Warren Buffett is perhaps the most successful and celebrated investor of the 20th century and his results have only been getting better as he ages.


Of course, that’s largely due to his ability to pick stocks that outperform the market.

But during his lifetime, the stock market has actually gone up quite a bit, despite the dot com and financial crisis.

Anyone who bought and hold would be doing quite well as well. You don’t necessarily need to pick the best stock winners.

Simply getting exposed to the overall market in a diversified manner would have given you solid returns over time.

In fact, that’s exactly what Warren Buffett recommends and is doing himself.

On page 20 of The 2013 Berkshire Hathaway Annual Report to Shareholders (PDF), he talks about how he is allocating 90% of his estate for his heirs to be invested in the S&P500 index fund – and that’s what he recommends to the average investor.

What This Means For You

Warren Buffett’s favorite investing strategy can be essentially boiled to a few key takeaways:

1) Buy a low-cost index fund – either through ETFs such as SPY or VOO — or directly with Vanguard.

2) Buy in pieces over a period of time (dollar-cost-averaging)

3) Hold.

In his annual report, Buffett specifically recommends the Vanguard S&P500 Index Fund.

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