Warren Buffett's Favorite Vanguard Fund and How a $200 Monthly Investment Compounds

Yahoo Finance ·

Widely celebrated as the Oracle of Omaha, Warren Buffett converted Berkshire Hathaway into a premier global enterprise, achieving a compounded annual return of 19.7% between 1965 and 2025. Meanwhile, the S&P 500 generated a 10.5% return including dividends over the same timeframe. Buffett retired as chief executive officer at the end of 2025, passing the reins to Greg Abel, and recently relinquished his chairman role to his son, Howard Buffett, last month. Today, he continues to serve on the Board of Directors as chairman emeritus. Buffett's ultimate legacy extends beyond stock picking; it lies in his straightforward counsel for everyday investors. Rather than active trading, his wealth accumulation stemmed from identifying high-quality businesses with durable competitive advantages and holding them for decades. Acknowledging that most individuals lack the time or expertise to analyze individual stocks, Buffett recognizes the distinct value of straightforward, low-cost investment strategies for ordinary portfolios.

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Warren Buffett led Berkshire Hathaway to achieve an overwhelming compound annual growth rate of 19.7% from 1965 to 2025. Although Buffett has stepped down as CEO, his core investment philosophy of long-term value investing and holding high-quality companies remains valid. He advises ordinary investors to invest in low-cost index funds instead of picking individual stocks, emphasizing stable long-term asset growth.

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Warren Buffett's long-term value investing philosophy and recommendation of the S&P 500 index fund induce stable capital inflows across the market, having a positive impact on the index rise centered on large-cap blue-chip stocks. Historically, the S&P 500 has recorded an average annual return of 10.5%, providing trust to long-term investors.

In the bullish scenario, the S&P 500 index continues an upward trend due to continuous passive fund inflows, benefiting large-cap stocks. On the other hand, in the bearish scenario, there is a risk of synchronous index decline during macroeconomic shocks, and the key indicators to watch are the monthly dollar-cost averaging investment scale and the long-term compound return trend of the S&P 500.

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