Coffee can investing is becoming a buzzword among many investors, but what does it really mean? If you’re just getting started with investing or want a fuss-free way to grow your wealth over time, this strategy might be worth exploring. Let’s break it down together in the simplest way possible.
Understanding The Term: Coffee Can Investing
The term “coffee can investing” comes from an old American practice where people would hide their valuable belongings, including money and jewellery, in coffee cans and stash them away for years without touching them. The idea was simple—keep it safe and forget about it.
In the world of investing, coffee can investing follows the same idea. You build a portfolio of high-quality stocks and leave them untouched for at least 10 years. No frequent buying or selling. No tracking prices daily. Just pick solid companies and let time do the magic.
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Where Did Coffee Can Investing Come From?
This strategy was popularised by Robert Kirby, an American investment professional, in the 1980s. He noticed that one of his clients had done better than his own firm by quietly buying all the stocks he had recommended and never selling them. Over the years, some of those shares had grown significantly in value, simply because she left them alone.
In India, the concept was brought into the spotlight by investment expert Saurabh Mukherjea, who even wrote a book titled The Coffee Can Investing. Since then, it’s become quite popular among investors who believe in long-term wealth building.
How Does Coffee Can Investing Work?
Here’s a simple breakdown of how coffee can investing works:
- Choose quality stocks: You invest in companies with strong financials, consistent growth, high return on capital, and trustworthy management.
- Invest and forget: Once you’ve built your portfolio, you do not touch it for 10 years or more. No selling during market crashes or excitement during bull runs.
- Let compounding do the work: Over time, the companies grow, their earnings rise, and so does your wealth—thanks to the power of compounding.
Why Coffee Can Investing Appeals To Indians
For Indian investors, coffee can investing has several advantages:
- Suits a long-term mindset: Indians often invest with long-term goals like children’s education, retirement, or buying a house. Coffee can investing fits perfectly.
- Reduces stress: You don’t need to monitor markets daily or worry about short-term volatility.
- Less chance of mistakes: Frequent buying and selling can lead to emotional decisions. With this approach, you avoid that.
- Tax benefits: Since you’re holding stocks for more than a year, any capital gains are taxed at a lower rate.
What Kind Of Stocks Should Go In Your Coffee Can?
Not every stock is suitable for coffee can investing. Look for companies that:
- Have delivered consistent revenue and profit growth over the last 10 years
- Generate high return on equity (above 15% is a good benchmark)
- Carry low or manageable debt
- Have strong brands or leadership positions in their industries
- Are run by trustworthy promoters or professional management
Some examples from the Indian market (as of recent years) include companies like Asian Paints, HDFC Bank, Titan, and Infosys. These firms have shown resilience, growth, and strong management over long periods.
Coffee Can Investing Vs Other Strategies
You might wonder how coffee can investing is different from mutual funds or SIPs. Here’s a quick comparison:
| Feature | Coffee Can Investing | Mutual Funds / SIPs |
| Control over stocks | Full control | Chosen by fund manager |
| Holding period | 10+ years | Flexible, but often shorter |
| Involvement needed | Low | Medium (monitor fund performance) |
| Tax treatment | Lower for long term | Varies by fund type |
Of course, mutual funds are great for those who want diversification and don’t want to pick individual stocks. But if you’re willing to do some research and pick the right companies, coffee can investing can give excellent returns with minimal stress.
A Word Of Caution
While the strategy sounds simple, it doesn’t mean any stock will perform well over 10 years. Picking the right stocks is crucial. Also, you need to have the patience to hold through ups and downs, especially when the market looks scary.
Final Thoughts
Coffee can investing is a powerful yet simple way to grow your wealth over time. It works on the belief that “time in the market” is more important than “timing the market.” For Indian investors who want a peaceful, long-term approach to building wealth, this strategy is worth considering.
So, if you believe in strong businesses, and have the patience to let them grow, maybe it’s time to start filling your own coffee can.
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