“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a twenty year period?
Today, let’s look backwards in time to 2001, and take a look at what happened to investors who asked that very question about Fiserv Inc (NASD: FISV), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 02/02/2001 |
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| End date: | 02/01/2021 | ||||
| Start price/share: | $8.47 | ||||
| End price/share: | $106.50 | ||||
| Starting shares: | 1,180.64 | ||||
| Ending shares: | 1,180.64 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,157.38% | ||||
| Average annual return: | 13.49% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $125,821.31 | ||||
As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 13.49%. This would have turned a $10K investment made 20 years ago into $125,821.31 today (as of 02/01/2021). On a total return basis, that’s a result of 1,157.38% (something to think about: how might FISV shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“The four most dangerous words in investing are: ‘this time it’s different.'” — Sir John Templeton
