1 Warren Buffett ETF I'm Stocking Up On Before the End of 2024 – The Motley Fool

The end of the year can be a great time to review your investments, and you may even be able to strengthen your portfolio by investing in more stocks and funds.

Exchange-traded funds (ETFs) are an easy way to invest in dozens or even hundreds of stocks at once, and are great for people who don't have the time or want to avoid spending huge amounts of time researching individual stocks. is an ideal choice for

There are a seemingly endless number of ETFs to choose from, each with their own strengths and weaknesses. While there's no one right choice for everyone, there is one Warren Buffett-approved ETF that I'm stocking up on before the end of the year.

A powerful investment that can protect your portfolio

One of Warren Buffett's most recommended investments is the S&P 500 ETF. This type of fund has S&P500 (^GSPC 0.25%) It itself includes 500 of America's largest and most powerful companies

By investing in one share of the S&P 500 ETF, you can instantly buy hundreds of stocks across a variety of industries. This allows you to limit risk and provide instant diversification with far less effort than buying dozens of stocks individually.

The S&P 500 includes only large companies, so all the stocks in the ETF are strong companies, including: apple, Amazonand Nvidiato procter and gamble, 3Mand coca cola. If you want to gain exposure to industry leaders in all areas of the stock market, the S&P 500 ETF is a solid choice.

Earn Buffett's approval

through Berkshire HathawayMr. Buffett owns two types of funds: Vanguard S&P 500 ETF (VOO 0.20%) and SPDR S&P 500 ETF Trust (spy 0.19%).

A few years ago, Mr. Buffett put his own money on the line by betting $1 million that an S&P 500 fund would outperform a group of five actively managed hedge funds over a 10-year period. I even bet on it.

result? At the time, his investments delivered a total return of nearly 126%, while hedge funds' returns ranged from just 2.8% to 87.7%. Combined, the five hedge funds have an average return of about 36% over a 10-year period.

In a letter to shareholders after Berkshire Hathaway's bet, Buffett said:

There was nothing unusual about the stock market's behavior over the past decade. You don't need to be a great intellect, have a degree in economics, or be familiar with Wall Street jargon to seize the opportunities presented to you. Instead, investors need the ability to ignore the fear and enthusiasm of the crowd and focus on a few simple fundamentals.

Earn hundreds of thousands of dollars in the long run

The S&P 500 ETF is a relatively safe investment, but with enough time and consistency, it has the potential to make you a lot of money.

Historically, the S&P 500 itself has averaged an annual return of about 7%. With this type of investment, returns can vary widely from year to year, so a long-term outlook is important. But over decades, these annual ups and downs should average out to a more consistent number.

Let's say you invest $200 each month in an S&P 500 ETF, earning an average annual return of 7%. At this rate, this is approximately how these contributions add up over the decades.

Data source: Author calculations via investor.gov.

The more you let your investment grow, the more you potentially earn. Regardless of how much you can donate each month, you can dramatically increase your earnings by starting early.

As with any investment, time and consistency are important. The S&P 500 ETF can be a great option for those looking for a safer and more reliable investment. The best way to maximize your profits is to start early. By making the most of this Buffett-approved ETF, you'll earn more than you ever imagined in the long run.