How Warren Buffett's VOO Call Could Hand Investors $820K

Warren Buffett directed the trustee of his estate to invest 90% of his wife's inheritance in a low-cost S&P 500 index fund, a move that may help you check if you're financially ahead of the typical actively managed portfolio.

The Vanguard S&P 500 exchange-traded fund (ETF), trading as VOO, charges just 0.03% in annual expenses. S&P Global's 2025 scorecard found that 79% of active large-cap managers trailed the index.

The estate plan directs 90% into a low-cost S&P 500 fund and 10% into bonds

Buffett's instruction calls for 90% of the cash bequeathed to his wife to go into a very low-cost S&P 500 index fund and the remaining 10% into short-term government bonds, The Wealth Advisor confirmed. He named Vanguard as his preferred provider, signaling confidence in the firm's low-fee structure for your long-term wealth.

The directive first appeared in Berkshire Hathaway's 2013 shareholder letter, and at the 2024 annual meeting Buffett was asked whether growing technology-stock concentration in the index had changed his thinking. He said he revises his will periodically but has not changed the core allocation.

Berkshire Hathaway returned 19.7% annualized from 1965 through 2025, nearly doubling the index

Berkshire Hathaway under Buffett's leadership delivered a 19.7% annualized return from 1965 through 2025, nearly doubling the S&P 500's 10.5% over the same stretch, The Motley Fool reported. The gap makes the estate-plan choice striking, because Buffett built one of the strongest stock-picking records in history yet chose an index fund for his family.

Buffett has stated that the simple allocation would likely outperform most pension funds, institutions, and individuals who employ high-fee managers. Buffett told shareholders at Berkshire Hathaway's 2021 annual meeting that "in my view, for most people, the best thing to do is to own the S&P 500 index fund," The Motley Fool documented. The advice carries weight because it comes from an investor who beat the benchmark by 9.2 percentage points per year across six decades.

The S&P 500 returned 1,790% over 30 years through three recessions and four bear markets

The S&P 500 posted a total return of 1,790% over the past 30 years, an annualized pace of 10.2% that persisted through three United States (U.S.) recessions, 16 market corrections, and four bear markets, The Motley Fool showed. The durability of the long-run return is the core assumption behind Buffett's compounding math.

The U.S. accounts for more than 70% of the S&P World Index, reinforcing the structural advantage of holding the world's largest equity market in your portfolio, InvestmentNews noted.

VOO charges 0.03% and covers roughly 80% of domestic equities by market value

VOO tracks 500 large U.S. companies across 11 sectors and covers approximately 80% of domestic equities by market value, The Motley Fool documented.

• VOO's expense ratio of 0.03% translates to $3 per year on every $10,000 invested, leaving virtually all of your returns to compound over time.
• The top three holdings are Nvidia at 8.1%, Apple at 7%, and Microsoft at 5.7%, and the 10 largest positions collectively represent roughly 39% of the fund.
• Roughly 75% of the 20 largest public companies by market capitalization are U.S.-based, underpinning the index's global dominance.

Active large-cap managers trailed the S&P 500 at a rate of 79% in 2025

The 2025 S&P Indices Versus Active (SPIVA) U.S. Scorecard from S&P Global found that 79% of active large-cap equity fund managers trailed the S&P 500, up from 65% in 2024 and the fourth-worst result in the study's 25-year history, InvestmentNews reported.

The persistence of underperformance reinforces the logic of holding a low-cost index fund over paying a manager to beat one. The S&P 500 gained 18% during 2025 and logged 39 record highs, and the index outpaced the S&P MidCap 400 by 10 percentage points and the SmallCap 600 by 12, InvestmentNews highlighted.

Monthly contributions of $400 compound to roughly $820,000 over 30 years

An investor who contributes $400 per month to VOO and earns the index's historical 10.2% annualized return with dividends reinvested would accumulate approximately $77,000 after 10 years, roughly $281,000 after 20 years, and about $820,000 after 30 years, The Motley Fool showed.

The 30-year figure illustrates the power of compounding, where more than half of the $820,000 accumulates in the final decade as earlier contributions generate returns on returns, rewarding patience in your investing approach.

Buffett bet against hedge funds in 2007 and won decisively over a decade

Buffett wagered in 2007 that an S&P 500 index fund would outperform a curated group of hedge funds over the following decade, and he won the bet decisively, The Motley Fool documented. The outcome validated the philosophy that a passive, low-cost vehicle delivers better net returns than high-fee alternatives.

Buffett has framed the directive as a practical instruction rather than an imitation of his own investment approach, noting that simplicity serves investors who lack the resources of a professional fund manager.

Bottom line

The 90/10 estate-plan allocation, the 10.2% historical return, and the $820,000 compounding projection all point toward consistent, low-cost S&P 500 exposure as the strategy most likely to reward your patience. The 79% active-manager underperformance rate in 2025 adds further evidence that paying for stock-picking has eroded returns for the majority of fund investors.

Pairing the strategy with the must-have investing apps at your brokerage automates contributions and lets compounding work toward the $820,000 projection. Buffett's directive has survived growing technology concentration in the index without a change in philosophy.

This article is for informational purposes only and should not be considered investment advice.

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