Some investors might be satisfied with a 5% risk-free return. But those who pick the right S&P 500 stocks are doing much better than that.
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All told, had you invested $10,000 in January and reinvested your money into the top-performing stock each month in 2023, including Arista Networks (ANET) in August, you'd have $125,279 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's an impressive eight-month gain of 1,153%. It's quite a feat given the S&P 500 is up just 17.4% so far this year. The same $10,000 invested in the S&P 500 would be worth just $11,740 now. That's a gain of just $1,740. The S&P 500 slipped in August as some investors figured rising yields on bonds are good enough.
Did August Snap A Strong Second Half For The S&P 500?
Hindsight is 20-20. And, clearly, few if any investors could have picked the top stock in each of the past eight months, as it's not a repeatable strategy. But the staggering numbers are a reminder to investors that amazing gains can be found even in a market that's taking a breather.
Thirteen stocks in the S&P 500 rose 10% or more in the month. And of those, two rocketed 20% or more including Arista. Not bad for a month when the S&P 500 fell 1.8%, snapping the string of gains in the previous five months. Even the red-hot Nasdaq 100 skidded 1.5% during the month.
Seeing the S&P 500 struggle in August isn't much of a surprise, though. The month is historically the third-worst month of the year, says "The Stock Trader's Almanac." Stocks have gained a scant 0.1% on average in the month going back to 1950, the Almanac says.
But this August was worse than usual, unless you chose well.
Top S&P 500 Stock Of August: Arista Networks
An information-technology stock rallied in August. But it wasn't one of the "Magnificent Seven" stocks you might suspect. It was Arista Networks, which sells cloud-computing services to companies.
Arista shot up 25.9% during the month, making it August's very best stock in the S&P 500 — topping even other high-growth tech stocks. It's now up nearly 61% for the year.
Just two other tech stocks beside Arista joined the S&P 500's top-10 gainers in the month. But they didn't rise anywhere near as much as Arista in the month. Computer reseller CDW (CDW) rose 12.9% and networker Akamai Technologies (AKAM) added 11.2%. And AI champion Nvidia (NVDA)? It's shares rose just 5.6% in August.
Health care is the other S&P 500 sector to watch in the month. Three of the top 10 S&P 500 stocks this month were in the health care sector. Just behind Arista as the best S&P 500 in August is neuroscience treatment leader Eli Lilly (LLY), up 21.9% in the month.
How To Handle This Market; 7 Titans Are Near Buy Points
Reading The S&P 500 This Year
Each month's twists and turns reveal just how theis still worthwhile for investors.
The year kicked off with a bang. Not only did the S&P 500 jump 6.2% in January alone, some winners during the month soared even more. Warner Bros. Discovery(WBD) added more than 56% in just a single month.
And then came February with a pullback. Optimism that the Fed finally cooled inflation with its rate hikes is giving way to fear that more rate increases are to come. Three quarters of the stocks in the S&P 500 dropped in February. Catalent(CTLT), a health care company, was a rare standout with its 25.6% in the month.
And then in June a rally firmly took hold. The S&P 500 surged 6.5%, marking the index's best monthly gain all year. A huge surge in consumer spending, especially in the travel space, pushed the market in June. Carnival(CCL), a cruise line operator, saw its shares rally 67.7% in June — topping all other S&P 500 stocks.
The big question, though, was whether the rally could keep going in the second half. The jury is still out on that. Powered by a bounce in financial stocks like Zions Bancorporation (ZION), which rose 42% in July, the first half started strong. But then rising yields gave stocks more competition in August.
And now, there's the scary month of September to contend with. Historically, September is the worst month of the year. S&P 500 returns average -0.5% in September, the almanac says.
But just as with August, a tough market for most S&P 500 stocks doesn't mean it's bad for all of them.
How To Turn $10,000 Into $120,005 In 8 Months
| Month | Top S&P 500 stock | Symbol | Monthly gain | Sector | S&P 500 monthly change | Starting balance | Cumulative value of $10,000 investment in January reinvested in best stock each month |
|---|
| January | Warner Bros. Discovery | (WBD) | 56.3% | Communication Services | 6.2% | $10,000 | $15,630 |
| February | Catalent | (CTLT) | 25.6% | Health Care | -2.3% | $15,630 | $19,631 |
| March | Intel | (INTC) | 28.7% | Information Technology | 2.0% | $19,631 | $25,265 |
| April | Chipotle Mexican Grill | (CMG) | 21.0% | Consumer Discretionary | 1.5% | $25,265 | $30,571 |
| May | Nvidia | (NVDA) | 36.3% | Information Technology | 0.2% | $30,571 | $41,669 |
| June | Carnival | (CCL) | 67.7% | Consumer Discretionary | 6.5% | $41,669 | $69,878 |
| July | Zions Bancorporation | (ZION) | 42.4% | Financials | 3.1% | $69,878 | $99,506 |
| August | Arista Networks | (ANET) | 25.9% | Information Technology | -1.8% | $99,506 | $125,279 |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
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FAQs
All told, had you invested $10,000 in January and reinvested your money into the top-performing stock in the S&P 500 each month in 2023, including Arista Networks (ANET) in August, you'd have $125,279 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
How much can 10K grow in a year? ›
How much money you can make by investing $10,000
| Year | Return | Ending balance |
|---|
| 1 | $800 | $10,800 |
| 5 | $4,693 | $14,693 |
| 10 | $11,589 | $21,589 |
| 20 | $36,610 | $46,610 |
1 more rowOct 1, 2023
The 8% sell rule is a strategy used by some investors to minimize losses and help preserve their capital. The rule is typically applied when a stock drops 8% under your purchase price—regardless of the situation. Keep in mind that this isn't a hard-and-fast rule.
