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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— 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 Ansys Inc. (NASD: ANSS) 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: 05/06/1999
$10,000

05/06/1999
$890,933

05/03/2019
End date: 05/03/2019
Start price/share: $2.16
End price/share: $192.49
Starting shares: 4,629.63
Ending shares: 4,629.63
Dividends reinvested/share: $0.00
Total return: 8,811.57%
Average annual return: 25.16%
Starting investment: $10,000.00
Ending investment: $890,933.21

As we can see, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 25.16%. This would have turned a $10K investment made 20 years ago into $890,933.21 today (as of 05/03/2019). On a total return basis, that’s a result of 8,811.57% (something to think about: how might ANSS shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Another great investment quote to think about:
“Taking risks is really the only way to consistently achieve above-average returns.” — Sam Zell