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“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: 12/14/2000


End date: 12/11/2020
Start price/share: $22.69
End price/share: $3,116.42
Starting shares: 440.77
Ending shares: 440.77
Dividends reinvested/share: $0.00
Total return: 13,636.29%
Average annual return: 27.90%
Starting investment: $10,000.00
Ending investment: $1,374,030.84

As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 27.90%. This would have turned a $10K investment made 20 years ago into $1,374,030.84 today (as of 12/11/2020). On a total return basis, that’s a result of 13,636.29% (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.]

Here’s one more great investment quote before you go:
“Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.” — Peter Lynch