Here’s how much money you'd have if you invested $1,000 in the S&P 500 a decade ago | Canada News Media
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Investment

Here’s how much money you’d have if you invested $1,000 in the S&P 500 a decade ago

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1 year ago

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During the Berkshire Hathaway annual meeting in 2020, billionaire and legendary investor Warren Buffett told the audience, “in my view, for most people, the best thing to do is own the S&P 500 index fund.”

It’s a sentiment Buffett has stood by and repeated because he believes it’s a way for investors to help mitigate the risks that come with choosing individual stocks.

“The trick is not to pick the right company. The trick is to essentially buy all the big companies through the S&P 500 and to do it consistently and to do it in a very, very low-cost way,” he told CNBC in 2017.

The S&P 500 is a market index that tracks the stock performance of around 500 large-company U.S. stocks, including Amazon, Google parent company Alphabet, Meta and Visa.

While the index is not immune to overall market downturns, long-term investors have historically earned a nearly 10% average annual return. However, as with all investments, it’s important to note that past performance can’t be used to predict future results.

Here’s how much you’d have now if you’d invested $1,000 in the S&P 500 about one, five and 10 years ago:

If you had invested $1,000 into the S&P 500 about a year ago, your investment would be worth about $942 as of April 20, according to CNBC’s calculations.

Had you invested $1,000 into the S&P 500 about five years ago, your investment would have grown to about $1,689 as of April 20, according to CNBC’s calculations.

And if you had put $1,000 into the S&P 500 about a decade ago, the amount would have more than tripled to $3,217 as of April 20, according to CNBC’s calculations.

Why index funds can be a smart investment

While you can’t directly invest in the index itself, choosing to buy an S&P 500 index mutual fund or exchange-traded fund (ETF) gives you exposure to the index’s underlying stocks.

Financial experts generally consider these types of funds less risky than owning individual shares. By spreading your bets across some 500 companies, you lower the chances that a drawdown in any one particular stock would hurt your portfolio’s performance.

Additionally, because index funds are considered passive strategies, they tend to be low-cost investments. Index funds merely track a benchmark’s performance and therefore don’t employ a manager to run the fund, as is the case with “active” strategies.

As a result, the average passive fund charges an annual fee of 0.12%, compared with a 0.60% average fee among active funds, according to the latest data from Morningstar.

How compounding can help you build wealth

When it comes to investing, the sooner you start, the better. That’s because of compound interest, which can help your money grow.

Here’s how it works: After you make an initial investment, you theoretically earn a return on that principal amount. As interest is added to your balance, you begin to earn interest on that amount as well.

Say you invest $1,000 and earn an annualized return of 4%. A year later, your investment would have grown to $1,040 which is your original $1,000 investment plus four percent.

In year two, you’d earn 4% on the entire total, not just the principal balance of $1,000. By the end of the year, you’d have $1,081.60. In year three, you’d then earn 4% on $1,081.60, and so on.

You can use CNBC Make It’s compound interest calculator to see how it can help your money grow based on your initial deposit, your monthly or annual contributions, interest rate and time horizon.

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Economy

S&P/TSX composite down more than 200 points, U.S. stock markets also fall

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6 days ago

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September 6, 2024

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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.

The S&P/TSX composite index was down 239.24 points at 22,749.04.

In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.

The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.

The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.

The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.

This report by The Canadian Press was first published Sept. 6, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

S&P/TSX composite up more than 150 points, U.S. stock markets also higher

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2 weeks ago

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August 29, 2024

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TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.

The S&P/TSX composite index was up 171.41 points at 23,298.39.

In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.

The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.

The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.

The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.

This report by The Canadian Press was first published Aug. 29, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Investment

Crypto Market Bloodbath Amid Broader Economic Concerns

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1 month ago

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August 5, 2024

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The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.

The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.

Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.

The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.

Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.

Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.

Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.

Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.

The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.

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