1 Warren Buffett ETF I'm Stocking Up On Before the End of 2024

As the year draws to a close, it's a great opportunity to review your investments, potentially enhancing your portfolio by adding stocks or funds.

Exchange-traded funds (ETFs) present an efficient way to invest in a diverse range of stocks simultaneously. They suit individuals who may lack the time to research individual stocks or prefer a more streamlined approach to investing.

With so many ETFs available, each with distinct advantages and drawbacks, choosing the right one can be a challenge. However, one particular ETF, endorsed by Warren Buffett, stands out as a key investment I intend to increase before the end of the year.

A powerful investment that can protect your portfolio

Warren Buffett frequently recommends the S&P 500 ETF, which includes all the stocks in the S&P 500 index. This index contains 500 of the largest and strongest companies in the United States.

By purchasing even a single share of an S&P 500 ETF, investors can gain immediate exposure to hundreds of stocks across various industries. This instant diversification helps limit risk compared to picking several different stocks individually.

Because the S&P 500 comprises only large-cap companies, all stocks within this ETF belong to formidable businesses, including Apple, Amazon, and Nvidia, as well as Procter & Gamble, 3M, and Coca-Cola. If you're aiming to invest in industry leaders from various sectors, an S&P 500 ETF is a sound choice.

Gaining the Buffett seal of approval

Buffett personally invests through Berkshire Hathaway, which holds shares in two notable S&P 500 ETFs: the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust.

A few years ago, Buffett made a $1 million wager that an S&P 500 fund would outperform five actively managed hedge funds over a decade.

When the decade concluded, his S&P 500 investment generated total returns nearing 126%, while the selected hedge funds reported returns ranging from a mere 2.8% to 87.7%. The average return for these hedge funds was approximately 36% over the ten-year period.

In his letter to Berkshire Hathaway shareholders after the wager, Buffett stated:

"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 familiarity with Wall Street jargon. What investors need instead is the ability to disregard mob fears or enthusiasms and focus on a few simple fundamentals."

Earn hundreds of thousands of dollars over time

While the S&P 500 ETF is generally considered a safe investment, it still has the potential to yield significant returns if you follow a strategy of time and consistency.

Historically, the S&P 500 index has delivered an average annual return of about 7%. Taking a long-term approach is essential when investing in this type of ETF, as year-to-year returns can be volatile. However, over the long haul, these fluctuations tend to stabilize around a more consistent average.

For example, if you were to allocate $200 each month into an S&P 500 ETF, earning an average annual return of 7%, here's a projection of how your contributions could grow over time:

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 longer you allow your investments to appreciate, the greater your potential returns. Regardless of how much you can invest monthly, starting early can significantly enhance your earning potential.

As with any investment strategy, time and consistency are crucial for success. The S&P 500 ETF is an excellent option for those looking for a stable investment approach. By taking advantage of this Buffett-approved ETF, you may achieve much higher returns than you might initially expect over the years.

investment, diversification, portfolio