“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a two-decade holding period for an investor who was considering Fiserv Inc (NASD: FISV) back in 2002, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 04/08/2002 |
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| End date: | 04/05/2022 | ||||
| Start price/share: | $11.25 | ||||
| End price/share: | $103.34 | ||||
| Starting shares: | 888.89 | ||||
| Ending shares: | 888.89 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 818.58% | ||||
| Average annual return: | 11.72% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $91,808.37 | ||||
As shown above, the two-decade investment result worked out quite well, with an annualized rate of return of 11.72%. This would have turned a $10K investment made 20 years ago into $91,808.37 today (as of 04/05/2022). On a total return basis, that’s a result of 818.58% (something to think about: how might FISV shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.” — Warren Buffett
