Stocks to Buy Now: Warren Buffett’s Best Investment Recommendation

If you’re looking for some of the best stocks to buy now, I’d strongly consider Warren Buffett’s advice.

| More on:
Make a choice, path to success, sign

Image source: Getty Images

Warren Buffett has built an incredible reputation and portfolio over the years, thanks to his impressive intelligence and investment savvy. However, another significant factor in Buffett’s success is the fact that he’s focused on long-term investing. That’s why any time you’re looking for the best stocks to buy now, taking a long-term approach like Warren Buffett is crucial.

Over his decades-long career, Buffett has made several high-quality and noteworthy investments — from GEICO, one of his earliest investments and now a wholly owned subsidiary of his holding company, to Coca Cola, a stock that he may never sell.

However, what might surprise some investors is that Buffett’s best and most consistent recommendation when asked about the best investments to buy now isn’t about individual stocks at all.

Instead, for years, including during last year’s annual shareholders’ meeting, he recommended that investors put the majority of their capital in a low-cost index fund.

Why does Warren Buffett think index funds are the best stocks to buy now?

There are several reasons why Warren Buffett believes that most investors are best off owning index funds rather than trying to find stocks to buy now. First, these are incredible investments that offer tones of advantages that you can have confidence owning over the long haul.

An index, such as the S&P 500 gives investors exposure to tonnes of different stocks of all sizes, industries, and with varying risks and rewards. While he recommends any index fund, the S&P 500 is typically his most common recommendation.

It’s an excellent way to bet on the consistently expanding American economy, which, for over 200 years, has been continuously growing.

So, as long as you invest for the long run and continue to add to your index funds with your savings, over the years, it should earn you strong returns. But what about finding the best stocks to buy now?

Stock picking, especially over the long run, is a lot harder than many think. Even professional money managers struggle to consistently beat the market over several years. So, logically, if the majority of investors are going to underperform index funds trying to pick their own stocks, it makes sense that most investors elect to invest the majority of their capital in index funds. This is why Warren Buffett recommends index funds.

But you may be wondering which index funds on the stock market are some of the best to buy now.

Two top index funds for Canadian investors

If you’re a Canadian investor and you’re interested in gaining exposure to the S&P 500, one of the best ETFs to consider is iShares Core S&P 500 Index ETF (CAD-Hedged) (TSX:XSP). This is the easiest way to gain exposure to the American economy and buy the best investment on the stock market now, according to Buffett.

The fund offers exposure to all the massive American companies, which is why it’s such a great investment to own for years and why Warren Buffett recommends the S&P 500. Plus, because the ETF is hedged, you don’t have to worry about the fluctuating value of the Canadian and American dollars.

In addition to having exposure to the American economy, though, you might also want to buy a Canadian index fund. So, if you’re looking for one of the best Canadian index funds on the stock market that you can buy now, consider iShares S&P/TSX 60 Index ETF (TSX:XIU).

The XIU is similar in a lot of ways to the XSP. It’s a diverse investment with a super-low-cost management fee that you can own long term. But because it only offers exposure to 60 stocks, and these are 60 of the largest and most prominent, the XIU pays a 2.5% dividend yield — much more than the S&P 500 ETF.

So, if you’re looking to buy an investment that you can own for years, index funds like these two could perform even better than stocks and, for most investors, will be the best to buy now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Stocks for Beginners

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Emerging Canadian AI Companies With Big Potential

These tech stocks are paving the way to an AI-filled future, but still offer enough growth ahead for a strong…

Read more »

Young Boy with Jet Pack Dreams of Flying
Tech Stocks

Is Constellation Software Stock a Buy, Sell, or Hold for 2025?

CSU stock has long been a strong option for high growth, high value stocks. But are there now too many…

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

Asset Management
Stocks for Beginners

TFSA: 4 Canadian Stocks to Buy and Hold Forever

Thinking about what to buy with the new TFSA contribution space in 2025? These four Canadian stocks are worth holding…

Read more »

concept of real estate evaluation
Stocks for Beginners

2 No-Brainer Real Estate Stocks to Buy Right Now for Less Than $1,000

These two real estate sector-focused stocks have the potential to deliver strong returns on your investments in the coming years.

Read more »

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

stocks climbing green bull market
Stocks for Beginners

3 TSX Stocks Soaring Higher With No Signs of Slowing

Don't ignore stocks just because they look like they're at a high price. Instead, see exactly why they've driven so…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »