To be clear, I don't suggest that anyone should buy just one stock. In order to properly invest in the stock market, you need a diverse portfolio, which means investing in five or six different stocks at a minimum.

Having said that, there are still some good investments to make if you only have enough capital to buy one stock. In the past, I've made the case that Warren Buffett's Berkshire Hathaway (BRK.A -0.42%) (BRK.B -0.56%) is one of the closest things to a stand-alone stock that you can find. Today, I'd like to take another page out of Warren Buffett's playbook and talk about the best investment the Oracle of Omaha feels most people can make.

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The best investment most people can make

Warren Buffett is one of the greatest stock-pickers of all time, so it may come as a surprise that he's said, many times, that the best investment most people can make is a simple, low-cost S&P 500 index fund.

Buffett considers an investment in the S&P to be an overall bet on American business -- one that has paid off extremely well in the past, and should continue to do so over long time periods. Over the long run, the S&P 500 has averaged total returns of about 10% per year, and while there is no way to guarantee future performance, there's no reason to expect any different over the next 20, 50, or 100 years.

To prove his point, about nine years ago, Warren Buffett offered to wager $500,000 that no group of at least five hedge funds would match the performance of an unmanaged S&P 500 index fund (Buffett chose a Vanguard S&P index fund) over a 10-year period. With one year to go, the S&P 500 has delivered a total return of 85%, handily outperforming the 22% return averaged by a professionally selected group of five "funds of funds."

The point Buffett was trying to make is that as a whole, active investing and its high fees would underperform the results of simple buy-and-hold investing over long periods of time. After nine years of solid outperformance, it's tough to argue against him.

My favorite S&P 500 index fund

I mentioned that Warren Buffett used a Vanguard S&P 500 index fund in his bet, and that's actually my personal favorite -- particularly the ETF variety.

The Vanguard S&P 500 ETF (VOO 0.96%) trades just like a stock, making it extremely easy to invest in. The fund charges a rock-bottom expense ratio of 0.05% -- meaning that if you have $10,000 invested, you'll pay just $5 in fees this year.

In a nutshell, the Vanguard S&P 500 ETF is an all-in-one bet on the long-term success of American business. With one of the lowest fee structures of any mutual fund or ETF in the market, most of the long-term gains of the index will help you build wealth -- and won't go toward making fund managers rich.

If I could only buy one stock

In full disclosure, I don't own any shares of the Vanguard S&P 500 ETF, or any other S&P 500 index fund, for that matter. This is because I've accumulated a well-diversified stock portfolio over the years, and feel I have a reasonably good chance to beat the market over long periods of time with my stocks.

What I'm saying here is that if I were just getting started with investing, or if I didn't have the time, knowledge, or desire to invest in individual stocks the right way, the Vanguard S&P 500 ETF is a great investment, all by itself.