Investing in Apple vs. Owning an iPhone: Which pays off in the long run?

Maybe you’re thinking of biting the bullet and getting a fancy iPhone as your next big purchase. Maybe the slick advertising has finally won you over, or maybe you’re tired of being the only Android user in your circle of friends. Or maybe you really are a power user who will get a lot of mileage out of the iPhone’s impressive tech specs.

All of these are perfectly valid reasons to get an iPhone, of course. However, if you’re sold on the importance of investing and long-term wealth building (as you probably should be!), then there’s an important aspect you should consider whenever you want to purchase a relatively expensive item: opportunity cost.

Simply put, spending money in one place means it can’t be invested in something that could’ve delivered much more value over the long run.

So instead of spending a certain amount on an iPhone, what if you were to invest that amount in Apple stock, say?

How Apple stock has fared in the past

Let’s first examine how Apple stock has performed over the last decade.

On 1 July 2014, Apple’s share price was $23.90. Ten years later, on 1 July 2024, its share price was $234.82 — nearly ten times as much!

From these prices, we can work out that Apple stock delivered an impressive average annual return (CAGR) of 25.67%.

But wait there’s more!

You see, over the decade from July 2014 to July 2024, the exchange rate between the US dollar and the Indian rupee also changed significantly, from 60.55 to 83.55.

Thus, buying one share of Apple in July 2014 would’ve cost you ₹1,447, and selling one share of Apple in July 2024 would’ve fetched you ₹19,619: a CAGR of 29.78%!

In July 2014, you could’ve bought an iPhone 5s (16 GB) for ₹53,500. If you’d invested that sum in Apple stock instead, it would’ve grown to the equivalent of around ₹7.25 lakh by now (at a CAGR of 29.78%).

With that sum, you could buy 9 iPhone 15s today!

But should you actually buy an iPhone 15 today?

Currently, an iPhone 15 costs ₹79,900. If you were to invest this money in Apple stock today, and if we were to assume the same effective CAGR that we obtained for the last decade, then in ten years’ time, this investment would be worth ₹10.83 lakh.

Another thing to remember is that most physical goods depreciate in value over time. So, after ten years, the value of your iPhone will have dwindled down to a small fraction of what you paid for it.

Of course, you’ll derive a fair amount of value from your iPhone simply by owning and using it. This value could be emotional (you’ll feel better about yourself) or practical (you’ll use the iPhone for professional reasons). So, if you’re thinking of buying an iPhone right now, you’ll need to weigh this derived value against the investment gains that you could’ve had by investing in Apple stock instead.

One last factor to keep in mind is that investing in the US stock market is much simpler today than it was ten years ago. There are now several platforms that provide a smooth and transparent overseas investing experience while charging highly competitive fees, leading to better effective returns.

So before walking into your nearest Apple Store, make sure you give some thought not just to the iPhone’s price, but to its opportunity cost as well!

Shlok Srivastav, Co-founder and COO, Appreciate