If you had invested $100,000 in the SPDR S&P 500 ETF Trust (SPY 0.23%) 10 years ago, as of this writing you would have more than $346,000, good for a compound annual growth rate (CAGR) of 13.2%
Without doubt, it’s a solid return. But there are ways to beat the market return. In particular, if you had invested $100,000 in Microsoft (MSFT 1.25%) 10 years ago, your investment would have grown to $1,088,000 as of this writing. Similarly, a $100,000 investment in Tesla (TSLA 1.82%) made 10 years ago would now be worth $2,598,000.
These two examples prove that smart investments can help build lasting wealth. Let’s examine why these two stocks are poised to outperform the market again over the next decade as well.
Image source: Getty Images.
Microsoft
First up is Microsoft (MSFT 1.25%).
Granted, shares of Microsoft have moved sideways for more than a year, but I still have faith that this tech giant will be worth owning in the long term.
That’s because Microsoft has an excellent set of diversified revenue streams that serve different markets, including gaming, cloud services, and software.
The sum total of all that revenue is impressive, but its profits are truly astounding. Microsoft generated more than $250 billion in revenue during the past 12 months; about $91 billion, or 36%, was converted to profit.
Over time, the market is unlikely to ignore such strong fundamentals. Case in point: During the past 10 years, Microsoft stock has advanced by more than 1,000%, resulting in a CAGR of 27%. Consequently, a $100,000 investment would have grown to more than $1 million in 10 years.
While Microsoft stock is currently stuck in neutral, over the next 10 years, it should reward investors who stick with it.
Tesla
Then there’s Tesla (TSLA 1.82%).
The reason Tesla makes the cut is simple: Ten years is a long time.
For example, 10 years ago, Tesla’s market cap was about $20 billion. Today, it is more than $1 trillion.
What’s more, the company’s real-world results have undergone huge change as well. In 2015, Tesla manufactured about 50,000 electric vehicles (EVs) and generated only $4 billion in revenue.
In 2024, the company produced almost 1.8 million EVs, and its revenue was just shy of $100 billion.
All of this is to say that Tesla, and its Chief Executive Officer Elon Musk, have a history of delivering results. Granted, sometimes Musk’s vision runs far ahead of reality, but such is the cost of thinking big.
When looking out a decade from now, investors should take Tesla — and Musk — seriously. The company plans on making full self-driving, robotaxis, and humanoid robots commonplace. That may seem overly ambitious, but 10 years ago, many people said the same thing about a car company that would only make and sell EVs.
At any rate, even if Tesla only achieves half of what Musk wants to do, the company’s stock could deliver enormous returns for shareholders. Bear in mind, Tesla stock has advanced by more than 2,300% over the last decade. That works out to a CAGR of 38.2%. An individual who invested $100,000 back in 2015 would now have nearly $2.6 million worth of Tesla stock.
TSLA Total Return Level data by YCharts
In summary, Musk has set big goals for Tesla. The company may not meet every one of them. Nevertheless, given how game-changing some of them could prove to be, Tesla stock remains a solid long-term investment.
