Editor’s note: This article was first published in March 2012; Apple’s status as the world’s most valuable company, its $614.48 share price, the dividend announcement and the 2014 forecast describe that moment. Apple has since split its shares (7-for-1 in 2014, 4-for-1 in 2020), so per-share figures are not comparable with today’s.
When we say that the stock market is the most profitable investment, we don’t say it lightly. Over the years we have talked on this blog about the need to know how to make your money work, invest it properly and manage risk. Today we look at a real example, because I think it is the best way for people who want to get started in the stock market to understand the advice we have given so far.
During 1999, Apple (currently the most valuable company in the world) traded at around $8–9 per share. Had we decided to buy Apple shares on 13 April 1999 and invested $20,000 in them, we would have got 2,312 shares at a price of $8.65 per share.
Apple has gone through volatile periods on the stock market, but its trend has been upward over the years, even though it has not paid dividends. Had we held on to those shares until yesterday, we would have turned that initial $20,000 into $1,420,760, since Apple’s share price as of 27 March 2012 (yesterday) is no less than $614.48.
What’s more, Apple has announced that it will pay dividends for the first time, so many investment funds are expected to buy the company’s shares, sending its price soaring once again.
If a young investor had put just $1,000 into Apple in 1999, today they would have $71,038.
With this example I want to show that investing in the stock market is very profitable in the long term if we choose the right stock: a company with growth potential and a good CEO, as the great Steve Jobs was. Major investors said that Steve Jobs was a safe bet because of his charisma, his strength and his vision.
See also: Warren Buffett gives his view on the current economic situation
The truth is that in 1999 Apple raised plenty of doubts, but, as we can see, those who bet on the company have struck gold. The newspaper El Mundo (elmundo.es) has reported that by 2014 Apple will be worth more than Spain.
Perhaps another striking case of a profitable investment is Google: in its early days, nobody wanted to buy shares in the company. Google handed out a package of shares to its employees, turning them, quite literally, into millionaires. Any doubts that the stock market is profitable?
Further reading
- The secret of millionaires, told by millionaires
- For me, success was easy. For others, neglect was easier
- 6 ways to lose your savings
Featured image: katz2110 (flickr), CC BY 2.0, via Wikimedia Commons.
