Warren Buffett is known for his investment wisdom. He often recommends that most investors buy index funds. Berkshire Hathaway, the company Buffett leads, owns stakes in two S&P 500 index funds.
One of those funds is the Vanguard S&P 500 ETF. It tracks the performance of 500 of the largest U.S. companies and offers instant diversification across various sectors.
It also has a very low expense ratio of just 0.03%. The S&P 500 index is weighted by market cap. This means the most prominent companies have the most influence.
For example, the technology sector currently makes up 31.7% of the index. This is due to tech giants like Apple, Microsoft, and Nvidia. One top Wall Street analyst predicts big gains for the S&P 500.
Buffett’s advice on Vanguard fund
Tom Lee of Fundstrat expects the index to hit 15,000 by 2030, implying a 150% rise from current levels.
Lee believes demographics will drive this growth. Millennials and Gen Z are entering peak earning years, and they will be making key life choices, including investing.
He also sees AI as a major growth driver that will boost productivity. Some risks could impact the S&P 500’s path to 15,000. An economic shock like a recession is one factor.
If AI doesn’t live up to the hype, that could also slow growth. However, history suggests the S&P 500 will eventually reach that milestone. Investors may want to follow Buffett’s advice.
Putting money in an S&P 500 index fund like Vanguard’s could pay off over the long run. Even modest investments can grow substantially over decades.