What is the growth of 10000 stock chart? ›
Growth of 10K (or growth of 10,000) is a commonly used chart that highlights the change in value of an initial $10,000 investment in a financial asset during a given period of time. Often, this period of time is since the asset's inception, or during the 10-year period since its most recent fiscal year end.
How much do stocks go up in 10 years? ›
The S&P 500 average return over the past decade has come in at around 10.2%, just under the long-term historic average of 10.7% since the benchmark index was introduced 65 years ago. But the stock market return you'll see today could differ greatly from the average over the past 10 years.
How to flip 10K into 100K? ›
Here are the most effective ways to earn money and turn that 10K into 100K before you know it.
- Buy an Established Business. ...
- Real Estate Investing. ...
- Product and Website Buying and Selling. ...
- Invest in Index Funds. ...
- Invest in Mutual Funds or EFTs. ...
- Invest in Dividend Stocks. ...
- Peer-to-peer Lending (P2P) ...
- Invest in Cryptocurrencies.
Making $4,000 a month based on your investments alone is not a small feat. For example, if you have an investment or combination of investments with a 9.5% yield, you would have to invest $500,000 or more potentially. This is a high amount, but could almost guarantee you a $4,000 monthly dividend income.
What is the 90% rule in stocks? ›
Understanding the Rule of 90
According to this rule, 90% of novice traders will experience significant losses within their first 90 days of trading, ultimately wiping out 90% of their initial capital.
What is the 3 5 7 rule in stocks? ›
The 3-5-7 rule in trading is a risk management guideline that suggests limiting the amount of capital you put into any single trade. According to this rule, you should not risk more than 3% of your trading capital on any one trade, no more than 5% on any one sector, and no more than 7% on all trades combined.
What is the 7% rule in stocks? ›
Always sell a stock it if falls 7%-8% below what you paid for it. This basic principle helps you always cap your potential downside. If you're following rules for how to buy stocks and a stock you own drops 7% to 8% from what you paid for it, something is wrong.
The average stock market return is about 10% per year, as measured by the S&P 500 index, but that 10% average rate is reduced by inflation. Investors can expect to lose purchasing power of 2% to 3% every year due to inflation. » Learn about purchasing power with the inflation calculator.
How to grow $100 in the stock market? ›
You can invest $100 in several high-risk ways, including:
- Individual stocks. In addition to their volatility and risk, individual stocks can also provide high returns.
- Options trading. There is a great deal of risk involved in options trading as an investment strategy.
- Venture capital.
The price range for equities might range from 2% to 20%. The stock exchange determines this range after reviewing the share's past price behaviour. The daily price range also considers the previous day's closing price.
What is the safest investment with the highest return? ›
Here are the best low-risk investments in July 2024:
- High-yield savings accounts.
- Money market funds.
- Short-term certificates of deposit.
- Series I savings bonds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
The table below shows the present value (PV) of $1,000 in 20 years for interest rates from 2% to 30%. As you will see, the future value of $1,000 over 20 years can range from $1,485.95 to $190,049.64.
What stock pays the highest dividend? ›
20 high-dividend stocks
| Company | Dividend Yield |
|---|
| AG Mortgage Investment Trust Inc (MITT) | 9.70% |
| Evolution Petroleum Corporation (EPM) | 9.06% |
| CVR Energy Inc (CVI) | 8.20% |
| Altria Group Inc. (MO) | 8.14% |
18 more rowsThe interest that $10,000 would earn over a year depends on the annual percentage yield and frequency of compounding. For example, a 4% APY that's compounded daily would result in $408.08 in annual interest earnings.
Is it possible to save 10k in one year? ›
While saving $10,000 in a year may seem daunting, it's achievable with a structured plan, a bit of self-restraint and a goal-focused mindset. More than likely, you'll make some mistakes along the way — but a successful savings strategy should allow for learning from mistakes, rather than shaming yourself over them.
How long will it take $10000 to grow to $12000 if it is invested at 9% compounded monthly? ›
How long will it take $10,000 to grow to $12,000 if it is invested at 9% compounded monthly? To solve an equation with an unknown in the power, we need to use the “logarithm”: ln 1.2 = ln(1.0075)n ln 1.2 = n ln(1.0075) ⇒ n = ln 1.2 ln 1.0075 = 24.4 Therefore, it will take 25 months for $10,000 to grow to $12,000.
