Long-term investing is a way to massively grow your wealth.ดาวน์โหลดjoker
The best way to illustrate the power of staying the course is to demonstrate this with an example.
Of course, investors need to ensure they pick a sturdy company that has a strong franchise and can withstand economic downturns.
The idea is to study how much you would end up with after investing in this stock for an entire decade.
And what better candidate for this exercise than Singapore’s largest blue-chip bank DBS Group (SGX: D05)?
We compare an investment in DBS versus leaving your money in the bank account over 10 years.
The power of compounding
Imagine that you had invested S$10,000 in DBS exactly 10 years ago on 18 May 2011.
The share price of the bank back then was around S$14.74. S$10,000 would have garnered you around 678 shares of the lender.
Fast forward to today, and DBS is now trading at around S$29.50, doubling from the level it traded at a decade ago.
The 678 shares you own would have grown to S$20,000.
And let’s not forget the dividends that the bank has declared along the way.
If we include the full-year dividend starting from 2011 up till the recent interim dividend for the first quarter of 2021, DBS would have paid out a total of S$8.39 per share.
The total dividends received would amount to S$5,688, making up more than 50% of your original investment of S$10,000.
By the end of a decade, you would end up with a total of S$25,688 that translates to a 157% gain on your original investment.
Not too shabby at all, you’re probably thinking.
A 10-year comparison
The question on your mind is probably: what has been responsible for driving the growth of the bank over this period?
To answer this, we take a look at the bank’s revenue and profits back in 2011.
For the first quarter of 2011 (1Q2011), total income came up to S$1.9 billion while net profit clocked in at S$807 million.
10 years later, DBS has grown its total income to S$3.9 billion, despite tackling challenging conditions related to the pandemic.