One Warren Buffett ETF I'm Investing In Before the End of 2024

The end of the year is a great opportunity to review your investments. It might be the perfect time to enhance your portfolio by adding more stocks or funds.

Exchange-traded funds (ETFs) provide a straightforward way to invest in numerous stocks all at once. This makes them an excellent option for individuals who have limited time or wish to avoid the hassle of researching each stock individually.

The variety of ETFs available comes with their own unique benefits and drawbacks. While there is no one-size-fits-all solution, I am keen on one specific ETF endorsed by Warren Buffett that I plan to add to my portfolio before year-end.

A Valuable Investment for Safeguarding Your Portfolio

One of the key investments that Warren Buffett often suggests is the S&P 500 ETF. This ETF encompasses all the stocks in the S&P 500 index, which features 500 of the biggest and most successful companies in the United States.

By purchasing a single share of an S&P 500 ETF, you can invest in hundreds of stocks across diverse sectors. This form of investment provides instant diversification, reducing your risk with significantly less effort than if you were to buy many individual stocks.

Since the S&P 500 is made up solely of large corporations, the stocks within this ETF represent powerful companies such as Apple, Amazon, Nvidia, Procter & Gamble, 3M, and Coca-Cola. If you want exposure to industry leaders across the market, an S&P 500 ETF is a solid choice.

Buffett's Endorsement

Through his company Berkshire Hathaway, Buffett holds two types of these ETFs: the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust.

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

The outcome? Buffett’s investment saw nearly 126% total returns compared to the hedge funds, which had returns ranging from a mere 2.8% to 87.7%. The average return of these hedge funds over the decade stood at about 36%.

In Berkshire Hathaway's letter to shareholders after this bet, Buffett remarked:

"There was nothing unusual about how the stock market acted during that ten-year span. Taking advantage of the opportunities that were available doesn't need extraordinary intelligence, an economics degree, or familiarity with Wall Street terms. What investors truly need is the ability to overlook market fears and focus on simple fundamentals."

Potentially Generating Wealth Over Time

While the S&P 500 ETF is generally considered a safe investment, it has the potential to generate significant profits over time with regular contributions.

Historically, the S&P 500 has achieved an average annual return of around 7%. It is important to adopt a long-term perspective with this investment, as annual returns can significantly fluctuate. However, over decades, these ups and downs tend to balance out.

If you were to invest $200 each month in an S&P 500 ETF with an expected 7% average annual return, here's how your investment could grow over the years:

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

The longer you give your investments to grow, the more you can potentially accumulate. Regardless of your monthly contribution, starting now rather than later can significantly enhance your potential earnings.

Time and consistency are essential with any investment. The S&P 500 ETF is an excellent option for those seeking a safer and more consistent investment. By making the most of this Buffett-endorsed ETF, you could realize more earnings over time than you might initially expect.

investment, ETF, Buffett