Wow. What a year. Exactly 12 months ago this Wednesday, I invested $1,000 into an S&P 500 index fund (Ticker symbol VOO). We were a month into feeling the widespread effects of the COVID-19 pandemic, and the stock market had suffered its worst decline in 10 years. No one knew what was going on, or what the next year would bring.
While it was the first pandemic most of us had seen, it wasn’t the first time the stock market had taken a nosedive – we saw a very similar story play out in 2008. As I outlined in my post a year ago, if you had invested in the stock market in 2008 when it felt like the world was ending, you would have made a lot of money (nearly quadrupled your investment by 2021).
So when stocks were crashing and it felt like the world was ending in March/April 2020, I saw it as a great opportunity to invest. And the government even sent me some extra money (thanks government my fellow taxpayers!).
I purchased $1,000 worth of VOO on April 21, 2020. Exactly one year later, that $1,000 I invested is now worth $1,541, representing a 54% return.
54% in a year. That is wild compared to the stock market’s average return of ~7% a year for the last hundred years or so. I was kinda hoping that stocks would continue to decline so I would have a good story about sticking out the ups and downs and holding on for the long term. But I’m sure that day when we hit another big downturn will come eventually (maybe one year from now? 5 years? who knows!).
For now, I’ll just pat last-year Greg on the back, and remind you again… when the stock market drops, that is a great time to buy. As Warren Buffett, arguably the greatest investor ever, says, “Be fearful when others are greedy, be greedy when others are fearful.”
I’ll leave you with a fun hypothetical. Let’s say I kept that $1,000 invested for the next 40 years, and it continued to increase by 54% each year. By the time I was 65, it would be worth roughly $31,000,000. I give that a 0.00% chance of happening, but it just illustrates how high of a return that is in a year.
As always, if you are interested in chatting about anything personal finance related, or you just want to say hello, feel free to reach out to me at hashtagmoneygoals@gmail.com.
Previous installments of the Stimulus Check Experiment:
What I’m Doing with My Stimulus Check – April 2020
Stimulus Check Update #1: My First Dividend! – July 2020
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