“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 ten year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Fiserv Inc (NASD: FISV) back in 2010: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full ten year investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.
| Start date: | 12/27/2010 |
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| End date: | 12/23/2020 | ||||
| Start price/share: | $14.74 | ||||
| End price/share: | $110.64 | ||||
| Starting shares: | 678.43 | ||||
| Ending shares: | 678.43 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 650.61% | ||||
| Average annual return: | 22.34% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $75,066.27 | ||||
As we can see, the ten year investment result worked out exceptionally well, with an annualized rate of return of 22.34%. This would have turned a $10K investment made 10 years ago into $75,066.27 today (as of 12/23/2020). On a total return basis, that’s a result of 650.61% (something to think about: how might FISV shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“If you’re looking for a home run, a great investment for five years or 10 years or more, then the only way to beat this enormous fog that covers the future is to identify a long-term trend that will give a particular business some sort of edge.” — Ralph Wanger
