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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 2017, investors considering an investment into shares of Carmax Inc. (NYSE: KMX) 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: 08/31/2017
$10,000

08/31/2017
  $13,451

08/30/2022
End date: 08/30/2022
Start price/share: $67.15
End price/share: $90.33
Starting shares: 148.92
Ending shares: 148.92
Dividends reinvested/share: $0.00
Total return: 34.52%
Average annual return: 6.11%
Starting investment: $10,000.00
Ending investment: $13,451.84

As shown above, the five year investment result worked out well, with an annualized rate of return of 6.11%. This would have turned a $10K investment made 5 years ago into $13,451.84 today (as of 08/30/2022). On a total return basis, that’s a result of 34.52% (something to think about: how might KMX 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:
“An investment in knowledge pays the best interest.” — Benjamin Franklin