Photo credit: commons.wikimedia.org

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

— 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 two-decade holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Mohawk Industries, Inc. (NYSE: MHK) back in 1999: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.

Start date: 10/21/1999
$10,000

10/21/1999
$56,899

10/18/2019
End date: 10/18/2019
Start price/share: $22.00
End price/share: $125.17
Starting shares: 454.55
Ending shares: 454.55
Dividends reinvested/share: $0.00
Total return: 468.95%
Average annual return: 9.08%
Starting investment: $10,000.00
Ending investment: $56,899.63

The above analysis shows the two-decade investment result worked out well, with an annualized rate of return of 9.08%. This would have turned a $10K investment made 20 years ago into $56,899.63 today (as of 10/18/2019). On a total return basis, that’s a result of 468.95% (something to think about: how might MHK shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Another great investment quote to think about:
“A risk-reward ratio is important, but so is an aggravation-satisfaction ratio.” — Muriel Siebert