“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 IPG Photonics Corp (NASD: IPGP) 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: | 07/18/2014 |
|
|||
| End date: | 07/17/2019 | ||||
| Start price/share: | $62.46 | ||||
| End price/share: | $130.97 | ||||
| Starting shares: | 160.10 | ||||
| Ending shares: | 160.10 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 109.69% | ||||
| Average annual return: | 15.96% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $20,967.23 | ||||
The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 15.96%. This would have turned a $10K investment made 5 years ago into $20,967.23 today (as of 07/17/2019). On a total return basis, that’s a result of 109.69% (something to think about: how might IPGP shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“A 10% decline in the market is fairly common, it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealthbuilding power of stocks.” — Christopher Davis
