
“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 twenty year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Advanced Micro Devices Inc (NASD: AMD) back in 2005: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full twenty year investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
Start date: | 01/24/2005 |
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End date: | 01/22/2025 | ||||
Start price/share: | $15.16 | ||||
End price/share: | $123.75 | ||||
Starting shares: | 659.63 | ||||
Ending shares: | 659.63 | ||||
Dividends reinvested/share: | $0.00 | ||||
Total return: | 716.29% | ||||
Average annual return: | 11.06% | ||||
Starting investment: | $10,000.00 | ||||
Ending investment: | $81,569.51 |
As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 11.06%. This would have turned a $10K investment made 20 years ago into $81,569.51 today (as of 01/22/2025). On a total return basis, that’s a result of 716.29% (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 piece of investment wisdom to leave you with:
“Only when the tide goes out do you discover who’s been swimming naked.” — Warren Buffett