How NOT having the newest iPhone would have earned you $9,000+ over the last 10 years

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Don’t buy new iPhones every year, buy AAPL instead

I ran a simple simulation: what if, rather than buying a new iPhone every year for each of the last 10 years, you only bought a new iPhone every 3 years and for each of the two years between each purchase, you bought a new iPhone worth of Apple stock (AAPL) instead?

Based on the value of AAPL in November 2020, you would have accumulated over $9,000 worth of Apple stock! This takes into account the trade-in value of your iPhone each time you upgrade.

The Simulation Setup

The basic idea of this simulation is that in early November of each year, you would either purchase the iPhone released that year or you would purchase an amount of AAPL stock worth the value of the year’s latest iPhone less the trade-in value of the previous year’s iPhone. The simulation begins in 2011 with you purchasing the iPhone 4S and then for each of the next two years you would purchase AAPL stock instead of buying a new device. This process would repeat over the ten years from 2011 to 2020.

Here are some assumptions used in the model:

  • The stock purchase price is the closing price of AAPL stock on the day closest to November 9th of the given year (Source: MarketWatch).
  • I used the value of the base iPhone model with the lowest storage plus a 5% sales tax minus the trade in value of the previous year’s iPhone to calculate how many shares of AAPL stock you would buy on the two years between each iPhone purchase. (Source: Wikipedia). This accounts for trading-in your iPhone when you buy a new one each year.
  • For the trade in value after one year, I used 50% depreciation. (Source: 9to5mac)
  • For the trade in value after three years, I used 75% depreciation. (Source: 9to5mac)
  • The number of shares purchased was rounded up to the nearest share.
  • The ending value of AAPL stock is based off of an AAPL stock price of $116 in early November 2020.
Screenshot of the simulation spreadsheet

Takeaway: Compounding > Consumption

My main takeaway with this little simulation is that there is great power in replacing a bit of consumption with investing that compounds over time. Over the last 10 years, you still would have been able to enjoy Apple’s cutting edge devices like the iPhone 4S, 7, X and 12. But squeezing some extra life out of each iPhone would have left you with over $9,000 in Apple stock that cost you only $2,000!

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