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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

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 Monster Beverage Corp (NASD: MNST) 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: 10/21/2014
$10,000

10/21/2014
$17,100

10/18/2019
End date: 10/18/2019
Start price/share: $32.79
End price/share: $56.06
Starting shares: 304.97
Ending shares: 304.97
Dividends reinvested/share: $0.00
Total return: 70.97%
Average annual return: 11.34%
Starting investment: $10,000.00
Ending investment: $17,100.17

As we can see, the five year investment result worked out quite well, with an annualized rate of return of 11.34%. This would have turned a $10K investment made 5 years ago into $17,100.17 today (as of 10/18/2019). On a total return basis, that’s a result of 70.97% (something to think about: how might MNST 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:
“In the end, how your investments behave is much less important than how you behave.” — Benjamin Graham