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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

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 five year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Alphabet Inc (NASD: GOOGL) back in 2019: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full five year investment time horizon and then actually held for these past 5 years, here’s how that investment would have turned out.

Start date: 04/18/2019


End date: 04/17/2024
Start price/share: $62.07
End price/share: $155.47
Starting shares: 161.11
Ending shares: 161.11
Dividends reinvested/share: $0.00
Total return: 150.48%
Average annual return: 20.15%
Starting investment: $10,000.00
Ending investment: $25,051.71

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 20.15%. This would have turned a $10K investment made 5 years ago into $25,051.71 today (as of 04/17/2024). On a total return basis, that’s a result of 150.48% (something to think about: how might GOOGL shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“Know what you own and why you own it.” — Peter Lynch