How Much You Had To Invest In Amazon 10 Years Ago To Retire Today
Written by
John Csiszar
Edited by
Chris Cluff
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Amazon has come a long way since its humble roots. Originally founded as an online bookseller, Amazon is now the go-to name in e-commerce, selling everything from ballpoint pens to prefabricated houses.
The company is the fourth largest in the entire S&P 500, with a market capitalization of a whopping $1.812 trillion as of March 18.
Investors who have stuck with the stock through thick and thin have been handsomely rewarded, in spite of occasional bouts of unsettling volatility. But if you had invested only in Amazon 10 years ago, would you have enough to retire today? How about for those looking ahead to the next 10 years? Read on to learn more about the performance of this amazing stock.
How Has Amazon Stock Performed Over the Past 10 Years?
Over the last 10 years, Amazon stock has been a beast, returning roughly 856% to investors. That amounts to almost nine times your initial investment in a single decade. That return far outweighs that of the S&P 500, which managed a still impressive 174% over the same period.
Could You Retire Today If You Had Invested $100K in Amazon 10 Years Ago?
An investor who prudently chose to invest $100,000 in Amazon 10 years ago would be richly rewarded as of today. That $100,000 would have turned into roughly $856,000, just shy of the mythical $1 million figure many shoot for in their nest eggs. A small bump to $120,000 would be enough to push you over the $1 million mark.
How About $50,000? $150,000?
Even an investor who set aside “only” $50,000 into Amazon stock 10 years ago would have a huge leg up when it came to their retirement savings. A $50,000 investment would now be worth roughly $428,000. Someone who was able to sock away $150,000 likely would be able to live a comfortable retirement, as that initial investment would now be worth $1,284,000.
What Are Analyst Forecasts for Amazon Stock From Here?
Most analysts don’t create 10-year stock forecasts, as there are too many variables to include. The 47 Wall Street analysts who cover Amazon have a consensus “strong buy” rating on the stock, with an average 12-month price target of $208.48. This represents a 16.6% increase over the March 14 price of $178.75.
Analysts at Coin Price Forecast do offer a 2034 projection for Amazon stock, estimating a 10-year price increase of 276%, to $672 per share.
Reasons Amazon Might Still Be a Good Buy
There are three primary reasons Amazon may continue to grow.
The first is its barriers to entry. Although anyone can set up an online store, Amazon has the reputation, the clout and the logistics to keep it the 800-pound gorilla in the room. Many traditional retailers still struggle to get customers in the door, but Amazon offers nearly anything to anyone 24/7 from the comfort of their own homes.
In addition to the overall growth in online shopping, Amazon stands to benefit both from digital advertising and from its Amazon Web Services division. The advertising segment is fairly new for Amazon and is thus far demonstrating high growth, while AWS already controls more than one-third of the world’s cloud computing service revenue.
Lastly, Amazon isn’t that expensive on a historic basis, unlike some of its tech stock brethren that have run up to stratospheric valuations. Amazon currently trades at about 3.2 times sales, which is just about where it has been over the past 10 years on average. While certainly not a “cheap” stock — it still carries a price/earnings ratio of about 61 times — it’s about in line with its long-term average valuation.
There are plenty of other reasons investors might continue to buy Amazon as well. In addition to its push into AI, the stock recently joined the venerable Dow Jones Industrial Average, marking it as a true “blue chip stock” in the eyes of many investors.
Is It Too Late To Add Amazon Stock to Your Portfolio?
If you believe in the long-term growth story of Amazon, it’s certainly not too late to add it to your portfolio. This is particularly true if you are a younger investor, as your money will have additional time to compound.
If Amazon kept pace with the overall market and its 10% long-term average annual return, just $175 per month, starting at age 25, would be enough to net you over $1.1 million if you retire at 65.
If Amazon could return 16.6% per year, as analysts estimate over the coming 12 months, that monthly $175 investment would jump to an incredible $9.2 million. Even if you waited to start until age 35, a 16.6% annual return could net you over $1.7 million on your modest $175 monthly investment.
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