Warren Buffett Has Recommended This Surprising Investment for All Investors During Any Market Environment. Here’s How It’s Turned Out, According to History.

This Vanguard fund, and others like it, invest in all of the S&P 500 members to replicate the benchmark’s performance. So, when you buy shares of the fund, you’re betting on this major index.

Why is Buffett a believer in this investment? For one simple reason: “American business has done wonderfully over time and will continue to do so (though, most assuredly, in unpredictable fits and starts),” Buffett wrote in his 2013 letter to shareholders. And this investment allows investors access to this range of top American businesses.

But has Buffett been right over time? Here’s how it’s turned out, according to history. Since the S&P 500’s launch in the late 1950s, its average annual return has been 10%.

And since the Vanguard fund’s inception date, in 2010, it’s replicated the S&P 500’s gain of more than 500%.

We can also see in the chart above that every downturn was followed by a recovery, and the fund went on to gain. So, history is telling us that Buffett is right and investing in the Vanguard S&P 500 ETF or another S&P 500 index fund is the right move — and one you could make during any market environment — as long as you hold on for a number of years. This investment has never disappointed over the long term.

This doesn’t mean you should abandon stock picking. Like Buffett, you could watch the market for opportunities and aim to get in on quality stocks at reasonable prices. At the same time, though, you might consider adding shares of an S&P 500 index fund to your portfolio. Buffett says it’s a winner, and history has clearly demonstrated that he’s right.

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American Express is an advertising partner of Motley Fool Money. Adria Cimino has positions in American Express. The Motley Fool has positions in and recommends American Express, Berkshire Hathaway, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

Warren Buffett Has Recommended This Surprising Investment for All Investors During Any Market Environment. Here’s How It’s Turned Out, According to History. was originally published by The Motley Fool