Photo credit:

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

— 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 two-decade 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 20 years to 2000, investors considering an investment into shares of Inc (NASD: AMZN) may have been pondering this very question and thinking about their potential investment result over a full two-decade time horizon. Here’s how that would have worked out.

Start date: 02/11/2000


End date: 02/10/2020
Start price/share: $76.19
End price/share: $2,133.91
Starting shares: 131.26
Ending shares: 131.26
Dividends reinvested/share: $0.00
Total return: 2,700.87%
Average annual return: 18.12%
Starting investment: $10,000.00
Ending investment: $280,066.62

As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 18.12%. This would have turned a $10K investment made 20 years ago into $280,066.62 today (as of 02/10/2020). On a total return basis, that’s a result of 2,700.87% (something to think about: how might AMZN shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more piece of investment wisdom to leave you with:
“Taking risks is really the only way to consistently achieve above-average returns.” — Sam Zell