Legendary investor Warren Buffett has been a household name for decades, thanks to his incredible track record of generating substantial returns for the shareholders of his company, Berkshire Hathaway. From 1964 to 2025, Berkshire delivered an overall gain of 6,099,294% (1), which is an astonishing 6 million percent. Given this impressive performance, one might assume that Buffett would want this successful trajectory to continue through his estate after his passing. However, the Oracle of Omaha has a different plan in mind.

Buffett’s Investment Strategy

In his 2013 letter to Berkshire shareholders, Buffett shed light on the directives he has included in his will. He wrote, ‘One bequest provides that cash will be delivered to a trustee for my wife’s benefit.’ Buffett’s advice to the trustee is straightforward and simple: ‘Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.’ This investment strategy is a testament to Buffett’s confidence in the power of index funds and the benefits of long-term investing.

Why Index Funds?

Buffett’s preference for recommending index funds stems from his belief that stock picking is not an optimal strategy for average investors. At the 2021 annual shareholders meeting, he stated frankly, ‘I do not think the average person can pick stocks (3).’ This is where index funds come into play. They can be used as a more passive investment strategy that gives investors exposure to many companies across various industries. Although this strategy spreads the risk, the rewards can still be very rich. In fact, the S&P 500, Buffett’s preferred index for low-cost investing, surged 16.39% in 2025, or 17.88% with dividends (4).

The Benefits of ETF Investing

The beauty of ETF investing is its accessibility. Anyone, regardless of wealth, can take advantage of it. Even small amounts can grow over time with tools like Acorns, an app that automatically invests your spare change. Signing up for Acorns takes just minutes: All you have to do is link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio of ETFs managed by experts at leading investment firms like Vanguard and BlackRock. With Acorns, you can invest in a dividend ETF with as little as $5.

The Last 10%?

Remember, Buffett didn’t advise going all-in on the S&P 500. He also recommended allocating 10% of the cash to short-term government bonds. Investing in short-term government bonds can be appealing for those seeking lower-risk investments or a stable, relatively predictable source of income. Furthermore, these bonds are more liquid than long-term bonds, making it easier for investors to access their funds without significant penalties or loss in value. The optimal allocation hinges on your personal financial situation and the current stage of your investment journey.

Conclusion

Warren Buffett’s investment strategy is a testament to the power of index funds and the benefits of long-term investing. By following his advice, investors can create a diversified portfolio that spreads risk and rewards. Remember, investing is a long-term game, and patience is key. With the right strategy and the right mindset, anyone can achieve financial success.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.