1 Time-Tested Warren Buffett Index Fund Could Turn $300 Per Month Into $618,900
The median income among full-time workers was about $4,700 per month in the second quarter, according to the Bureau of Labor Statistics. Many financial advisors would have workers allocate that income using the 50/30/20 rule, which apportions 50% to essential purchases (needs), 30% to discretionary purchases (wants), and 20% to savings.
Assuming taxes take 30% of gross income, 20% of after-tax income means the median full-time worker should be saving about $650 per month. Not all of that money needs to go to the same place. High-yield savings accounts are worthwhile options for those building up an emergency fund, for example, while individual stocks are worth exploring for anyone willing to do the requisite research.
However, legendary investor Warren Buffett would almost certainly recommend allocating a good chunk of that sum to an S&P 500 index fund like the Vanguard S&P 500 ETF (NYSEMKT: VOO). He has been pounding the table on that strategy for years, and he once illustrated his conviction by wagering $500,000 that no hedge fund manager could outperform an S&P 500 index fund over a decade. Buffett won that bet.
Source Fool.com
