He made the case again in a 2008 conversation about index funds with author Tim Ferriss, pointing to the financial industry’s reluctance to recommend an approach that doesn’t generate much in fees.
“You will not get that advice from anybody because nobody gets paid to give you that advice,” Buffett said at the time.
There’s more money in selling investors products that promise to beat the market than in recommending a fund designed to follow it. For anyone who doesn’t want to spend evenings poring over company earnings and weighing which stocks to buy, owning a slice of the broader market can be a more practical option.
Why Buffett thinks investors should keep it simple
An S&P 500 fund lets investors buy into hundreds of major U.S. companies in one shot, rather than trying to figure out which individual stocks should have a place in their portfolio. The appeal is less about excitement than avoiding the time and expense of trying to outperform the market on your own or hiring a financial advisor to do it for you.
That effort doesn’t always pay off, though — even for professionals. Fund managers may charge for their expertise, but that doesn’t mean they’ll make you more money than a more cost-effective index fund. Buffett has previously argued that most investors would be better off taking what the market gives them rather than paying a fund manager to try to beat it.
He put that argument to the test in 2008 when he wagered $1 million that an S&P 500 index fund would beat a group of hedge funds over the following decade. By the time the bet ended in 2017, the index fund had come out well ahead after fees.
That might seem at odds with the way Buffett made his fortune. Through Berkshire Hathaway, he has spent decades researching companies and making sizable, carefully considered investments. But he didn’t suggest that everyone else needed to do the same. For people without his experience, time, or resources, a simpler approach may make more sense.
Is the S&P 500 still a good bet?
Anyone who has held an S&P 500 index fund over the past few years has seen some impressive returns, with Business Insider reporting that the index was up about 14% in 2026 and nearly 80% over five years as of October.
