Warren Buffett is one of the most successful people in finance, and his portfolio's performance is a testament to the power of long-term investing. Buffett bought his first stock at age 11, he took control of Berkshire Hathaway at age 35, and he now ranks among the richest people on the planet at age 92, with a net worth that exceeds $100 billion.

Meanwhile, Buffett has also managed to create tremendous wealth for shareholders. Berkshire stock has nearly doubled the performance of the S&P 500 over the last five-plus decades, and Berkshire Hathaway itself has become the sixth-largest publicly traded company.

Given Buffett's business savvy and financial bona fides, investors should listen when he offers advice, and Buffett has often recommended an S&P 500 index fund. In fact, he believes the "know-nothing" investor can actually outperform most professionals by periodically investing in an S&P 500 index fund.

Warren Buffett owns the Vanguard S&P 500 ETF

The Vanguard S&P 500 ETF (VOO 0.15%) tracks the returns of the S&P 500 index, which comprises 500 large U.S. companies that span all 11 market sectors, representing a mix of value stocks and growth stocks. In a sense, the S&P 500 is a barometer for the broader U.S. economy, so the Vanguard ETF is a way for investors to bet on America, and Buffett has long been a champion of American business.

In fact, Buffett made the following statement in his 2015 letter to shareholders: "For 240 years it's been a terrible mistake to bet against America, and now is no time to start. America's golden goose of commerce and innovation will continue to lay more and larger eggs."

The Vanguard S&P 500 ETF offers three key advantages over individual stocks. First, its diversified nature means invested dollars are spread across multiple industries, which mitigates the risk that comes with a concentrated portfolio. Second, the benchmark S&P 500 has recovered from every past downturn, meaning investors are all but guaranteed a positive return with a long enough holding period. Third, it eliminates the need to research individual businesses, meaning investors can earn a good return without doing much work.

In fact, the Vanguard ETF generated a total return of 225% over the past decade, which is equivalent to 12.5% per year. At that pace, $150 invested on a weekly basis would be worth $1 million after 24 years, and $2 million after 30 years.

Investors should note that Buffett actually owns a stake in two S&P 500 index funds. The first is the Vanguard S&P 500 ETF, which is managed by the Vanguard Group. The second is the SPDR S&P 500 ETF, which is managed by State Street. The biggest difference between the two funds is the expense ratio. The Vanguard ETF bears an expense ratio of 0.03%, meaning Vanguard charges a fee of $3 per year on a $10,000 portfolio, while the State Street ETF bears a slightly higher expense ratio of 0.0945%. For that reason, I prefer the Vanguard ETF, but Buffett is clearly OK with either option.

A bull market rally is coming

Scorching inflation and rising interest rates have sent the S&P 500 tumbling into a bear market, making the past year difficult for many investors. But Buffett would probably put a different spin on the situation. In fact, he once said, "Bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price." That levelheaded outlook is one of many reasons Buffett has been so successful, and investors should take his advice seriously.

Right now is a particularly good time to buy an S&P 500 index fund. The S&P 500 has recovered from every bear market in the past, and there is no reason to believe the current downturn will be any different. Sooner or later, the next bull market rally will drive the S&P 500 to new highs, and any investor that bought an S&P 500 index fund during the bear market will look like a genius.