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Investing in the stock market early and staying put despite bad days is one of the proven ways to create wealth. US stocks have posted annualized returns of 10.3% from 1994 through the end of 2023. A $10,000 investment in the market 30 years ago would have grown to $200,000 by 2023. However, missing out on just the 10 best days of the market during this period would mean $108,000 in lost returns.
That’s why staying invested in the market despite its volatility is the key. Let’s take a look at a success story that helped an investor retire early and become wealthy by investing early.
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About six months ago, someone asked r/stocks — a Reddit community with over 8.4 million members — whether anyone on the forum was able to become rich by investing in the stock market. The question received over 800 comments, with several interesting success stories.
An investor said he was able to retire early about 10 years ago, thanks to investing early in the stock market.
“Success is slow and steady, it allowed me to retire early 10 years ago and now I live the good life. I first got into investing in the late 1990s,” he said.
The investor also advised to always have a plan for downside protection.
“One of the most important things in investing (not gambling) is to have both a downside and upside strategy. For my downside strategy, it is simple – if I lose ~15-20% of my original investment dollars, I am out and ask what did I miss or were there any over-riding events (war, terrorism, ..). I will continue to watch but rarely do I average down as I view this as throwing good money after bad. You need to remember if you lose 50%, the stock needs to double just to get to even.”
Let’s take a look at some of the stocks that helped the investor become wealthy and retire early.
Honeywell International Inc. (NASDAQ:HON) played a key role in the investor’s path to success as he signed up for the company’s dividend reinvestment plan and started contributing regularly to it.
“I decide to join the DRIP program contributing initially $100/ month and changed to $500/quarter and occasionally added extra cash. I have only sold once during Covid to re-do the kitchen. Today it is worth high six figures,” the investor said.
Honeywell has a dividend yield of about 2%. The stock is currently in the spotlight after the company said it plans to split into three public companies: Automation, Honeywell Aerospace, and Advanced Materials. The move came after pressure from activist investor Elliott Investment Management.
The investor said he piled into Meta Platforms (NASDAQ:META) shares when the stock was trading at $19. Today, the social media platform’s shares trade at around $714, having gained over 1700% since going public. The investor explained why he was bullish on META:
“In the case of FB/META, I thought they just had too many eyeballs to fail.”
After Meta’s latest quarterly results, Morgan Stanley said that the company’s fundamentals remain “remarkably strong.” The firm maintained its Overweight rating on the stock and set a $900 price target.
Advanced Micro Devices Inc (NASDAQ:AMD) also helped the investor achieve wealth and early retirement. He bought the chipmaker’s stock when it was at around $2.5. Today, the stock trades at around $107.
“On AMD, the only competitive to [Intel (NASDAQ: INTC)] had at the time and knew customers would not let AMD fail as they need competition as leverage against INTC pricing. When they hire Dr. [Lisa] Su, they began to execute. I also thought INTC strategy of branding device name was genius but it would catch up to them as other would enter the market. Same will happen with NVDA you cannot brand name devices,” the investor said.
AMD is struggling to keep up with competitors like Nvidia (NASDAQ:NVDA) in the ever-expanding AI race. Its latest quarterly results showed downbeat growth in the key data center segment. Citi downgraded AMD to Neutral from Buy after the report and cut its price target to $110 from $170.
The investor who was able to retire early due to stock investing said Eli Lilly & Co (NYSE:LLY) was also a part of his portfolio, as he piled into the healthcare company when its shares were trading at $60. As of Feb. 8, the stock price was $878, having gained a whopping 19,000% since the company’s IPO. Eli Lilly recently posted strong Q4 results amid demand for its type 2 diabetes and weight loss drugs. For 2025, it expects revenue to grow by 32%.
The investor bought General Electric shares when they were hovering at around $6. The company last year split into three separate businesses: aviation, health and energy.
“I was in GE early been when [Jeff] Immelt became CEO [in 2001], I saw him give a keynote address at a meeting and thought he was slimy. I sold it all and brought back at $6 because I thought the company was worth more apart than together. A long dead money span but it now proving correct,” the investor wrote about the company.
