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Warren Buffett's Investing Advice

Best Low-Cost S&P 500 Index Funds (Based On Warren Buffett’s Investment Advice)

Warren Buffett has been quoted for years saying that the best investment for average investors is to invest in low-cost index funds. Just google and you will find plenty of business and investing websites writing about his advice like in the following articles:

But, what exactly are the index funds he recommends? He recommends low-cost index funds that specifically tracks the S&P 500 index. Low-cost S&P 500 index funds are passively managed mutual funds and ETFs which carry minimal expense ratio or fee.

So, what are the best low-cost index funds? In this article, I share with you 6 of the best low-cost S&P 500 index funds that you might want to consider adding to your retirement portfolio. Here I provide you with side-by-side comparison to help with your research. You can then decide which funds make sense for your investment.

S&P 500 Index (Mutual) Funds

VFINX, FXAIX, and SWPPX all track the Standard & Poor’s 500 index, one of the most widely watched benchmarks for U.S. stocks. With these 500 stocks in the funds, you basically own about 80% of the market capitalization of the entire United States.

These funds are considered large-blend category and has the ultimate core large-cap stock holding. They are low-cost index funds because of their low expense ratio. Index funds are a type of passive investment unlike regular mutual funds that are actively managed by fund managers.

Index Fund Vanguard Fidelity Schwab
Ticker VFIAX FXAIX SWPPX
Fund Name Vanguard 500 Index Fund Admiral Shares Fidelity 500 Index Fund Schwab® S&P 500 Index Fund
Expense Ratio 0.04% 0.015% 0.02%
Minimum Investment $3000 $0 $0
Dividend Yield 1.86% 1.56% 1.69%
1 Year Return 14.06% 13.8% 14.06%
Number of Holdings 515 509 509

S&P 500 ETFs

While index funds are just as low cost as ETFs, index funds are traded as mutual funds – priced only after market closes and ETFs traded like stocks intra-day. Below are some of the most popular ETFs which track the S&P 500 index.

To learn more about the difference between low cost index funds and ETFs, also check out this post:

ETF Vanguard SPDR iShares
Ticker VOO SPY IVV
Fund Name Vanguard S&P 500 ETF SPDR S&P 500 ETF Trust iShares Core S&P 500 ETF
Expense Ratio 0.03% 0.09% 0.03%
Minimum Investment $0 $0 $0
Dividend Yield 1.71% 1.69% 1.98%
1 Year Return 14.02% 13.95% 13.74%
Number of Holdings 515 506 509

Can you buy mutual funds or ETFs at another online brokerage?

You can absolutely buy Vanguard funds at Fidelity. You don’t have to open an account with Vanguard in order to buy their mutual funds or ETFs. The same applies to all the funds listed above.

Just to be extra caution, I suggest you still check for any commissions, fees or loads and any charges imposed by your broker before you trade.

The information here is for informational purpose only and should not constitute financial or investing advice. I am not a finance professional.

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