In my early twenties, I knew that I wanted to invest in real estate to make the best investment returns ever. Little did I know that while real estate could provide very good investment returns, it simply could not come anywhere near close to providing the greatest investment return of modern recorded history. I am talking about small investments that make serious amounts of money.
And what investments did that?
We will examine three of the best: Microsoft stock, Apple stock, and Bitcoin.
Let’s start by taking a close look at the investment returns provided by investing in the stock of Microsoft. Before we examine the price history of Microsoft stock, it is necessary to understand what a stock split is. Investopedia states:
- A stock split is a corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.
- Although the number of shares outstanding increases by a specific multiple, the total dollar value of the shares remains the same compared to pre-split amounts, because the split does not add any real value.
- The most common split ratios are 2-for-1 or 3-for-1, which means that the stockholder will have two or three shares, respectively, for every share held earlier.
To give an example, let’s say you have 100 shares of Microsoft and the company decides to do a 2-for-1 stock split. After the split, you’ll have 200 shares of Microsoft.
This has to be taken into account when looking at historical stock price of Microsoft. Let’s say that the price was $10, and a year later the price is $15, but that Microsoft did a 2-for-1 stock split during that time.
Just looking at the stock price, you would think that if you had 100 shares, you would have received an investment return of $500 over the course of the year – 100 shares at $10 = $1,000 and new share price of $15 would be $1,500.
That’s how it would have been without the stock split. But the increase in share price from $10 to $15 doesn’t tell the whole story.
In this instance, at the beginning of the period you have 100 shares worth $10 each, or $1,000. At the end of the year, considering there was a 2-for-1 stock split during that time, at the end of the year you have 200 shares at $15 each, or $3,000.
So, to get an accurate measurement of the investment return of Microsoft stock over a period of ten years, we must take into account all stock splits during that period of time.
Now that we’ve examined the issue of stock splits, let’s take a look at the investment return of Microsoft stock over a ten year period from January 1, 1990 to December 31, 1999.
This ten year period was specifically chosen because it provided the largest investment gains during that time, and we are taking a close looks at which investment provided the greatest returns ever.
Just using those numbers, 62 cents turned into $58.38 for a return of 94 times your original investment.
However, that does not take into account stock splits. When we factor those in, the return on initial investment is much, much, much greater. Over the course of that decade, Microsoft experienced 7 different stock splits.
1 Share Turns Into 72 Shares
If you started the above decade with one share of Microsoft stock, after the 7 different stock splits, you’d end the decade with 72 shares!
Therefore, the total value of your Microsoft stock would not be $58.38 on December 31, 1999, it would be 72 x $58.38 = $4,203.36.
So your initial investment that was worth 62 cents, turned into $4,203.36 ten years later. That’s a return on your initial investment of 6,779-to-1.
This means for every dollar you invested in Microsoft stock on January 1, 1990, would have turned into $6,779.16 at the end of that decade.
$100 invested into Microsoft stock would have turned into $677, 916 ten years later.
That’s a really great investment return!
Now let’s take a look at Apple stock, and see if it had a 10 year return that was even greater than that of Microsoft.
Apple Investment Returns
Nonetheless, we need to take these into account when calculating total investment return.
Looking at Apple’s best decade of investment returns, we find that it began on January 1, 2005 to December 31, 2014.
The price of Apple stock on January 1, 2005 was $4.60. The price of Apple stock on December 31, 2014 was $110.38.
Again, this doesn’t take into account stock splits. Apple stock split on a 2-for-1 basis on February 28, 2005, and again on 7-for-1 basis on June 9, 2014. Therefore, your one share of Apple that was worth $4.60 on January 1, 2005 turned into 14 shares worth $110.38 each, for a total of 14 x $110.38 = $1,545.32.
Thus, your total investment return for holding Apple stock over the course of the decade would have been 335-to-1.
Thus, $100 invested into Apple stock on January 1, 2005, would have turned into $33,593.91.
While that is very impressive, it absolutely pales in comparison to the greatest investment return ever.
The Best Investment Return Ever
Want to know the best investment return ever over the course of a ten year holding period?
While Apple returned 335-to-1 over the course of a decade, and Microsoft returned a stunning 6,779-to-1, in the decade that just ended, this investment returned an absolutely unheard of 2,877,440-to-1 in just 10 years.
Yes, for every dollar that you invested, you would have received more than $2.8 million in return ten years later. Want to know more about it and the potential for future amazing returns? You can read more at the best investment return ever.