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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 two-decade holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Biogen Inc (NASD: BIIB) 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: 10/29/2001


End date: 10/26/2021
Start price/share: $56.89
End price/share: $271.12
Starting shares: 175.78
Ending shares: 175.78
Dividends reinvested/share: $0.00
Total return: 376.57%
Average annual return: 8.12%
Starting investment: $10,000.00
Ending investment: $47,666.54

As shown above, the two-decade investment result worked out well, with an annualized rate of return of 8.12%. This would have turned a $10K investment made 20 years ago into $47,666.54 today (as of 10/26/2021). On a total return basis, that’s a result of 376.57% (something to think about: how might BIIB shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“The older I get, the more I see a straight path where I want to go. If you’re going to hunt elephants, don’t get off the trail for a rabbit.” — T. Boone Pickens