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If You'd Invested $5,000 in the S&P 500 at the Great Recession Bottom, Here's What You'd Have Today
Key Points
During the financial crisis, the S&P 500 hit its low in March 2009.
Despite cratering sentiment at the time, it turned out to be one of the best buying opportunities in decades.
Here's the staggering return S&P 500 investors would have earned by buying at the low point.
At the lowest point of the financial crisis in the late 2000s, it felt like the U.S. economy might literally fall apart. The economy was in the midst of a deep recession. The housing market was collapsing. The unemployment rate briefly topped 10%.
To say the least, it sure didn't feel like the best time to be buying stocks.
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At its lowest point on March 9, 2009, the S&P 500 (SNPINDEX: ^GSPC) closed at 676.53. The index wouldn't hit a new all-time high again until 2012.
But in hindsight, it turned out to be one of the best buying opportunities ever.
Image source: Getty Images.
As of Sept. 10, the S&P 500 closed at 7,591.70. If you had bought the index at the March 2009 market low, your investment would have gained a staggering 1,030%. Add in reinvested dividends and the total return climbs to 1,470%!
Based on this, a $5,000 investment made at the Great Recession low would be worth around $56,690. With reinvested dividends, the account balance would be $78,510.
These numbers prove that bear markets and once-in-a-generation catastrophes are unquestionably painful to experience. But they can also be generational buying opportunities if you have the stomach to take advantage of them.
Nobody knows when a market bottom may occur. The biggest takeaway from this example is that if you have a long-term time horizon and don't need the money for years or even decades, continuing to invest in the S&P 500 as part of a systematic and consistent plan is usually the best course of action.
Even when conditions look historically bleak, there's always an opportunity hiding in the darkness.
David Dierking has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.