Investing in the stock market has been shown to be the most efficient and effective way of turning money into more money, and yet 61 percent of millennials say they’re afraid of getting started. Overcoming that fear, though, could pay off. Just look back 10 years.
Financial website How Much took a look at some popular stocks in 2007 to find out how much a $1,000 investment in each would be worth now, as of October 31.
In the below graphic, the blue dots are equivalent to the $1,000 initial investment, so they are the same size for each company. The pink ones represent the current total value of the investment, so each of those varies.
“The larger the pink circle, the more your investment is worth,” according to How Much. “If the pink fits inside the blue, then you lost money. The [graphic] assumes that you took any dividend paid out in cash and did not reinvest into the company by buying more stock.”
These companies largely proved to be good investments. “All things being equal, prices seem pretty high right now. In fact, most of the companies on our chart have seen significant gains in recent years,” the report states.
But there are cautionary tales to be seen in the chart, too, since any individual stock can either over- or under-perform. That’s why so many experts suggest that, to get started in the stock market, you consider index funds, which hold every stock in an index such as the S&P 500, including big-name companies such as Apple, Microsoft and Google, and offer low turnover rates, so the attendant fees and tax bills tend to be low as well.
Warren Buffett, Mark Cuban and Tony Robbins all agree index funds are a safe bet, especially for new investors, since they fluctuate with the market, stay pretty constant and eliminate the risk of picking individual stocks.
Investing for the first time can be a big step, and it can be risky. Past returns do not predict future results. But if you find the right stocks, it can lead to a real pay off.
Source CNBC International