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

— 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 two-decade 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 20 years to 1999, investors considering an investment into shares of Cadence Design Systems Inc (NASD: CDNS) may have been pondering this very question and thinking about their potential investment result over a full two-decade time horizon. Here’s how that would have worked out.

Start date: 05/03/1999


End date: 05/01/2019
Start price/share: $14.00
End price/share: $68.54
Starting shares: 714.29
Ending shares: 714.29
Dividends reinvested/share: $0.00
Total return: 389.57%
Average annual return: 8.26%
Starting investment: $10,000.00
Ending investment: $48,937.72

As we can see, the two-decade investment result worked out well, with an annualized rate of return of 8.26%. This would have turned a $10K investment made 20 years ago into $48,937.72 today (as of 05/01/2019). On a total return basis, that’s a result of 389.57% (something to think about: how might CDNS shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” — Peter Lynch