“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 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 ten year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Amazon.com Inc (NASD: AMZN) back in 2015: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full ten year investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.
| Start date: | 05/01/2015 |
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| End date: | 04/30/2025 | ||||
| Start price/share: | $21.14 | ||||
| End price/share: | $184.42 | ||||
| Starting shares: | 473.04 | ||||
| Ending shares: | 473.04 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 772.37% | ||||
| Average annual return: | 24.17% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $87,233.23 | ||||
The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 24.17%. This would have turned a $10K investment made 10 years ago into $87,233.23 today (as of 04/30/2025). On a total return basis, that’s a result of 772.37% (something to think about: how might AMZN shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” — Peter Lynch
