Warren Buffett Recommends S&P 500 Index Funds for Retail Investors

Warren Buffett, Chairman of Berkshire Hathaway Inc., recommends that everyday investors build wealth by buying and holding a low-cost S&P 500 index fund. He specifically suggests the Vanguard S&P 500 ETF as an efficient tool for growing modest savings because it minimizes management fees and avoids the pitfalls of active management.

Buffett asserts that active managers rarely outperform the broader market index over long durations. To support this claim, he cited a ten-year bet initiated in 2007, which he won after a Vanguard S&P 500 index fund outperformed a group of hand-picked hedge funds.

Despite these public recommendations for retail investors, United States Securities and Exchange Commission filings indicate a different strategy for his own firm. Berkshire Hathaway Inc. sold its entire positions in both the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust during the fourth quarter of 2025.