Warren Buffett is the world’s most successful investor. His advice? Invest in an index fund. And, as Tim Harford explains, index funds have become very important indeed.
Warren Buffett is the world’s most successful investor. In a letter he wrote to his wife, advising her how to invest after he dies, he offers some clear advice: put almost everything into “a very low-cost S&P 500 index fund”. Index funds passively track the market as a whole by buying a little of everything, rather than trying to beat the market with clever stock picks – the kind of clever stock picks that Warren Buffett himself has been making for more than half a century. Index funds now seem completely natural. But as recently as 1976 they didn’t exist. And, as Tim Harford explains, they have become very important indeed – and not only to Mrs Buffett.
Editors: Richard Knight and Richard Vadon
Producer: Ben Crighton
(Image: Market graphs, Credit: Shutterstock)