“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 two-decade 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 20 years to 2002, investors considering an investment into shares of Advanced Micro Devices Inc (NASD: AMD) may have been pondering this very question and thinking about their potential investment result over a full two-decade time horizon. Here’s how that would have worked out.
|Average annual return:||12.20%|
As we can see, the two-decade investment result worked out quite well, with an annualized rate of return of 12.20%. This would have turned a $10K investment made 20 years ago into $100,061.74 today (as of 12/21/2022). On a total return basis, that’s a result of 901.18% (something to think about: how might AMD shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“The function of economic forecasting is to make astrology look respectable.” — John Galbraith