Every rolling 20-year period in Crestmont Research's data ended with a positive annualized total return. That record has limits, and fund fees differ.
At Berkshire Hathaway's virtual shareholder meeting in 2020, Warren Buffett backed a straightforward choice for most people: an S&P 500 index fund. The historical record makes a case for that approach, not a guarantee. Past 20-year returns cannot tell investors what they will earn or when losses may come. The limits matter.
Buffett made the recommendation in the weeks after the February-March 2020 COVID-19 market crash. He retired as Berkshire Hathaway CEO on Dec. 31, 2025, after more than six decades at the company. Greg Abel became CEO on Jan. 1, 2026, according to Forbes' leadership account. Buffett did not routinely recommend individual stocks. The advice was broad.
Buffett later stepped down as Berkshire's chairman and became chairman emeritus; his son Howard Buffett was elected chairman of the board.
What the 20-year record shows
Crestmont Research's annual analysis tracks rolling 20-year periods of S&P 500 total returns, including dividends. Its updated dataset covers 107 overlapping periods, from 1900-1919 through 2006-2025. Every period had a positive average annual total return. The earliest figures are estimates: the S&P 500 did not begin in its present form until 1923, so researchers used the performance of its components in other major indexes to extend the historical series.
That finding does not mean an S&P 500 fund cannot lose money. It means that in those historical windows, investors who stayed in for the full 20 years ended with a positive average annual total return. Not every year was positive. Investors also faced steep declines along the way. The path was rough.
A long time horizon can give a stock investment more time to recover from downturns. Money needed sooner may not have that flexibility. For household planning, patience matters, as does the ability to withstand volatility. Buffett has also spoken about the long-term case for owning stocks and betting on the United States. He has not promised a smooth ride.
After Berkshire's leadership transition, the company reduced its listed stock positions from about 42 to 26, exited Amazon, Visa and UnitedHealth Group, and held about $397 billion in cash and Treasury bills combined.
Fees are one difference
Investors have several S&P 500 funds to choose from. This comparison looks at the Vanguard S&P 500 ETF (VOO) and the State Street SPDR S&P 500 ETF Trust (SPY), which began trading in January 1993. Both aim to track the same index. Their stated expense ratios differ: 0.03% for VOO and a gross expense ratio of 0.0945% for SPY.
An expense ratio is the annual fund charge for operating costs, expressed as a share of assets. The gap is about six basis points, or roughly six-hundredths of a percentage point. That may seem small in one year. The charge recurs for as long as an investor holds the fund, and it can cut returns over time. The fee alone does not determine which fund suits every account. Investors should also consider the fund's structure and their own circumstances.
For readers comparing regular contributions with attempts to time the market, an earlier look at automatic enrollment and investing offers related context. Regular investing does not remove market risk. An S&P 500 fund remains exposed to movements in large U.S. stocks. Risk remains.
The limits of a simple rule
Buffett's recommendation is not a promise of safety or a substitute for matching investments to a person's needs. An S&P 500 fund focuses on large U.S. companies. Its holdings differ from those of a broadly diversified portfolio that also includes other asset classes or markets. Historical comparisons cannot show that one fund will outperform another in the future.
Fund costs are only part of the decision. An investor's time horizon and ability to tolerate losses both matter. So does the need to access the money. A low expense ratio can reduce one drag on returns, but it cannot prevent a market decline. Nor can it ensure that money will be available at a favorable value when needed.
Buffett's advice favors broad ownership and a long holding period. It does not promise a particular S&P 500 return. Crestmont's 107 positive historical periods support the case for patience, but market swings and the limits of backtesting leave the future uncertain. Investors considering this approach should weigh their time horizon and ability to stay invested alongside the fund fee.
