If you had the foresight to invest $100 in the S&P 500 Index in 1972, you would be feeling pretty pleased with yourself now. The S&P 500 Index has performed exceptionally well over the past 46 years, and if you had invested $100 in 1972, you would now have a tidy sum of money.
The S&P 500 Index is a stock market index that tracks the performance of the 500 largest publicly traded companies in the United States. It is a broad measure of the stock market and is used as a benchmark for the performance of the overall market.
When the S&P 500 Index was first established in 1972, it had a base index value of 100. Since then, the index has risen steadily, and in September 2018, it hit an all-time high of 2,914. The index is currently hovering around the 3,000 mark. That means that since 1972, the S&P 500 Index has increased in value by a whopping 2,800%.
Let's do the math. If you had invested $100 in 1972, that would have bought you the equivalent of 10 stocks in the S&P 500 Index. Fast-forward to 2018 and those 10 stocks are now worth an impressive $28,000. That's a return of 27,900% on your original investment.
Of course, the stock market can be unpredictable and past performance is not necessarily an indication of future performance. The S&P 500 Index has endured its fair share of ups and downs over the years, and there have been times when the value of the index has dropped dramatically.
The worst calendar year for the S&P 500 Index was in 2008 when the index dropped by 37%. In the wake of the global financial crisis, the S&P 500 Index fell from 1,576 in December 2007 to 1,002 in December 2008.
The S&P 500 Index has since recovered and is currently at an all-time high, but it is important to remember that stock market investments can be volatile and you should always take a long-term view when investing.
It is also important to diversify your investments. A portfolio of stocks and bonds is often seen as the best way to protect yourself from a downturn in the stock market.
So if you had invested $100 in the S&P 500 Index in 1972, you would now have a tidy sum of money. But remember, stock market investments can be volatile, and it is important to take a long-term view and diversify your investments.
