“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 Adobe Inc (NASD: ADBE) back in 2011: 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: | 06/08/2011 |
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| End date: | 06/07/2021 | ||||
| Start price/share: | $32.24 | ||||
| End price/share: | $509.47 | ||||
| Starting shares: | 310.17 | ||||
| Ending shares: | 310.17 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,480.24% | ||||
| Average annual return: | 31.77% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $158,060.00 | ||||
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 31.77%. This would have turned a $10K investment made 10 years ago into $158,060.00 today (as of 06/07/2021). On a total return basis, that’s a result of 1,480.24% (something to think about: how might ADBE shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you’re generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you don’t make.” — Donald Trump
