“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 two-decade holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Amazon.com Inc (NASD: AMZN) back in 2003: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 06/09/2003 |
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| End date: | 06/06/2023 | ||||
| Start price/share: | $1.68 | ||||
| End price/share: | $126.61 | ||||
| Starting shares: | 5,952.38 | ||||
| Ending shares: | 5,952.38 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 7,436.31% | ||||
| Average annual return: | 24.12% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $753,962.14 | ||||
As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 24.12%. This would have turned a $10K investment made 20 years ago into $753,962.14 today (as of 06/06/2023). On a total return basis, that’s a result of 7,436.31% (something to think about: how might AMZN 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:
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” — Warren Buffett
