Warren Buffett Index Fund

According to Warren Buffett, Index Fund and other Diversified Investments are the way to go for all investors. The reason for this is simple: Instead of having a bunch of ownership in individual stocks which could be faulty on their own, when you own an index fund such as the S&P 500 or the Vanguard index fund, you own multiple companies at once and this dilutes your risk across many investment vehicles. Warren Buffett and Berkshire Hathaway essentially do this in their own custom tailored way by buying stocks such as Wells Fargo, Goldman Sachs, Southwest Airlines, Apple, Delta Airlines, American Express, and others. But this does not mean that individual investors need to have the savvy and know-how of which companies to buy at the right times. Generally speaking, the American markets always tend to go up over the long run and so this is why some type of and in the long run it will make investors money.

Another reason according to Warren Buffett that investors should put their money into index funds is because of the low cost involved. If an investment makes you 7% or 8% per year and costs 1% in fees, then over the long run that will really affect your retirement according to Buffett. However, if people invest in index funds such as the S&P 500 stocks on the stock market, they are much smaller and it will not affect your bottom dollar as much. 1% may not sound like a lot, but compounded over many years it actually adds up to a whole lot of money.

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