Warren Buffett‘s strategy for everyday investors to build wealth doesn’t rely on complex stock picking or insider knowledge. Instead, the legendary investor recommends simply buying and holding a low-cost S&P 500 index fund, specifically pointing to the Vanguard S&P 500 ETF (NYSE:VOO), as the best way to reliably grow modest savings over time.
The Simple Directive for Investors
According to Berkshire Hathaway Inc.’s (NYSE:BRK) annual report, it has achieved a staggering 6,099,294% overall gain from 1964 to 2025—vastly outperforming the S&P 500’s 46,061% gain over the same period.
Buffett, the current Chairman and former CEO of the firm, admits that retail investors cannot easily replicate those breathtaking results.
His instructions for his own wife’s trust perfectly reflect his philosophy for the everyday investor. In his 2013 shareholder letter, he wrote: “My advice to the trustee could not be more simple: 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’s.)”
However, Berkshire sold off its entire positions in both the SPDR S&P 500 ETF Trust (NYSE:SPY) and VOO during the fourth quarter of 2025, according to the Securities and Exchange Commission.
Beating Wall Street Professionals
The core of Buffett’s argument is that active management rarely beats the broader market index over the long term. To unequivocally prove this, Buffett placed a $1 million bet in 2007 against a fund-of-funds firm.
Over ten years, a Vanguard S&P 500 index fund easily crushed the hand-picked hedge funds. Buffett advises that the true key to investing success is minimizing management fees, staying in the market through rough patches, and consistently adding funds over the long haul.
Meanwhile, the Invesco S&P 500 Equal Weight ETF (NYSE:RSP) has outperformed this year, attracting strong investor inflows while beating popular peers such as VOO and the SPY. The RSP ETF has delivered a total return of 13.1% year-to-date, compared with about 10.16% and 10.13% for both VOO and SPY, respectively.
Low Costs and Consistent Growth
VOO perfectly aligns with this strategy. As of July 31, 2026, the ETF trades at a market price of $686.65. It charges a famously low expense ratio of just 0.03%, meaning investors pay a mere $3 annually on a $10,000 investment.
The fund provides self-correcting exposure to America’s largest companies and has delivered a robust 10-year trailing return of 15.47%. Ultimately, time in the market combined with VOO’s low costs does most of the heavy lifting.
How Has VOO Performed in 2026?
VOO ETF was up 8.70% year-to-date and 18.18% over the last year; it was down 0.02% in July and 1.11% higher over the last five sessions. VOO closed higher by 0.71% at $686.65 on Friday. It was up 0.47% in premarket on Monday.
With $979 billion in assets under management, Benzinga Edge Stock Rankings showed that the VOO ETF had a strong price trend across the small, medium, and long terms.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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