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Imagine you had invested $10,000 at the bottom of the financial crisis from 2008 to 2009. The results you find below might not blow you away on an actual basis, but the amount invested is all relative based on your financial situation. It’s the percentage gain that’s more important because that number is going to be the same for everyone—assuming investors poured money into the market at the exact same time in this hypothetical situation.
Below, in addition to looking at how much money you would have made, we’ll also take a brief look to see if the same kind of return is possible over the next 10 years.
Key Takeaway
- Investing $10,000 in the S&P 500 at the financial crisis low in 2009 could have grown to over $51,000 by 2020. Similarly, investments in the Dow Jones and Nasdaq would have seen substantial gains, underscoring the potential long-term benefits of investing in these indices during market lows.
- The S&P 500 is a key market barometer, consisting of around 500 large-cap stocks. An investment in its ETF, SPY, at the 2009 low could have resulted in a 410% gain as of October 2020.
- A $10,000 investment in the Dow Jones Industrial Average in 2009 would have grown by 339%, while the same investment in the Nasdaq Composite could have soared by 813%, highlighting the impressive growth of tech-heavy indices.
- Though past performance shows impressive gains, repeating such substantial returns over the next decade is unlikely. Investors might expect more historical average returns of around 8% to 10% annually, considering current economic conditions and central bank policies.
- While historical returns from 2009 to 2020 were substantial, future investments in major indices may yield more moderate, yet still potentially substantial, returns if investors remain committed to maintaining their investment in market indices.
How an S&P 500 Investment at Crisis Lows Could Have Grown
The S&P 500 consists of approximately 500 large-cap stocks—it’s never exactly 500 stocks and the makeup tends to change over time—that are either listed on the NYSE or NASDAQ. Most investors and traders refer to the S&P 500 as a barometer for the market because its components represent a lot of the significant activity that occurs on a daily basis. The S&P 500 Index is also the index that is generally used when calculating beta.
The absolute bottom for the financial crisis was March 9, 2009, when the S&P 500 hit 676.53. For simplicity purposes, we’ll call it 676. If you had $10,000 to invest at that time, it would have bought you 148 shares of the SPDR S&P 500 ETF (SPY) at $67.95 (this is rounded up from 147.17, assuming you could have thrown in a few extra bucks). As of October 2020, the S&P 500 stands at 3,477.13 and SPY trades at $346.85.
- 3477.13 – 676 = 2,801.13 for a 414% gain or 3.14x increase
- $346.85 – $67.95 = $278.90 for a 410% gain or 4.10x increase
Thus, holding all of your shares, your investment would be worth $51,333.80. Pretty good for a $10,000 investment. And this doesn’t include the dividend yield, which is always changing, but currently stands at 1.75% for the S&P 500 Index and 1.65% for SPY.
Evaluating Dow Jones Returns Since the 2009 Financial Crisis
The Dow Jones Industrial Average is intended to track the 30 strongest blue-chip stocks throughout the entire market. Regardless, the DJIA stood at 6,507 on March 9, 2009. A $10,000 investment with the SPDR Dow Jones ETF (DIA) would have bought you 153 shares at $65.51 each. As of October 2020, the DJIA trades at 28,586.90.
- 28,586.90 – 6,507 = 22,079.90 for a 339% gain or 3.39x increase
- $285.93 – $65.51 = $220.42 for a 336% gain or 3.36x increase
Thus, holding all of your shares, your investment would be worth $43,747.29.
Nasdaq Growth: Investment Outcomes From 2009 Lows
The Nasdaq is historically known to track mostly technology stocks. Technology stocks on the Nasdaq vary among tech and biotech, with some other company types mixed in as well.
The Nasdaq Composite consists of approximately 4,000 stocks. Whether they’re tech stocks or not, you’re going to find more growth companies on the Nasdaq. This will lead to bigger gains during bull markets and bigger sell-offs during bear markets. On March 9, 2009, the Nasdaq traded at 1,268.64. A $10,000 investment in Fidelity’s Nasdaq Composite ONEQ ETF at $50.75 would have bought you 198 shares. As of October 2020, the NASDAQ trades at 11,579.94.
- 11,579.94 – 1,268 = 10,311.94 for a 813% gain or 8.13x increase
- $449.84 – $50.75 = $399.09 for a 786% or 7.86x increase
Thus, holding all 198 of your shares, your investment would be worth $89,068.32.
Future Market Expectations: A Look Beyond Historical Returns
Whether you’re bullish or bearish, the odds of the above returns repeating themselves over the next 10 years are not likely. If you believe that the economy is on a steady track, that’s fine, and there will still be growth ahead, but the odds of returns greater than 300% are not likely. Add in central bank policy, which is increasing base level Treasury rates and causing balance among fixed income and equities in the marketplace, and those expectations are more for steady returns back to historical levels of 8% to 10%.
The Bottom Line
If you were savvy enough to get in at the bottom in 2009, you did well. As such, this gives you a much higher baseline to invest for the future, but don’t count on a rerun of the last 10 years. However, for investors willing to maintain the risk of their S&P 500, Dow Jones, or Nasdaq investments, steady returns of a more historical average nature could still lead to substantial gains.
