Warren Buffett has been at the helm of Berkshire Hathaway for 60 years, from 1965 to 2025. During his leadership, the company’s value ballooned to $1 trillion, built on sound investment choices, numerous subsidiaries, a stock portfolio worth $350 billion, and substantial cash reserves exceeding $300 billion.
Under Buffett’s guidance, the stock’s annual return stood at 19.7%. So, an initial investment of $1,000 in 1965 would have transformed into a staggering $48.4 million by the end of Buffett’s tenure. He often noted that achieving similar results would be challenging for the average investor, which is why he consistently compared his performance to the S&P 500.
In his Annual Letter to Shareholders from 2013, Buffett put forth several recommendations, including the Vanguard S&P 500 ETF. He pointed out that low fees make this option attractive. While younger investors might lean toward riskier ventures, those in their 40s should focus on establishing a robust retirement plan. I believe if I were in that demographic, the Vanguard ETF would be a wise choice.
Exposure to 500 Companies Across 11 Economic Sectors
The S&P 500 is noted for its diversification, encompassing 500 firms from 11 different sectors. It has stringent criteria for inclusion, requiring companies to have a market cap of at least $22.7 billion and to be profitable. Even with these standards met, the final decision on participation rests with a special committee.
The index is market-capitalization weighted, meaning the performance impact of larger companies is more significant than that of smaller ones. Despite its broad distribution, the technology sector, which includes three of the four largest companies globally, holds considerable sway, making up 38.8% of the market with a combined value of $13.7 trillion from Nvidia, Apple, and Microsoft.
The Vanguard S&P 500 ETF’s top sectors by weight and leading companies speak to its strength.
Data suggests that the technology sector has played a pivotal role in boosting market returns, particularly since the start of the AI surge in early 2023. The S&P 500 has enjoyed a 102% rise since then, though excluding technology drops that figure to 64%.
To sum up, the Vanguard S&P 500 ETF offers investors a chance to access high-growth areas with solid diversification, presenting a promising long-term investment opportunity.
Following Buffett’s Advice Has Paid Off
The S&P 500, since its inception in 1957, has averaged a return of 10.7% annually. However, since Buffett endorsed the Vanguard S&P 500 ETF in 2014, it has outperformed that with a 13.9% annual return, driven by explosive growth in sectors like AI and cloud computing.
A hypothetical investor putting $20,000 into the ETF a dozen years ago would now see their investment swell to $95,348. That’s before costs, but considering the low expense ratio of 0.03%, the annual fee comes to just $3 for every $10,000 invested.
A 45-year-old contemplating retirement at 67 could potentially amass a substantial retirement fund through the Vanguard S&P 500 ETF, although the outcome would hinge on its average annual return.
Personally, I think, I’d likely avoid selling all my positions when retirement comes around. Compound interest works wonders over time. Ideally, after 22 years, one might find their balance sufficiently robust to support a comfortable lifestyle post-career.
Should You Buy Vanguard S&P 500 ETF Stock Now?
Before diving in, I’d suggest considering a few points:
Analysts at Motley Fool Stock Advisor have found what they believe to be ten standout stocks currently available, none of which include the Vanguard S&P 500 ETF. These options have the potential for significant returns moving forward.
Keep in mind this list is long-standing; for example, if one had invested $1,000 in Netflix back when it was recommended, that investment would now be worth $411,427 or similarly, $1,335,252 for Nvidia from its recommendation date.
It’s noteworthy that the Stock Advisor’s overall return of 965% far exceeds the S&P 500’s 215%, so you might want to keep an eye out for their latest picks. Joining the Stock Advisor community could be worthwhile for retail investors looking to gain insights from fellow investors.
*Stock Advisor will resume on August 12, 2026.
