Investing in S&P 500 index funds has made millions of people wealthy over the decades. And the numbers behind it are genuinely staggering.
Over the last ten years, the index has delivered an average annualised return of 14.2%. But over the longer arc of history, the gains have been closer to 10%.
So, if a 40-year-old started investing £500 a month today at this 10% rate and kept going for 25 years, what would they have by retirement?
The answer is approximately £663,416. But, for investors willing to pick individual stocks rather than simply track the index, the numbers can look very different.
Tesla: a decade of extraordinary returns
Tesla (NASDAQ:TSLA) is perhaps the most vivid illustration of what successful stock picking can deliver. Over the last ten years, the electric vehicle pioneer has generated a staggering average annualised total return of 41.7%.
To put that in context, an investor drip-feeding £500 a month into Tesla shares over this 10-year period is now sitting on £853,107. That’s more than what a passive index investing is estimated to deliver in less than half the time.
But what’s driven such extraordinary performance?
This phenomenal gain stems from Tesla’s unique position of being at the intersection of multiple transformational technologies simultaneously.
Over the past decade, the company has gone from a niche luxury EV maker to one of the world’s dominant electric vehicle brands. At the same time, it’s built up a network of EV charging infrastructure, while also laying the groundwork for fully autonomous driving.
Combined, its Gigafactories, software-driven margin structure, and direct-to-consumer sales model created a business unlike anything that existed before in the automotive sector. And the market rewarded that novelty handsomely.
Is Tesla still worth buying in May 2026?
The bull case for buying Tesla shares remains genuinely exciting.
Institutional analysts have flagged Tesla’s autonomous driving and robotics ambitions as potentially capable of generating revenues that dwarf the existing car business.
This explosive growth potential is why Tesla shares trade at a substantial premium, with some projections expecting it to climb even higher to over $500.
Of course, lofty expectations leave little room for error. And despite achieving remarkable results over the last decade, signs of weakness are starting to emerge.
Tesla’s brand has taken a meaningful reputational hit in key markets following CEO Elon Musk’s foray into politics. When combined with increasingly fierce competition from Chinese EV manufacturers like BYD, Tesla’s sales in key markets like Europe have softened.
Of course, none of this might matter if the firm’s venture into robotics plays out as expected. However, this too comes with significant execution risk. And delays to the timeline, paired with weakening EV sales, could leave Tesla stock vulnerable to a correction.
So, what’s the verdict
The S&P 500 remains one of the most reliable wealth-building vehicles available to any investor. But Tesla’s decade of returns shows what’s possible when a truly transformational business gets the execution right.
Whether it can repeat that performance from here is the central question. Autonomous driving and robotics are a very promising avenue for continued growth. However, with so much of this growth already baked into Tesla’s valuation, it’s not a risk I’m personally willing to take right now. But it’s definitely a story I’ll be watching closely.
