October 7, 2024
Investment

If I’d put £5,000 into Rolls-Royce shares 4 years ago, here’s how much I’d have now


Businesswoman calculating finances in an office

Image source: Getty Images

Back in the depths of 2020, Rolls-Royce Holdings (LSE: RR.) shares fell to under 40p.

The company was under growing pressure from what seemed like a potentially crippling level of debt. And fears that such a venerable British aerospace name could go bust were real.

Even two years later, towards the end of 2022, a brief recovery had faded and the stock was down around 70p.

If you’d told me then that by August 2024, the Rolls-Royce share price would have achieved one of the best growth stock recoveries I’ve ever seen and broken through 500p, I’d have laughed.

Eggy face

Well, I’d have tried not to be rude and laugh in your face. But I’d have been chuckling and shaking my head quietly to myself.

But it’s my face that would have the egg on it today. And you, dear imaginary reader, would be the one laughing.

But I won’t just mutter to myself and go on about how right I might have been about some other stocks. No, I think we can learn from the ones we got wrong, and not hide from them.

But first, how much profit might I have actually made had I bought some shares back in the dark days?

Big profit

Well, that 40p share price of which I spoke was almost four years ago. And at August’s 52-week peak this year, we saw Rolls reach 505p.

Had I put £5,000 into Rolls-Royce shares back then, I could have reached the tidy sum of £63,125. Maybe I can take some comfort from the fact that I didn’t have that much to invest at just that time.

But even £500 could be worth £6,300 plus change today.

Hmm, that might be a lesson. At times, a depressed stock can look too risky to pile into as a serious investment.

But if I see at least a 50% chance of a recovery, maybe a small amount is still worth a gamble? I suspect a younger me might have risked that £500.

Second bite

And then, when the shares were trading at 70p in late 2022, the risk had receded a bit. The same £5,000 then could have grown to £36,000 today. And that would still a very big profit, in only half the time.

There’s another side to all this, though. And it’s something that I think we should never forget when we spend time kicking ourselves over missed opportunities.

Nobody ever lost money by not buying a stock.

Did any famous investor ever say that? Maybe I’ll be famous some day, and then I’ll have said it.

Foolish take

So what’s the point of all this? Of my somewhat light-hearted look at how I missed out on a big multi-bagger stock?

Well, the one thing we really can’t use to check on the quality of our past decisions is hindsight. We can’t judge based on the knowledge that we didn’t have at the time.

We just need to make enough good choices over our lifetimes. And a key part of that is to follow an important rule: Never lose money. And yes, a famous investor did once say that.



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