Just about every investor will face a moment in their career where they say, “I wish I would’ve invested in that company or asset 10 years ago.” It’s a cold, hard reality of investing over time. We’ll all have plenty of “missed opportunities,” whether it’s a stock you didn’t buy, a strategy you didn’t invest in, a real estate deal that fell through, or in the current era, a cryptocurrency wager you didn’t make.
There’s not a whole lot of benefit in dwelling on a missed opportunity, but I’m going to anyway in this post. It’s not in an effort to rub salt in anyone’s wound. The goal is to remind investors of the benefits – and compounding power – of smart, long-term investment choices. Specifically, investing in companies that have solid management, robust earnings growth, and widely embraced brands. Those are the types of companies with the potential to deliver attractive returns – for investors who stick with them.
I’ve picked 5 companies at random, and I took a look at how much a $10,000 investment would have grown over the last five years. To note, I assumed the investor took any dividends as cash, my napkin math below represents price returns versus total returns. Also, returns are as of May 25, 2018.
Facebook (ticker: FB) – $10,000 invested on January 1, 2013 would be worth $76,067.
Netflix (ticker: NFLX) – $10,000 invested on January 1, 2013 would be worth $107,503.
Apple (ticker: AAPL) – $10,000 invested on January 1, 2013 would be worth $29,654.
Visa (ticker: V) – $10,000 invested on January 1, 2013 would be worth $29,101.
Costco (ticker: COST) – $10,000 invested on January 1, 2013 would be worth $17,341.
As you can see, not every longer-term play was as gangbusters as Netflix, Facebook or even Amazon. But that’s not the point. The point is that finding quality companies and making a smart, committed trade can pay off – and there are plenty of ways to do it.
That being said, I wouldn’t advocate for picking one company and investing everything in it, quite the opposite in fact. I like the strategy of building a diversified portfolio with 90% of my liquid net worth and then investing the other 10% in a bet of some kind, whether in an individual security or perhaps even cryptocurrency if that’s your thing.
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