Sarah Travers
The stock market, a dynamic and ever-evolving financial arena, has fascinated investors for generations. It can be encapsulated in a series of astonishing facts that highlight the potential for long-term wealth building.
In this article, we’ll explore these eye-catching numbers that might just have you eager to make your next investment move.
The Remarkable Journey of the S&P 500
The S&P stock market index, a globally recognized benchmark, had modest beginnings in 1926 with only 90 companies. By 1957, it had expanded to encompass 500 companies, becoming the renowned S&P 500.
If you had invested $1,000 in an S&P 500 index fund in 1957, with dividends reinvested, your investment would now be valued at over $671,000. This represents an extraordinary compound annual return of 10.2% over 67 years, illustrating the market’s potential for wealth creation.
Individual Stock Success Stories
While index funds like the S&P 500 have provided substantial returns, some individual stocks have outperformed even more impressively. Companies must meet rigorous criteria to join the S&P 500, ensuring that only high-quality firms make the cut. Notably, tech giants Apple and Microsoft, accounting for 15.5% of the index’s weight, have significantly outperformed the index:
- Apple, which went public in 1980 at a split-adjusted price of approximately $0.10 per share, now trades at over $190 per share, yielding a phenomenal return of over 190,000%.
- Microsoft, with its IPO in 1986 at a split-adjusted price of roughly $0.0729 per share, boasts gains of well over 500,000%, with recent share prices exceeding $370.
A $1,000 investment in Apple at its IPO would now be worth $1.9 million, while the same amount invested in Microsoft would be worth almost $5.1 million. These figures emphasize that there is no one-size-fits-all approach to stock market investing, and investors from various backgrounds can accumulate substantial wealth over the long term.
Revealing the Market’s Consistency
Since 1957, the S&P 500 has demonstrated remarkable consistency. It has reported an annual loss only 15 times while delivering a positive annual return an impressive 52 times. This means that investors are more than three times as likely to achieve gains in the stock market during a given year than to incur losses.
But the story gets even more compelling. The S&P 500 has achieved an annual return of at least 10% on 41 occasions, making it more than twice as likely to generate double-digit gains than to experience losses in a given year. The most compelling statistic of all: the S&P 500 has delivered an annual return of 20% or more on 24 occasions since 1957. This means you are more likely to earn a return that is twice the long-term average (10%) than you are to experience any loss.
The Path Ahead in Stock Market Investing
The stock market’s illustrious history, as illuminated by these astonishing facts, presents a landscape of opportunity and potential for wealth accumulation.
If you’ve missed out on past market successes, there’s no need to worry. It’s never too late to invest, as the best years may still lie ahead. Whether through index funds or individual stock selections, the stock market remains a powerful instrument for building long-term wealth, offering a promising route to financial security and prosperity.
