Invest Like Warren Buffett With These ETFs (2024)

FAQs

What two ETFs are good enough for Warren Buffett? ›

Buffett's favorite fund

Buffett's Berkshire Hathaway owns only two index funds. The conglomerate holds positions in the SPDR S&P 500 ETF Trust and the Vanguard S&P 500 ETF (NYSEMKT: VOO). These two index funds share a couple of things in common.

The Vanguard Dividend Appreciation ETF tracks the performance of a large subset of S&P 500 stocks -- specifically, those that have a record of growing their dividends each year. Buffett would likely love this fund for a few key reasons. The fund is passively managed, keeping costs extremely low.

Buffett has said one of the best ways to build your retirement savings is to “consistently buy an S&P 500 low-cost index fund. I think it's the thing that makes the most sense practically all of the time.”

One of the biggest reasons Ramsey cautions investors about ETFs is that they are so easy to move in and out of. Unlike traditional mutual funds, which can only be bought or sold once per day, you can buy or sell an ETF on the open market just like an individual stock at any time the market is open.

The Vanguard Dividend Appreciation ETF tracks the performance of a large subset of S&P 500 stocks -- specifically, those that have a record of growing their dividends each year. Buffett would likely love this fund for a few key reasons. The fund is passively managed, keeping costs extremely low.

Warren Buffett's Berkshire Owns 2 ETFs: SPY and VOO.

Rule 1: Never lose money.

By following this rule, he has been able to minimize his losses and maximize his returns over time. He emphasizes this so much that he often says, “Rule number 2 is never forget rule number 1.”

Warren Buffett owns 2 ETFs—this one is better for everyday investors, experts say.

Berkshire Hathaway doesn't pay dividends

In the comparison to the S&P 500 Index above, the performance figures include reinvested dividends. That is a benefit for the S&P 500, but has no impact on Berkshire Hathaway's performance because the company doesn't pay a dividend.

What did Warren Buffett tell his wife to invest in? ›

The percentage may shock you.

Part of the cash would go directly to his wife and part to a trustee. He told the trustee to put 10% of the cash in short-term government bonds and 90% in a low-cost S&P 500 index fund.

These were the stocks Buffett had in his portfolio heading into 2024. Some top picks of Berkshire are Apple Inc. (NASDAQ:AAPL), Coca-Cola Co (NYSE:KO) and Chevron Corp (NYSE:CVX).

Investing in the stock market is one of the most effective ways to generate long-term wealth, and you don't need to be an experienced investor to make a lot of money. In fact, it's possible to retire a millionaire with next to no effort through exchange-traded funds (ETFs).

Market risk

The single biggest risk in ETFs is market risk. Like a mutual fund or a closed-end fund, ETFs are only an investment vehicle—a wrapper for their underlying investment. So if you buy an S&P 500 ETF and the S&P 500 goes down 50%, nothing about how cheap, tax efficient, or transparent an ETF is will help you.

Buying high and selling low

At any given time, the spread on an ETF may be high, and the market price of shares may not correspond to the intraday value of the underlying securities. Those are not good times to transact business.

Warren Buffett owns 2 ETFs—this one is better for everyday investors, experts say.

Buffett's Two Lists is a productivity, prioritisation and focusing approach where you write down your top 25 goals; circle your 5 highest priorities; then focus on those 5 while 'avoiding at all costs' doing anything on the remaining 20.

Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification. But the number of ETFs is not what you should be looking at.

Keeping it simple. One option you can consider would be using two ETFs to help provide a balanced, diversified portfolio of stocks and bonds: A total world stock market ETF. A total bond market ETF.