Munger’s Index-Fund Advice: How $400 Monthly in VOO Could Reach $813,000
Charlie Munger, Berkshire Hathaway’s late vice chairman, advised ordinary savers to rely on index funds rather than picking individual stocks. A hypothetical plan investing $400 monthly in VOO for 30 years at 9.5% annual returns could grow to about $813,000, with most of that from compounding. VOO’s low 0.03% expense ratio would cost far less than a typical 1% fee fund.
Munger, Berkshire Hathaway’s late vice chairman, spent decades helping run a roughly $1.1 trillion company, yet he recommended index funds for ordinary savers. He died in November 2023. Over ten years, VOO reportedly gained about 326%, while Berkshire’s B shares rose about 250%.
VOO tracks the S&P 500 and charges 0.03%. In the hypothetical, $400 monthly for 30 years at 9.5% reaches about $813,000; $144,000 comes from deposits and $669,000 from compounding. Regular buying also means more shares are purchased when prices decline.
This story may encourage ordinary savers to compare low-cost index funds with active stock picking and high fees. Workers with workplace retirement accounts could benefit from lower costs and steady contributions, though market downturns may test their resolve. Financial advisers and active fund managers might face greater scrutiny over fees and performance. The broader effect could be modest, since outcomes depend on time horizon, income stability, and whether investors stay invested.