Passive investing through a Vanguard index fund that follows the stock market isn’t perfect, but its pros far outweigh its cons — and one of the greatest investors of all time has just given his stamp of approval.

“The greatest living investor’s instructions to the executors of his estate are perhaps the most convincing argument in favor of a passive approach,” reporter Spencer Jakab asserted in a report for The Wall Street Journal.

Warren Buffett urged them to put 10 percent in short-term bonds “and 90 percent in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions, or individuals — who employ high-fee managers.”

The sticking point is that active management typically subtracts two percent a year from returns. Index inefficiencies – like the half-a-point drag on inflated new stocks and deflated outgoing stocks when an index is updated or overvalued sectors within indexes caused by the vast sums of money invested in them – take far less out of investors’ pockets.

And as for Princeton Professor Burton Malkiel’s paradox “that you do need active management to make the market efficient,” the approach of index champions like Vanguard isn’t likely to eliminate managers until market share reaches 90 percent, which is far from today’s 30 percent.

Read more about the passive investing pros and cons in The Wall Street Journal here, and check out previous VISTA Today coverage of Vanguard here.