Five years ago, the S&P/ASX 200 Index (ASX: XJO) had already climbed 11.1% from its 20 March 2020 pandemic closing lows.
That rebound came after governments and central banks around the world took concerted steps to keep their economies afloat. (Remember negative interest rates?)
On 8 May 2020, the benchmark Aussie index closed at 5,391.1 points.
Now, after gaining more than 11% in less than two months, you may have thought that the stock market rebound was overdone and due for a pullback. And you might not have been willing to invest $10,000 in the ASX 200 and simply look away for five years.
Though that's precisely the advice legendary investor Warren Buffett offers.
"I don't invest to make a quick profit. I buy stocks with the mindset that the market might shut down tomorrow and stay closed for five years," Buffett famously said.
So, if you'd channelled your inner Warren Buffett and invested $10,000 five years ago, how much would you have now?
Let's find out!
Image source: Getty Images
Investing $10,000 in the ASX 200
Now, before we dig into the maths, you can't actually invest directly in the benchmark Aussie index.
But you can invest in a number of low-cost exchange-traded funds (ETFs) that are intended to mirror the performance of the ASX 200, like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) and the BetaShares Australia 200 ETF (ASX: A200).
We'll see how well they live up to their benchmark tracking mandate in a tick.
First, the benchmark index closed up 0.48% on Friday at 8,231.20 points.
That's up more than 52% over five years. Or, enough to turn a $10,000 investment into $15,200.
With a five-year gain of over 51%, the performance of the BetaShares Australia 200 ETF comes in slightly lower than the benchmark index.
If you'd opted to invest in the iShares Core S&P/ASX 200 ETF, you would have edged out the index's performance, with the ASX ETF up almost 54% in five years. That would have grown your $10,000 invested in May 2020 into $15,360 today.
Foolish takeaway
If you look back at the five-year price chart above, you'll notice that despite what seemed like some occasionally wild daily and weekly swings at the time, the ASX 200 has really marched higher fairly steadily when viewed over the longer term.
Which brings us full circle to Warren Buffett.
"The stock market is a device for transferring money from the impatient to the patient," Buffett noted.
The Motley Fool's chief investment officer, Scott Phillips, has a similar patient outlook when it comes to investing.
"Most investors check their portfolios way too often. And the more often you look, the more likely you are to react emotionally, chase short-term noise, panic during volatility, and make decisions that hurt long-term returns," Phillips advised.
And with the ASX 200 now up more than 50% in five years, patient investors will have been well-rewarded.
