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These Are the 2 ETFs That Warren Buffett Owns, and Why He Thinks You Should Too (With Snarky Commentary Included)

Ah, Warren Buffett. The Oracle of Omaha. The man who’s been outperforming the stock market for decades while you and I are over here trying to figure out if buying that third latte this week was a smart move for our budget. Buffett doesn’t just talk the talk—he walks the walk, and when he says most of us are better off owning ETFs that track the S&P 500, well, it’s worth paying attention. Even if, let’s be honest, he’s being kind of condescending about it.

So, which ETFs are we talking about? None other than the SPDR S&P 500 ETF Trust (SPY) and the Vanguard S&P 500 ETF (VOO). And yes, they make up a minuscule portion of Berkshire Hathaway’s multi-gazillion-dollar portfolio, but Buffett insists these are the ones that most investors should own. Let’s dig into why—snark and skepticism in tow.

Why Not Everyone Can Be Warren Buffett (Including You and Me)

Buffett, in his infinite wisdom, has been telling us for years that most investors (read: you, me, and your cousin Steve who bought Dogecoin at its peak) should stick to S&P 500 index funds. He even said it plainly at the 2020 Berkshire Hathaway annual meeting: "In my view, for most people, the best thing to do is to own the S&P 500 index fund."

Translation: “Let’s face it, you’re probably not cut out for this stock-picking thing. Just buy the market and go watch Netflix or something.”

He’s not wrong. The cold, hard reality is that beating the market is hard. Like, climbing-Everest-in-flip-flops hard. Buffett himself has managed an annualized return of 19.8% since 1965, while the S&P 500 has delivered a "paltry" 10.2%. But don’t let those numbers fool you into thinking you can emulate him. As of last year, 60% of large-cap fund managers failed to beat the S&P 500. These are professionals, mind you. People who do this for a living and probably have fancier Excel spreadsheets than you.

So, if these financial wizards can’t outperform, what makes you think your Robinhood app is going to turn you into the next Wall Street legend? Spoiler: It won’t. Just buy an index fund and thank Buffett later.

Fees: The Less You Pay, the More You Keep (Duh)

Here’s another reason Buffett is pro-index fund: they’re cheap. Like, impressively cheap. The SPDR S&P 500 ETF (SPY) has an expense ratio of 0.09%, and Vanguard’s S&P 500 ETF (VOO) is practically giving it away at 0.03%. Compare that to actively managed funds, which can charge you upwards of 1% for the privilege of underperforming. Bargain-hunting Buffett would never stand for that.

Think of it this way: if investing were like grocery shopping, actively managed funds are the Whole Foods of the finance world. Index funds? Costco. Sure, you may have to buy in bulk, but the savings over time are undeniable. And who doesn’t want extra money for snacks?

“I Believe in America” (Cue Patriotic Music)

Buffett’s love affair with the S&P 500 goes beyond its performance. He sees it as a bet on the American economy, which he believes in more passionately than a Hallmark Channel protagonist believes in Christmas miracles.

At the 2020 Berkshire Hathaway meeting, he declared, "I will bet on America the rest of my life." Okay, Warren, we get it. You’re bullish on the red, white, and blue. But he has a point: the S&P 500 is essentially a microcosm of the U.S. economy. If you believe in the long-term growth of the United States (and don’t think we’re going to implode in a fiery mess of TikTok trends and avocado toast addiction), an S&P 500 index fund is a solid way to invest.

For All Levels of Investor (Even You, Steve)

Another reason Buffett loves index funds is that they’re accessible. Whether you’re a seasoned investor or someone who still thinks "bull" and "bear" are just animals, you can’t really mess up with the S&P 500. It’s like the sweatpants of investing—comfortable, reliable, and a little boring, but it gets the job done.

Buffett even recommends index funds over his own company’s stock for most people. At the 2021 Berkshire Hathaway annual meeting, he said, "I like Berkshire, but I think that a person who doesn't know anything about stocks at all, and doesn't have any special feelings about Berkshire, I think they ought to buy the S&P 500 index."

Translation: “We’re great, but let’s be honest—you don’t know what you’re doing.”

Thanks, Warren. Always a confidence boost.

The Secure Route to Wealth (Slow and Steady Wins the Race)

Let’s talk about the magic of not screwing up your finances. Index funds aren’t flashy. They’re not going to make you rich overnight. But they will grow your wealth steadily over time, which, let’s be real, is more than most of us can say about our past financial decisions (looking at you, Beanie Baby collection).

Buffett has a way of making the mundane sound profound. At the 2021 meeting, he mentioned that for someone like his wife, he’d recommend investing 90% in an S&P 500 index fund. The logic is simple: if you’re looking for consistent returns and don’t want to spend your days glued to CNBC, this is the way to go.

Here’s some perspective: If you retire with $1 million in the bank, a 10% annual return (the S&P 500’s historical average) nets you $100,000 a year. That’s not yacht money, but it’s certainly I’ll-have-guac-on-my-burrito money.

Should You Follow Buffett Into SPY and VOO?

Now, let’s address the obvious: just because Warren Buffett owns SPY and VOO doesn’t mean you should blindly throw your money into them. But his reasoning is solid. Index funds are low-cost, easy to understand, and reliable over the long term. They’re not sexy, but they don’t need to be. You’re not trying to impress anyone with your portfolio, are you? (If you are, please stop.)

And let’s not forget: Buffett has a history of putting his money where his mouth is. This isn’t just theoretical advice; he’s actually following it. If that doesn’t inspire confidence, well, maybe you should keep chasing meme stocks and crossing your fingers.

Wrapping It Up: Listen to the Oracle, Even If He’s Smirking

So, there you have it: Warren Buffett’s case for SPY and VOO. It boils down to this: you’re probably not going to beat the market, and that’s okay. Index funds like these give you exposure to the S&P 500, a slice of the American economy, and a shot at steady, reliable growth. Plus, they’re cheap, which means more of your money stays in your pocket.

Buffett’s advice isn’t flashy or groundbreaking, but that’s kind of the point. Investing isn’t about fireworks; it’s about making smart, boring choices that pay off in the long run. So, do yourself a favor: take the Oracle’s advice, buy the sweatpants of investing, and go enjoy your life.

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