Warren Buffett just announced that at the end of this year, he'll step down as CEO of Berkshire Hathaway after an illustrious career heading the conglomerate. He has compounded capital at 5,500,000% in the past six decades, making him an investing legend.

The Oracle of Omaha might have one of the best track records. However, his advice for the average investor is remarkably simple. Buffett suggests buying a low-cost S&P 500 index fund, such as the Vanguard S&P 500 ETF (VOO 3.25%). The simplicity of such a strategy might sound boring.

But when you understand that a $1,000 monthly investment in this ETF can turn into $228,000 in just 10 years, you'll quickly realize just how powerful Buffett's suggestion can be. Here's what investors need to know about this effective money-making strategy.

Image source: The Motley Fool.

Generating huge wealth

In the past decade, the Vanguard S&P 500 ETF has produced a total return of 219%. On an annualized basis, this translates to a yearly gain of 12.3%. Over the very long term, the S&P 500 has generated a roughly 10% annual return, so the last 10 years has been better, probably driven by near-zero interest rates, the rising popularity of passive investing, and solid economic growth.

It's worth pointing out that past results are no guarantee of future returns. But let's just assume that the Vanguard S&P 500 ETF registers the same gains over the next decade, which obviously is impossible to predict. If you invest $1,000 each month into this investment vehicle, then after 10 years (equating to a total of 120 investments), you'd be staring at a $228,000 balance in your portfolio. That's a phenomenal outcome.

That's the magic of dollar-cost averaging. It eliminates the need to try to correctly time the market and buy at one time. Instead, investors allocate money to the Vanguard S&P 500 ETF on a monthly basis. This allows investors to take advantage of multiple price points while building a valuable habit of consistent investing.

A low-maintenance strategy

Everyone wants to be a successful stock picker like Warren Buffett. The truth, however, is that we not only don't possesss expert financial modeling and business analysis skills, but we lack probably don't have enough time to do this. Here's where buying the Vanguard S&P 500 ETF truly shines as a low-maintenance strategy.

Investors immediately gain broad diversification to the S&P 500, a popular benchmark that contains 500 leading companies that trade on U.S. stock exchanges. The portfolio will have exposure to all sectors of the economy, from information technology and financials to real estate and materials. Betting on the growth of the U.S. economy has worked out well in the past, and it should continue to do so in the future.

The focus usually always centers on performance. But it's also important to know what the cost is. The Vanguard S&P 500 ETF carries a tiny expense ratio of 0.03%. Of a $1,000 investment, just $0.30 goes to Vanguard on an annual basis to cover costs associated with administration, marketing, and distribution of its various products.

And for such a low fee, the average investor is sure to outperform most active fund managers out there. Studies indicate that many of these highly paid professionals lag the S&P 500's performance over long periods of time, something Buffett has ridiculed.

It might not seem like much. But putting just $1,000 per month into the Vanguard S&P 500 ETF can end up turning into a massive sum of wealth for the disciplined and patient investor.