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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— Warren Buffett

The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?

A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a twenty year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Waters Corp. (NYSE: WAT) back in 2001. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 07/12/2001


End date: 07/09/2021
Start price/share: $23.50
End price/share: $369.40
Starting shares: 425.53
Ending shares: 425.53
Dividends reinvested/share: $0.00
Total return: 1,471.91%
Average annual return: 14.76%
Starting investment: $10,000.00
Ending investment: $157,086.34

As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 14.76%. This would have turned a $10K investment made 20 years ago into $157,086.34 today (as of 07/09/2021). On a total return basis, that’s a result of 1,471.91% (something to think about: how might WAT 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:
“In the end, how your investments behave is much less important than how you behave.” — Benjamin Graham