The S&P 500 plummeted by 19% between late February and early April, but since then, the index has regained ground, now sitting almost 2% above its previous all-time high in February. With the US stock market historically trending upwards, financial experts suggest investing in a diversified portfolio and consider following Warren Buffett’s advice for everyday investors.
Buffett, chairman of Berkshire Hathaway, recommends consistently buying an S&P 500 low-cost index fund. This approach has proven successful for many investors, as most people struggle to pick winners consistently. In fact, according to Morningstar, just 7% of active mutual fund managers benchmarked to large US stock indexes beat their average passive peer.
Index funds, which seek to replicate the performance of a market index, offer rock-bottom annual management fees and can afford to charge lower fees compared to actively managed funds. By investing in an S&P 500 index fund, investors can earn returns alongside the market, rather than trying to beat it.
Consider the following examples:
– If you invested $1,000 one year ago, your total return would be 14.73%, with a total of $1,147.
– If you invested $1,000 ten years ago, your total return would be 255.09%, with a total of $3,551.
– If you invested $1,000 twenty years ago, your total return would be 658.14%, with a total of $7,581.
Buffett’s approach is not about beating the market; it’s about giving yourself a leg up on even the savviest Wall Street pros. By investing in an index fund and acknowledging your limitations, you can actually outperform many investment professionals.
Source: https://www.cnbc.com/2025/07/03/how-much-1000-dollars-invested-in-the-sp-500-a-decade-ago-is-worth-today.html