This was the best way to invest $1,000 … back in 2010
- Written by: Jason Tian, Senior Lecturer, Swinburne University of Technology
Over the past few years, markets have been on a wild ride. The price of gold has soared to record highs. Bitcoin is trading above US$100,000 (about A$150,000), at levels that once seemed unthinkable.
Hype about artificial intelligence (AI) has put a rocket under tech stocks. US chip maker Nvidia is worth more than Australia’s entire stock market combined.
Obviously, this doesn’t tell us anything about where these investments are headed in the future. There are now even widespread concerns AI investment may be driving a bubble.
Still, if you did have a time machine, what would be the best way to go back and invest some cash?
We’ve crunched the numbers on a range of popular investment options to see how they have performed since 2010. The results might surprise you.
The range is staggering
Let’s imagine you had A$1,000 burning a hole in your pocket back in 2010.
The global financial crisis was still fresh on everyone’s minds, and the investment world was a different place. But maybe you had just received a tax refund, or sold your old car. So, where should you have put that money?
By now, that $1,000 could be worth anywhere from $1,428 if you left it in a savings account, to a mind-boggling $466.8 million if you’d invested in Bitcoin.
Cryptocurrency is a bit of a special case, so we’ll come back to that later.
The Australian share market delivered solid returns. Investing in the ASX 200 – the top 200 companies listed on the Australian Securities Exchange (ASX) – would have turned $1,000 into $3,446 (with dividends reinvested). That’s a 245% total return.
Putting it in gold, often considered a “safe haven” investment, would have returned $4,201.
Then comes the standout: US shares. Investing in the S&P 500 would have transformed $1,000 into $10,851 – more than triple the return on Australian shares.
US superstars – the ‘Magnificent Seven’
Even that remarkable figure pales beside a more concentrated bet – the “Magnificent Seven” tech stocks — Apple, Microsoft, Alphabet (owner of Google), Amazon, Meta (owner of Facebook), Tesla and Nvidia.
These stocks now account for about 40% of the S&P 500 index and have driven much of its recent strong performance.
We can’t measure their performance from all the way back in 2010, because Meta (Facebook) only listed publicly on the US share market in 2012.
However, Bloomberg data allows us to reliably track their performance as a basket of stocks since 2015. From that point in time, investing in these stocks would have turned that same $1,000 into $26,074 by today.
That’s nearly two and a half times better than the broader S&P 500 since 2010 and more than seven times the ASX 200’s performance.
The Magnificent Seven’s outperformance reveals why the overall strength of US shares isn’t just about US companies being better investments – it’s about which sectors and companies dominated global innovation and market returns over this period.
The currency effect that amplified returns
The S&P 500 would have given you more than 600% over 15 years in US dollar terms with dividends reinvested. This is impressive, but after you translate the US dollar returns into Australian dollars, you get a return of 985%.
That’s because the Australian dollar fell from parity with the US dollar in 2010 to about 65 US cents now. That’s a 35% depreciation that turbocharged returns on US investments.
Every US dollar of gains converts back to significantly more Australian dollars today than it did in 2010.
The crypto reality check
Finally, let’s address the elephant in the room. Theoretically, A$1,000 invested when Bitcoin traded around 37 Australian cents in late 2010 could have grown to approximately $466.8 million by now. That’s a whopping 46,682,249% return.
However, cryptocurrency investors faced immense challenges over this period. They had to navigate a market with a catastrophic failure rate, where nearly 40% of all coins from 2014–2021 were delisted – mostly as a total 100% loss.
Even though Bitcoin appears more resilient than other cryptocurrencies, it has endured intense volatility. It saw annual price swings of over 100% between 2010 and 2015.
Cryptocurrency exchange collapses – such as the 2014 failure of Mt. Gox, which resulted in the loss of 850,000 bitcoin – highlight the vulnerabilities in crypto infrastructure.
Sobering news for savers
Here is the sobering news: leaving your money in a typical savings account would have seen it grow to just $1,428. That is only 45% growth over 15 years.
Savings accounts were paying reasonable interest (although the rate had been declining) until the COVID pandemic, when savings rates plummeted to just 0.5%.
When you account for inflation, money in savings accounts has actually lost purchasing power.
What this means today
An investor who turned $1,000 into $10,851 in US shares simply diversified internationally, held steady through multiple crises, and benefited from both asset appreciation and currency depreciation.
They didn’t need perfect timing or insider knowledge, just patience and perspective. In an era of unprecedented market concentration, that patient, diversified approach matters more than ever.
The best investment strategy isn’t about finding the next Bitcoin. It’s about building a portfolio that captures returns wherever they emerge globally.
Disclaimer: This article provides general information only and is not intended as financial advice. All investments carry risk.
Authors: Jason Tian, Senior Lecturer, Swinburne University of Technology
Read more https://theconversation.com/this-was-the-best-way-to-invest-1-000-back-in-2010-267739
