This 1 Word Might Be the Most Important Part of Warren Buffett's Legendary Advice to Investors

Warren Buffett is one of the most successful investors of all time.

During 60 years (1964-2024) when he was CEO of Berkshire Hathaway (BRKA +0.66%)(BRKB +0.15%), Buffett delivered total returns of more than 5,500,000%. He outperformed the S&P 500 index (^GSPC +0.17%) by nearly 2 to 1 during that time. The S&P 500 compounded at 10.4% annually during those six decades, while Buffett’s investments compounded at 19.9%.

Over the years, many people looked to Buffett for stock tips and investing advice. He was known for his down-to-earth investing philosophy and homespun wisdom. But one of his most famous pieces of investing advice is often overlooked and misunderstood.

In a 2017 interview with CNBC, Buffett said that for most investors, “the thing that makes the most sense practically all of the time” is to “consistently buy an S&P 500 low-cost index fund.” That word “consistently” is what many investors get wrong.

Let’s look at what Buffett meant by this legendary investing advice — and how to maximize results for your portfolio.

Don’t miss this one word of Buffett’s investing advice: “consistently”

Many investors focus on which stocks Warren Buffett thinks are good buys. But beyond just buying the S&P 500, Buffett emphasized that the “consistently” part is important. He warned investors not to try to time the market, not to pause their investments or withhold their money during stock market crashes or bad economic news. If you’re truly a long-term investor, you should keep investing as often as possible. Keep buying stocks through the S&P 500. Establish that sense of discipline and trust the process.

During his 2017 CNBC interview, Buffett said: “The temptation when you see bad headlines in newspapers is to say, well, maybe I should skip a year or something. Just keep buying.”

Buffett believed that in the long run, American businesses tend to deliver great returns for their investors — and history has proven him right. The S&P 500 index represents the largest 500 publicly traded companies in America. If you keep buying stocks consistently, with low-cost S&P 500 index funds, you can share in those long-term gains.

But to follow Buffett’s advice and be a consistent investor, you need emotional discipline and self-control. You have to avoid the temptation to sell stocks based on knee-jerk reactions. You have to avoid the fear-based impulse to stay out of the market when it feels too risky. You have to be humble enough to avoid thinking that you know better than the rest of the world, that you know what’s going to happen next with stock prices.

No one knows for sure which stocks will do best or how much the stock market will return on any given day, week, month, or year. For most people, the best bet is to buy “all the stocks” (with an S&P 500 ETF) consistently — keep investing as often as you can — and hold onto those stocks for as long as you can. Let the future growth of American businesses make you richer in the long run. Time in the market beats timing the market.

How much you can earn with consistent S&P 500 investing

Let’s say you can put money to work in the stock market every month, or every payday. Buying stocks on a regular basis, every time you can, every time you have some extra cash to put to work, is an excellent practice for long-term investors.

The S&P 500 probably won’t give you the same returns as Warren Buffett. But that’s OK — the average stock market return is good enough to make you a lot better off. During the past 10 years, the Vanguard S&P 500 ETF (VOO +0.18%) has delivered average annual returns of about 15.3%.

That 15.3% return is a lot higher than average. For the past 98 years (just slightly longer than Buffett has been alive), the S&P 500 has delivered average annual returns of 9.98%. There are no guarantees that the stock market will keep paying those same returns in the future. But for this example, let’s say that it does.

If you consistently invest $300 every month in the S&P 500 and earn 9.98% average annual returns, after 20 years, you’d have $205,722. After 30 years, you’d have $589,941. And after 60 years, you’d have $10,828,056.

Not everyone can invest as long as Warren Buffett — not everyone will have a 60-year time horizon for their investing life. But this goes to show how powerful compounding returns can be. The longer you’re invested, the more your money can grow. You don’t have to be a superstar stock picker like Warren Buffett. You can get seriously rich by starting with simple, regular, consistent moves — buying stocks with low-cost index funds like VOO.