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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 2018, investors considering an investment into shares of Waters Corp. (NYSE: WAT) 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: 10/23/2018
$10,000

10/23/2018
  $13,994

10/20/2023
End date: 10/20/2023
Start price/share: $181.22
End price/share: $253.64
Starting shares: 55.18
Ending shares: 55.18
Dividends reinvested/share: $0.00
Total return: 39.96%
Average annual return: 6.96%
Starting investment: $10,000.00
Ending investment: $13,994.16

As shown above, the five year investment result worked out well, with an annualized rate of return of 6.96%. This would have turned a $10K investment made 5 years ago into $13,994.16 today (as of 10/20/2023). On a total return basis, that’s a result of 39.96% (something to think about: how might WAT shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Another great investment quote to think about:
“The best stock to buy is the one you already own.” — Peter Lynch