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“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— Warren Buffett

The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?

A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a ten year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of F5 Networks, Inc. (NASD: FFIV) back in 2009. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 04/13/2009
$10,000

04/13/2009
$63,135

04/10/2019
End date: 04/10/2019
Start price/share: $26.64
End price/share: $168.15
Starting shares: 375.38
Ending shares: 375.38
Dividends reinvested/share: $0.00
Total return: 531.19%
Average annual return: 20.24%
Starting investment: $10,000.00
Ending investment: $63,135.03

The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 20.24%. This would have turned a $10K investment made 10 years ago into $63,135.03 today (as of 04/10/2019). On a total return basis, that’s a result of 531.19% (something to think about: how might FFIV shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“The greater the passive income you can build, the freer you will become.” — Todd Fleming