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“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— 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 five year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Dollar Tree Inc (NASD: DLTR) back in 2014: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full five year investment time horizon and then actually held for these past 5 years, here’s how that investment would have turned out.

Start date: 09/11/2014
$10,000

09/11/2014
$19,740

09/10/2019
End date: 09/10/2019
Start price/share: $55.68
End price/share: $109.93
Starting shares: 179.60
Ending shares: 179.60
Dividends reinvested/share: $0.00
Total return: 97.43%
Average annual return: 14.57%
Starting investment: $10,000.00
Ending investment: $19,740.34

As shown above, the five year investment result worked out quite well, with an annualized rate of return of 14.57%. This would have turned a $10K investment made 5 years ago into $19,740.34 today (as of 09/10/2019). On a total return basis, that’s a result of 97.43% (something to think about: how might DLTR shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” — Warren Buffett