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“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— 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 five year 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 5 years to 2016, investors considering an investment into shares of Amazon.com Inc (NASD: AMZN) may have been pondering this very question and thinking about their potential investment result over a full five year time horizon. Here’s how that would have worked out.

Start date: 07/05/2016
$10,000

07/05/2016
$47,145

07/01/2021
End date: 07/01/2021
Start price/share: $728.10
End price/share: $3,432.97
Starting shares: 13.73
Ending shares: 13.73
Dividends reinvested/share: $0.00
Total return: 371.50%
Average annual return: 36.43%
Starting investment: $10,000.00
Ending investment: $47,145.53

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 36.43%. This would have turned a $10K investment made 5 years ago into $47,145.53 today (as of 07/01/2021). On a total return basis, that’s a result of 371.50% (something to think about: how might AMZN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more piece of investment wisdom to leave you with:
“Those who do not remember the past are condemned to repeat it.” — George Santayana