“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 Monster Beverage Corp (NASD: MNST) back in 2012: 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.
|Average annual return:||17.22%|
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 17.22%. This would have turned a $10K investment made 10 years ago into $48,979.82 today (as of 01/28/2022). On a total return basis, that’s a result of 389.72% (something to think about: how might MNST shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“Markets can remain irrational longer than you can remain solvent.” — John Maynard Keynes