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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— Warren Buffett

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a twenty year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Advanced Micro Devices Inc (NASD: AMD) back in 1999: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full twenty year investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.

Start date: 04/29/1999
$10,000

04/29/1999
$33,820

04/26/2019
End date: 04/26/2019
Start price/share: $8.25
End price/share: $27.88
Starting shares: 1,212.12
Ending shares: 1,212.12
Dividends reinvested/share: $0.00
Total return: 237.94%
Average annual return: 6.28%
Starting investment: $10,000.00
Ending investment: $33,820.18

The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 6.28%. This would have turned a $10K investment made 20 years ago into $33,820.18 today (as of 04/26/2019). On a total return basis, that’s a result of 237.94% (something to think about: how might AMD shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“Price is what you pay. Value is what you get.” — Warren Buffett