to get stock market exposure: Buying individual stocks requires more work than most people are willing to take on, and beating the S&P 500 is challenging even for professional money managers. Indeed, fewer than 15% of large-cap fund managers outperformed the index during the last decade. That means most professionals would have been better off buying an S&P 500 index fund. And if that many trained experts struggle to outperform the index, then most non-professional investors are likely to fail. "The goal of the non-professional should not be to pick winners," Buffett wrote in his 2013 shareholder letter. They should instead seek to "own a cross-section of businesses that in aggregate are bound to do well. An S&P 500 index fund will achieve this goal." Another reason to like S&P 500 index funds is that the underlying benchmark has consistently been a profitable investment over long periods. In fact, the S&P 500 has never produced a negative return over any 15-year period since its inception in 1957. History says the Vanguard S&P 500 ETF can turn $400 invested monthly into $835,000 over three decades The S&P 500 returned 1,810% in the last three decades, compounding at 10.3% annually. That period encompasses such a broad range of economic and market conditions that similar results are plausible over the next three decades. ExpandNYSEMKT: VOOVanguard S&P 500 ETFToday's Change(-1.08%) $-6.84Current Price$626.87Key Data PointsDay's Range$624.48 - $633.4352wk Range$442.80 - $634.13Volume10K At that pace, $400 invested monthly in an S&P 500 index fund would be worth $77,000 after one decade, $284,000 after two decades, and $835,000 after three decades. Moreover, the Vanguard S&P 500 ETF has a very low expense ratio of 0.03%, meaning shareholders will pay $3 annually on every $10,000 invested in the fund. Brendan McCann at Morningstar writes, "This exchange-traded fund accurately represents the large-cap opportunity set while charging rock-bottom fees, a recipe for success over the long run." Indeed, you would be hard-pressed to find a cheaper index fund with a better track record. As a final thought, investors need not choose between individual stocks and an S&P 500 index fund. For those willing to do the research, owning both is a smart strategy. If your stocks outperform, your portfolio will beat the S&P 500. But if your stocks underperform, your portfolio will not trail the S&P 500 too badly (depending on what percentage of your money is invested in an S&P index fund).About the AuthorTrevor Jennewine is a contributing Motley Fool stock market analyst covering technology, cryptocurrency, and investment planning. Prior to The Motley Fool, Trevor managed several pharmacies. He holds a doctor of pharmacy degree from Oregon State University, a master’s degree in business administration from Miami University, and a bachelor’s degree in biology from Miami University.TMFphoenix12X@tjennewine1Read NextDec 12, 2025 •By David Jagielski, CPANew to Investing?
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