A Warren Buffett ETF Worth Investing In by the End of 2024

The end of the year presents a great opportunity to review your investments and possibly enhance your portfolio by adding more stocks or funds.

Exchange-traded funds (ETFs) offer an easy way to invest in multiple stocks at once, making them a perfect choice for those who have limited time or prefer to avoid the extensive research often associated with individual stocks.

With countless ETFs available, each with its unique benefits and drawbacks, it may be challenging to choose the right one. However, there is one ETF that has gained the endorsement of Warren Buffett and is worth considering before the year wraps up.

A Strong Investment for Your Portfolio

One of Buffett's highly recommended investments is the S&P 500 ETF. This fund includes shares from the S&P 500 index, which represents 500 of the largest and most robust companies in the United States.

By investing in a single share of an S&P 500 ETF, you gain exposure to hundreds of stocks across various industries. This allows you to achieve diversification with considerably less effort than purchasing numerous individual shares.

The S&P 500 is comprised solely of large-cap companies, featuring industry giants such as Apple, Amazon, and Nvidia, alongside established brands like Coca-Cola, Procter & Gamble, and 3M. If your goal is to invest in leading companies from diverse sectors, an S&P 500 ETF is a sound option.

Buffett's Backing

Through his company Berkshire Hathaway, Buffett holds stakes in two notable S&P 500 ETFs: the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust.

A few years back, Buffett famously wagered $1 million that an S&P 500 ETF could outperform a selection of five actively managed hedge funds over ten years.

The outcome? His investment yielded total returns close to 126%, while the hedge funds generated returns ranging from 2.8% to 87.7%. Collectively, the average return for the hedge funds over the decade was around 36%.

In the letter to Berkshire Hathaway shareholders following this bet, Buffett stated:

"There was nothing aberrational about stock market behavior over the 10-year stretch. Making the most of available opportunities does not require extraordinary intelligence, a degree in economics, or knowledge of Wall Street terminology. What investors need is the ability to ignore the fears or excitements of the crowd and focus on a few basic principles."

The Potential for Significant Earnings

The S&P 500 ETF is generally considered a safer investment choice, yet it has the potential to generate substantial returns over time with discipline and consistency.

Historically, the S&P 500 has achieved an average return of about 7% per year. Maintaining a long-term perspective is essential, as you may experience considerable annual fluctuations in returns. However, over several decades, these ups and downs tend to average out into a more reliable figure.

For instance, if you were to contribute $200 each month to an S&P 500 ETF while earning an average annual return of 7%, here’s how your investment could accumulate over the years:

Number of Years	Total Portfolio Value
20	$98,000
25	$152,000
30	$227,000
35	$332,000
40	$479,000

Data source: Author's calculations via investor.gov.

The earlier you start investing, the more time your funds have the chance to grow, which can significantly affect your overall earnings. Regardless of your monthly contribution, beginning your investment journey sooner can exponentially enhance your returns.

As with any investment, timing and consistency are crucial. The S&P 500 ETF serves as an excellent option for those in search of a more stable and dependable investment route. By leveraging this Buffett-endorsed ETF, you could accumulate a more substantial wealth over time than you might expect.

investment, ETF, Buffett