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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 Synopsys Inc (NASD: SNPS) 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: 07/19/1999


End date: 07/16/2019
Start price/share: $30.31
End price/share: $135.91
Starting shares: 329.92
Ending shares: 329.92
Dividends reinvested/share: $0.00
Total return: 348.40%
Average annual return: 7.79%
Starting investment: $10,000.00
Ending investment: $44,848.50

The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 7.79%. This would have turned a $10K investment made 20 years ago into $44,848.50 today (as of 07/16/2019). On a total return basis, that’s a result of 348.40% (something to think about: how might SNPS shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“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