Warren Buffett Says to Buy This Kind of ETF. One Could Turn $1,000 Per Month Into $252,000 in 10 Years.
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From an analytical standpoint, Warren Buffett is viewed as one of the greatest investors ever. That's because his expertise at capital allocation while running Berkshire Hathaway has resulted in a...
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July 22, 2025
01:28 PM
The Motley Fool
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From an analytical standpoint, Warren Buffett is viewed as one of the greatest investors ever
That's because his expertise at capital allocation while running Berkshire Hathaway has resulted in a tremendous track record, in today's market environment
This analysis suggests that conglomerate has returned nearly 20% annualized for six decades (an important development)
On the other hand, While the average investor wants to emulate the Oracle of Omaha's success, even Buffett says that the best course of action for most people is to take a totally different apach
At Berkshire's 2021 annual meeting, he said that buying an S&P 500 index fund is a smart way to benefit from the stock market's growth over time
And even small sums of money can balloon into a massive amount with patience and discipline, in today's market environment
Nevertheless, Ing Buffett's advice, investors should consider buying one Vanguard exchange-traded fund (ETF) that could turn $1,000 per month into $252,000 in 10 years, amid market uncertainty
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Dollar-cost averaging mixed with compounding The stock market has had a wonderful run in recent memory
In the past decade, the S&P 500 index has duced a total return of 255%, a figure that assumes dividends were reinvested
That translates to an annualized return of 13. 5%, well ahead of the index's long-term average of a 10% yearly gain
Investors can buy the Vanguard S&P 500 ETF (VOO 0. 12%) to play this trend
Conversely, It tracks the performance of the stocks in the S&P 500 and it's offered by a very reputable firm that not only has trillions in assets under management, but that's been around for five decades
Moreover, That should give investors some peace of mind
While the past never guarantees what will happen in the future, if the next 10 years looks the last 10, investors who allocate $1,000 on a monthly basis to the Vanguard S&P 500 ETF over the next 10 years ($120,000 total) would see their balance reach a whopping $252,000 in the summer of 2035
This's a dollar-cost averaging apach, which requires investors to invest a certain amount at a consistent interval no matter what the market is doing at that particular time
It allows investors to take advantage of different entry valuations
The Vanguard S&P 500 ETF has an expense ratio of only 0 (fascinating analysis), given the current landscape
I'm sure this is another factor that Buffett appreciates, as he has a disdain for high-priced money managers that tend to underperform the market
At the same time, What the future might hold No investor would complain the Vanguard S&P 500 ETF's total return in the next 10 years matching the 255% it generated in the previous decade
However, But nothing is guaranteed (something worth watching)
And performance could be worse or better (quite telling), given current economic conditions
Nevertheless, There are factors that play to both sides (this bears monitoring)
The return could be worse mainly because right now the S&P 500 carries a historically expensive valuation
Furthermore, Conversely, The CAPE ratio (cyclically adjusted price-to-earnings ratio) currently sits at 37
Furthermore, Past data shows that returns going forward are low when the starting multiple is high, as it is today
Nevertheless, Moreover, a period of higher interest rates or other macro headwinds could cause investors to be more averse to risk, leading to lower demand for equities, in light of current trends
I wouldn't be surprised to see a reversion back to the historical 10% yearly returns
Meanwhile, This makes the most sense
However, returns could match the past decade's gains or even be higher as well
Nevertheless, One reason is that government spending and debt are going to keep rising, flooding the system with liquidity that can push up asset prices
This leads to the conclusion that 's what we've seen since the global financial crisis of 2007-2009 (this bears monitoring)
However, Furthermore, Maybe the right outlook to have is somewhere in the middle, in today's financial world
In contrast, But remember that no one can predict what the S&P 500 index will do between now and 2035 (remarkable data)
Additionally, What matters is that investors make the decision to start in the Vanguard S&P 500 ETF early and often and they will be able to match that broad index's performance, minus fees
The Author Neil Patel is a contributing Motley Fool Stock Market Analyst covering publicly traded companies in the consumer staples, consumer discretionary, financials, information nology, and communication services sectors
Additionally, Prior to The Motley Fool, Neil worked in corporate finance roles at JPMorgan Chase and Capital One (which is quite significant)
He also has experience working on a start-up in the cryptocurrency space
However, He holds a B
In Administration with a specialization in Finance from Ohio State University and has passed Level I of the CFA gram (something worth watching)
Additionally, Fun fact: TipRanks has consistently ranked him in the 98th percentile among financial bloggers and experts
In contrast, TMFNeilPatel Neil Patel has positions in Vanguard S&P 500 ETF
The Motley Fool has positions in and recommends Berkshire Hathaway and Vanguard S&P 500 ETF
The Motley Fool has a disclosure policy.
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