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“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— Warren Buffett

This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a five year holding period potentially?

For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 5 years to 2014, investors considering an investment into shares of F5 Networks, Inc. (NASD: FFIV) may have been pondering this very question and thinking about their potential investment result over a full five year time horizon. Here’s how that would have worked out.

Start date: 03/27/2014
$10,000

03/27/2014
$14,376

03/26/2019
End date: 03/26/2019
Start price/share: $106.31
End price/share: $152.86
Starting shares: 94.06
Ending shares: 94.06
Dividends reinvested/share: $0.00
Total return: 43.79%
Average annual return: 7.53%
Starting investment: $10,000.00
Ending investment: $14,376.34

As shown above, the five year investment result worked out well, with an annualized rate of return of 7.53%. This would have turned a $10K investment made 5 years ago into $14,376.34 today (as of 03/26/2019). On a total return basis, that’s a result of 43.79% (something to think about: how might FFIV shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“Every day that you’re not selling an asset in your portfolio, you’re choosing to buy it.” — Sam Zell