What If You Had Invested In Apple Stock Instead of Buying the First iPhone?
The first generation iPhone was a worldwide phenomenon when it was released on June 29, 2007. Avid fans around the world lined up for hours, or even days, to get their hands on the very first iPhones, ushering in an era of incredible profitability for the company. And while there’s no arguing that those very first customers got plenty of use and enjoyment out of their iPhones, they might have felt even better in the long run if they had invested that money in Apple stock instead of the original iPhone product.
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Cost of Original iPhone in 2007
On that fateful day in June 2007, two versions of the original iPhone went on sale. The first was the 4GB version of the iPhone, while the other had twice the storage space, at 8GB. The cost of the phones was $499 and $599, respectively.
Price of Apple Stock in 2007
On a split-adjusted basis, the cost per share of Apple stock on June 29, 2007, was $3.75. So, for the price of the original iPhones, investors instead could have ended up with between 133 and 159 shares of Apple stock, depending on which version of the phone you bought.
Value of Apple Stock vs. the Original iPhone in 2021
Perhaps surprisingly — although not to collectors — some of the original iPhones have actually gone up in value since their initial sales date in 2007. This doesn’t apply to all 1st-gen iPhones, of course, but some that are brand new and in pristine, unused condition are being offered for well over $1,000 on third-party seller sites like eBay. However, most used iPhones from that era, while still maintaining some value, do not command premiums to their original sales prices. Like most obsolete technology, original iPhones that were regularly used, as opposed to being preserved as an investment, are not worth much at all.
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Apple stock, on the other hand, has been nothing short of a complete home run for investors who picked up shares back on June 29, 2007. As of June 3, 2021, a $499 investment (at 133 shares) in Apple stock — which was the purchase price of the original 4GB iPhone — was worth $16,430.82. A $599 investment in Apple stock (at 159 shares) instead of the original 8GB iPhone would pay off even more handsomely, with its value jumping to $19,642.86, as of June 3. This means that investors who bought Apple stock instead of a single iPhone in 2007 could now afford nearly 20 of the latest top-of-the-line iPhones, the iPhone 12 Pros, which start at $999. Or, more practically, an investor could now buy a top-of-the-line iPhone and still have nearly $19,000 in cash left over. An “investor” in the first iPhone, by contrast, would simply have a single, out-of-date phone.
The Bottom Line
No matter how much satisfaction a consumer good offers, in the long run, you’ll always be better off financially by investing rather than spending. The math behind the iPhone vs. Apple stock example above demonstrates this clearly. Of course, the utility and enjoyment that users get out of products like the iPhone do have value. But from a strictly financial perspective, it pays to remember that consumer goods like iPhones and cars depreciate over time, while investments like stocks and houses tend to appreciate in value.
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