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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 2015, investors considering an investment into shares of United Rentals Inc (NYSE: URI) 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: 11/10/2015
$10,000

11/10/2015
$26,480

11/09/2020
End date: 11/09/2020
Start price/share: $77.72
End price/share: $205.82
Starting shares: 128.67
Ending shares: 128.67
Dividends reinvested/share: $0.00
Total return: 164.82%
Average annual return: 21.49%
Starting investment: $10,000.00
Ending investment: $26,480.99

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 21.49%. This would have turned a $10K investment made 5 years ago into $26,480.99 today (as of 11/09/2020). On a total return basis, that’s a result of 164.82% (something to think about: how might URI 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:
“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.” — Martin Whitman