“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 F5 Inc (NASD: FFIV) 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: | 03/24/2005 |
|
|||
| End date: | 03/21/2025 | ||||
| Start price/share: | $26.58 | ||||
| End price/share: | $268.40 | ||||
| Starting shares: | 376.22 | ||||
| Ending shares: | 376.22 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 909.78% | ||||
| Average annual return: | 12.25% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $100,893.80 | ||||
As we can see, the twenty year investment result worked out quite well, with an annualized rate of return of 12.25%. This would have turned a $10K investment made 20 years ago into $100,893.80 today (as of 03/21/2025). On a total return basis, that’s a result of 909.78% (something to think about: how might FFIV shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“I’d like to live as a poor man with lots of money.” — Pablo Picasso
