The One Warren Buffett ETF to Consider Before 2024

The end of the year is an excellent time to review your investments and potentially strengthen your portfolio by adding more stocks or funds.

Exchange-traded funds (ETFs) offer a straightforward way to invest in a broad selection of stocks, allowing you to own shares in numerous companies at once. This can be especially beneficial for those who may not have the time or desire to research each stock individually.

There are countless ETFs available, each with its distinct sets of pros and cons. While different options suit different investors, one particular ETF backed by Warren Buffett is on my radar for purchase before the year ends.

A Strong Investment Option for Portfolio Protection

Warren Buffett frequently endorses the S&P 500 ETF. This ETF encompasses all the stocks within the S&P 500 index, which features 500 of the largest and most successful companies in the United States.

By buying a single share of an S&P 500 ETF, you can effectively invest in a vast array of stocks across various industries, providing instant diversification that reduces your risks without the hassle of purchasing multiple individual stocks.

This ETF includes only large companies, featuring well-known giants like Apple, Amazon, and Nvidia, along with other reputable firms such as Procter & Gamble, 3M, and Coca-Cola. For those seeking exposure to industry leaders across the stock market, an S&P 500 ETF is a solid choice.

The Buffett Endorsement

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

In a bold prediction, Buffett once bet $1 million that an S&P 500 ETF would outperform a group of five actively managed hedge funds over ten years.

The outcome? Buffett’s investment yielded nearly 126% in total returns, while the hedge funds experienced returns ranging from only 2.8% to 87.7%. The average return of the five hedge funds was merely around 36% during the same decade.

In the shareholder letter following this wager, Buffett remarked:

"There was nothing aberrational about stock market behavior over the 10-year stretch. Seizing the opportunities then offered does not require great intelligence, a degree in economics, or a familiarity with Wall Street jargon. Investors need to disregard herd mentality and focus on a few straightforward principles."

Potential for Significant Earnings Over Time

While the S&P 500 ETF is considered a relatively safe investment, it can also yield substantial returns with patience and persistence.

Historically, the S&P 500 has produced an average annual return of about 7%. It’s critical to adopt a long-term perspective with such investments, as you may encounter significant variations in yearly returns. However, over the long term, these fluctuations should average out, leading to a more stable return.

For instance, if you were to invest $200 each month into an S&P 500 ETF, assuming a 7% average annual return, here’s how your savings could grow over the years:

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

The longer you allow your investments to grow, the greater your potential returns. Regardless of how much you can invest each month, starting sooner rather than later can drastically enhance your earnings.

Just like with any investment, time and consistency are essential. The S&P 500 ETF stands out as a solid option for those aiming for a more reliable and safer investment strategy. By taking advantage of this Warren Buffett-approved ETF, you might find yourself earning more over time than you initially expected.

Warren, Buffett, ETF