What if you bought S&P 500 index fund in 1990?

Countries · USA. The hindsight answer, year by year, against the only benchmark that matters.

The story

The S&P 500 tracks roughly the 500 largest US companies, weighted by market value, and an index fund simply buys all of them. Starting in 1990 meant catching the tail of a recession and the Gulf War, then one of the great bull markets as inflation fell, the Cold War ended and the internet arrived. By 2000 the index had roughly quadrupled, helped along by valuations that later looked absurd.

Then came two crashes in a decade. The dot-com bust took the index down by about half, and after a recovery the 2008 financial crisis did it again; someone who bought at the start of 2000 was roughly back where they began a decade later. The 2010s were kinder, with low interest rates and a handful of technology giants doing much of the lifting, and the index shrugged off the brief Covid crash of 2020. By the mid-2020s a few companies such as Nvidia, Microsoft and Apple made up an unusually large share of the whole.

The lesson: Owning the whole market removes the risk of picking the wrong company but not the risk of a lost decade, so time horizon matters as much as diversification.

$1,000 invested at the start of each year

green = beat the S&P 500 · red = lost money

Best entry point in our set: 1990, turning $1,000 into $19,429. The S&P 500 from that same year: $19,429.

On this day

• 5 February 2018: Volmageddon: the Dow drops 1,175 points
• 19 February 2020: The S&P 500 hits a record before COVID
• 29 February 2020: The US reports its first COVID-19 death
• 3 March 2020: The Fed makes an emergency rate cut
• 6 March 2009: The S&P 500 touches 666

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