The past five years have seen Rio Tinto Ltd (ASX: RIO) shares benefit from resilient global iron ore prices and a surging copper price.
Despite numerous bearish commodity analyst forecasts over the years, the iron price has broadly continued to trade near of above US$100 per tonne, recently fetching around US$102 per tonne.
And Rio Tinto's increasing exposure to copper is also paying off.
At US$13,745 per tonne, the copper price has gained 46% over the last five years, according to data from Bloomberg.
So, if you'd bought $10,000 worth of Rio Tinto shares five years ago, just how much would that investment be worth today?
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How a $10,000 investment in Rio Tinto shares would have panned out
Five years ago, on 18 June 2021, you could have bought shares in the S&P/ASX 200 Index (ASX: XJO) mining giant for $123.45 apiece.
Meaning your $10,000 investment would have netted you 81 Rio Tinto shares.
On Tuesday afternoon, shares were swapping hands for $188.69 each.
So, the 81 shares you bought five years ago would be worth $15,284 today.
But let's not forget the passive income Rio Tinto has delivered over this time.
If you owned Rio Tinto stock since 18 June 2021, you would have received the last 10 fully franked dividend payments, totalling $40.14 a share.
Assuming you spent that passive income as it came in, rather than reinvesting it, then the accumulated value of the 81 Rio Tinto shares you bought for $10,000 five years ago is now worth $18,536.
Or a gain of more than 85%.
But what is that really worth?
Real versus nominal value
With inflation running hot these past years, it's worth distinguishing between real value and nominal value.
In a nutshell, the nominal value of an Australian dollar doesn't change over time, while its real value is eroded by inflation as the purchasing power of that dollar declines.
According to various estimates, over the past five years Australia's inflation level has knocked between 22.3% to 22.9% off the real value of the Aussie dollar.
Going with the middle value of 22.6%, then $10,000 in cash tucked under your mattress today would only be worth around $8,156 five years ago. Which is why, as investors, we aim to buy ASX shares that outpace the eroding powers of inflation.
Now, as we calculated above, the nominal value of the $10,000 worth of Rio Tinto shares you bought five years ago would be worth $18,536 today.
The real value would be worth around $15,119.
So, even taking the historically high inflation levels into account, Rio Tinto shares have still gained about 52% over the past five years in real terms.
