“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 twenty year holding period for an investor who was considering Illumina Inc (NASD: ILMN) back in 2002, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 05/16/2002 |
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| End date: | 05/13/2022 | ||||
| Start price/share: | $3.26 | ||||
| End price/share: | $233.56 | ||||
| Starting shares: | 3,067.48 | ||||
| Ending shares: | 3,067.48 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 7,064.42% | ||||
| Average annual return: | 23.80% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $716,013.07 | ||||
As shown above, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 23.80%. This would have turned a $10K investment made 20 years ago into $716,013.07 today (as of 05/13/2022). On a total return basis, that’s a result of 7,064.42% (something to think about: how might ILMN shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“A 10% decline in the market is fairly common, it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealthbuilding power of stocks.” — Christopher Davis
