Investing

Video Gamer Buys NVIDIA Stock (NVDA) With Pension Check and Turns $4,000 Into $2 Million

Kristin Hitchcock

Published: November 20, 2024 2:45 pm

24/7 Wall St. Key Takeaways:

• Sometimes, financial success feels a bit random. However, even when we hear a surprising success story, the decisions behind the success are often well-planned.
• Investing in individual stocks comes with risks. However, that doesn’t mean you should avoid investing in individual companies that you believe in. 
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

Recently, I read a story about how a Reddit user had an incredible tale of luck and timing that turned a modest $4,000 pension check into a $2 million fortune. The secret ingredient? NVIDIA (NASDAQ: NVDA) stock.

This Redditor’s journey to be a millionaire didn’t start with a smooth career path. Instead, in the early 2010s, they were stuck in a toxic work environment and decided to quit. What followed was a year of unemployment, followed by some serendipitous investing that would set them on a path to wealth.

Why did this Redditor invest in NVIDIA? He liked playing video games and realized just how good NVIDIA’s graphics cards were. At the time, Nvidia was a promising company, but no one could have predicted just how well it would perform over the next decade.

NVIDIA’s Incredible Growth Since 2010

Since the Redditor made their initial investment, Nvidia’s stock has soared. 

NVIDIA has been one of the top-performing stocks in the tech industry. This is mainly because it benefits from several sectors within tech that all rely on its graphics cards, including artificial intelligence, data centers, and gaming. 

In total, the company’s stock has increased over 50 times in value since 2010. It’s easily one of the best-performing stocks in the last decade. 

In the context of this story, Nvidia’s meteoric rise is a reminder that timing the market or simply holding onto a winning company for the long term can yield incredible returns. For the Redditor, this risk paid off massively.

The Drawbacks of Holding a Single Stock

Does this mean you should just go pick a stock and invest in it? No, that isn’t what we would recommend!

While this story is inspiring, it’s important to note that holding onto a single stock like NVDA for years comes with significant risks. Just as a company can reach the moon, it can also go straight through the floor! 

Plus, the Redditor had to endure several major letdowns, such as from 2011 through 2013, when NVIDIA was particularly volatile.  In 2018 and 2019, NVIDIA experienced a serious downturn that led to its losing more than 50% of its value. The ride to the top was not an easy one!

Comparing to Other High-Performing Stocks

NVIDIA’s success has been impressive. However, it’s worth noting that NVIDIA isn’t the only stock that’s performed very well since 2010. Let’s look at the broader market and other standout companies:

• S&P 500: The broad market index has grown more than 5x since 2010, delivering a solid return to those who held the market through thick and thin.
• Apple (NASDAQ: AAPL): Apple has also had a good run since 2010, increasing in value by over 15x. This success has been driven by tons of factors, but it isn’t exactly surprising!
• Amazon (NASDAQ: AMZN): Amazon’s stock has increased more than 15x since 2010. E-commerce has led to this huge growth explosion. 

While NVIDIA has outpaced the market, it isn’t the only high-performing stock. Some individual stocks do outperform the market, but you don’t have to invest in a single company to get impressive returns. 

What Investors Can Learn

So, what can you learn from this story as an investor? 

• Serendipity and Risk:  Sometimes, wealth comes from unexpected decisions. In this case, a casual decision to invest in Nvidia turned into a multi-million-dollar gain. But not everyone will be as lucky. Holding onto individual stocks through their ups and downs requires patience and the stomach to weather volatility.
• Diversification Matters: This Redditor’s story shows how one concentrated bet can lead to a lot of wealth. However, this also involves some serious risk! Most financial experts recommend diversifying your investments to protect yourself from volatility. We’ve covered why investing in one stock isn’t recommended before, too. 
• Volatility Happens: The road to the top is very bumpy. You can’t expect to to be a straight shot. The Redditor had to endure major drawdowns along the way, with the stock dropping more than 50% in some periods. This moment is when many investors sell, but holding can yield very substantial rewards. 
• Long-Term Thinking: NVIDIA’s performance wasn’t an overnight success. It took years for the stock to rise to its current value. This investor did invest in a single company, but they did it with a long-term mindset!

So, while we don’t recommend investing all you have into a single stock like this Redditor, there’s a lot you can learn from this story. Choose companies you believe in and plan to hold them for a decade or more.