Key Points
-
Warren Buffett famously said to “never bet against America” and encouraged investors to buy a low-cost S&P 500 index fund.
-
The Vanguard S&P 500 ETF has delivered average annual returns of about 13.8% for the past five years, even with the bear market of 2022.
-
Investing $300 a month in VOO at historical average annual returns of 9.98% would grow to more than $205,000 after 20 years.
-
Warren Buffett is a legendary investor who might be the all-time greatest at picking individual stocks. During 60 years as CEO of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB), Buffett delivered total returns of 5.5 million percent, a rate of nearly 20% per year.
But Buffett didn’t tell other people to follow his example. Instead of advising others to invest like him by picking individual stocks, Warren Buffett said that most investors should consistently buy low-cost index funds, like an S&P 500 exchange-traded fund (ETF).
Missed AI’s “Act 1”? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
One of the most popular and low-cost ETFs that fits this strategy is the Vanguard S&P 500 ETF (NYSEMKT: VOO). In the 98 years since 1928, the S&P 500 (SNPINDEX: ^GSPC) index has delivered average annual returns of 9.98%. The Vanguard S&P 500 ETF has been around for less time, only 16 years. But since the fund’s inception in September 2010, VOO has delivered annualized returns of 14.94%.
Let’s look at why you might want to invest in VOO instead of investing like Warren Buffett — and how much money you could earn with this S&P 500 ETF in the long run.
Why buy S&P 500 ETFs — almost any time
I don’t think anyone else will ever get as rich as Warren Buffett with the same investing strategy he used. He bought great companies when their stock prices were low. He found underpriced value stocks that other investors overlooked. He swooped in and “bought the dip” during times of crisis when other investors were afraid to deploy cash. He held onto winning investments for decades. He had some extraordinary good luck and overcame some big investing mistakes along the way.
But even though Warren Buffett was humble about his own personal approach to investing, he was always confident about America’s economy and the long-term future of the overall U.S. stock market. In 2021 in his annual letter to Berkshire shareholders, Buffett wrote, “never bet against America.”
Buying an S&P 500 ETF like VOO is a good way to bet on America. This ETF contains the 500 largest publicly traded companies in the U.S., making up about 80% of the total U.S. stock market. If the U.S. economy does well, the S&P 500 will tend to do well. Buying the Vanguard S&P 500 ETF lets you own major tech names like Nvidia (NASDAQ: NVDA), Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), and Apple (NASDAQ: AAPL), as well as household name brands like Johnson & Johnson (NYSE: JNJ), Visa (NYSE: V) and Walmart (NASDAQ: WMT).
The S&P 500 doesn’t always go up. It can sometimes crash or go into a bear market, like it did in 2022, when the Vanguard S&P 500 ETF delivered a negative total return of -18.15%. But in the past five years, even with that bad year in 2022, VOO has delivered annualized gains of about 13.8%.
How much you can earn from 20 years of VOO investing
The best way to buy stocks is for the long term, and buying VOO is no different. No one knows what will happen to the stock market in the short run. But if you can hold onto your investments without selling them for five, 10, or 20 years (or longer), you are likely to see strong gains, based on historical performance.
Let’s assume that VOO delivers 9.98% average annual returns for the next 20 years. That’s not unreasonable; it’s the same long-term gain that the S&P 500 has delivered since 1928. If you could invest $300 per month in VOO and earn 9.98% annualized returns, here’s how much you’d earn after 5, 10, 15, and 20 years:
|
Year
|
Investment balance
|
|
5
|
$21,970
|
|
10
|
$57,320
|
|
15
|
$114,200
|
|
20
|
$205,722
|
Data source: Author’s calculations, Investor.gov compound interest calculator
What if you could invest even more, and put $500 a month into VOO for 20 years? Here’s how much your investments would grow at 9.98% average annual returns:
|
Year
|
Investment balance
|
|
5
|
$36,616
|
|
10
|
$95,533
|
|
15
|
$190,333
|
|
20
|
$342,870
|
Data source: Author’s calculations, Investor.gov compound interest calculator
There is no guarantee that the S&P 500 will keep delivering the kinds of strong returns we’ve seen in the past five years. It might not even deliver the same 9.98% annualized return in the future. But if you want to own a diversified mix of stocks that lets you buy into the future of the U.S. economy, the Vanguard S&P 500 ETF is one of the easiest ways to do it.
You don’t have to invest like Warren Buffett. But if you follow his example by “betting on America,” you’re likely to do well in the long run.
Should you buy stock in Vanguard S&P 500 ETF right now?
Before you buy stock in Vanguard S&P 500 ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $334,308!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,323,413!*
Now, it’s worth noting Stock Advisor’s total average return is 897% — a market-crushing outperformance compared to 213% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of October 30, 2026.
Ben Gran has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Berkshire Hathaway, Nvidia, Vanguard S&P 500 ETF, Visa, and Walmart. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
