While Warren Buffett has supported a style of value investing for decades, the other thing he frequently advocates is simplicity. He is not a frequent trader nor does he chase the next big thing, and he does not make exotic bets. You simply invest in long-lasting, long-lasting businesses and let them do their thing.
This same concept applies to retail investors. By building a portfolio around large, financially healthy companies, you can set yourself up for years of long-term wealth creation. In a 2013 letter to Berkshire Hathaway shareholders, Buffett said the following:
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Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard.) I believe the trust’s long-term results from this policy will be superior to those achieved by most investors.
Buffett couldn’t be much clearer than that. He believes investors should have the Vanguard S&P 500 ETF (NYSEMKT:VOO) in their wallets.
Key takeaways
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VOO tracks the S&P 500 index, charges just 0.03% annually, and has grown to more than $950 billion in assets, making it one of the largest investment funds in the world.
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S&P 500 earnings for the first quarter of 2026 are on track to grow about 28% year over year, the best result since 2021.
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Buffett designed a 90/10 framework so that non-expert investors could achieve results that outperformed most professional managers without the cost or complexity.
Why Buffett’s investment principles still apply
Many investors are overweight technology and growth stocks right now, whether through an ETF targeted at one of those themes or simply through a S&P 500 ETF. The index’s 33% technology allocation is substantially larger than just a decade ago, when it represented about 20% of assets.
But over time, the S&P 500’s sector allocation adjusts to where the economy is moving. At different points in recent decades, technology, energy and finance were the largest individual sector holdings. Investing in the S&P 500 does not require market timing or frequent trading. Its simplicity is its greatest attraction. It is truly a long-term buy and hold index that allows investors to capture the engine of US economic growth.
Buffett acknowledges that most people shouldn’t try to pick individual winners. Even most professional money managers don’t do this consistently. By simply investing in the index through the Vanguard S&P 500 ETF, you get long-term growth potential with rock-bottom fees.