How To Become A Coffee Can Crorepati?

Coffee can investing is a passive investment strategy that involves holding a small number of high-quality stocks for an extended period, typically 10 years or more. The name "coffee can" comes from the old practice of storing valuables in a coffee can and burying it in the backyard for safekeeping. In the same way, coffee can investors aim to invest in a handful of stocks that they believe will generate substantial returns over the long term. Read the article to understand how this approach to investing will help you build substantial wealth over time.
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  • 11 Apr 2023
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Ever dreamt of buying Royal Enfield or a property? Here’s the fun fact: If you had used that money to buy the stock of Enfield’s maker - Eicher Motors 10 years ago, you could have been a millionaire. Or buying the stock of HDFC in 2008 would have returned more than buying a property in India! There are some stocks you can buy and put it away in a coffee can for a decade. This strategy has got a catchy name too: Coffee Can Investing.

As evident from the above example, the “buy and forget” approach to investing in stocks that have consistently performed well is referred to as ‘Coffee Can Investing’. It is a low-risk method to create wealth by buying a stock and then holding them for at least a decade to generate high returns. But not every stock is a coffee can candidate. For instance, the famous – Ambassador was not able to keep the stock price of Hindustan Motors evergreen.

If you invest money in fundamentally strong stocks and hold them for several years, there are high chances you may end up with multi-bagger returns. You should buy businesses that can keep their products popular, with some innovation. Warren Buffett did exactly that with the stocks of Coca Cola.

Coffee can investing is a concept that originated in the US. This term was coined by an American investment manager – Robert G. Kirby – in 1984. Way before the banks came into the picture, in old West America, people used to hide their valuables in coffee cans and then placed them under their mattresses. They stayed untouched for decades.

Similarly, investors can choose to buy high-performing equity stocks and forget them for a lengthy period. Later, coffee can investing was made popular by the industry and literature. In India, the coffee can strategy was introduced by Mr. Saurabh Mukherjee through his book ‘Coffee Can Investing’.

However, Indians have been doing coffee can investing in commodities like gold, real estate, etc., for a very long time. In fact, if you think, you’ll realise that our Indian mothers have been investing the coffee can way for many years by keeping money in tins or jars for a later use.

Below is a 4-step framework to build your coffee can portfolio:

  1. Pick fundamentally strong companies that are leaders in their market.
  2. Build a portfolio with 10-15 of these companies.
  3. Review and monitor each company’s growth history.
  4. Diversify the portfolio by investing in different types of stocks.

Just like the examples above, we can give numerous examples of Coffee Can stocks. The key is to know if these companies are sound, then start filling your coffee can with their stocks.

Coffee can investing is very simple and easy. It is suitable for passive investors who wish to create wealth and hold their investments for a very long period. This strategy can provide very high returns but selecting the right stocks is essential.

So, if you want to build great wealth, strategize & start today. As Saurabh Mukherjee says:

“Some people want it to happen, some wish it would happen, others make it happen.”




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