HO HO HO! Christmas day has come, and it’s time for some fun. Santa Claus is back with cheers of joy and some unique gifts we all longed for a year.
But this year, let’s focus on building a portfolio for yourself, which will be your secret Santa for life. Before we start, here is a rule. You must stay patient and wait for good tidings to flow with time.
So, please grab a cup of coffee and start building a coffee can portfolio!
What is a Coffee Can Portfolio?
In the 1800s, Americans stored their valuables in coffee cans for years. These cans kept many things safe, while a few were unsafe. Later, this became an investment strategy where investors buy quality stocks and wait patiently. After years, they will have a few stocks outperforming and offering a high return on investment from the entire box of investments.
Fundamentals in Building a Coffee Can Portfolio
The base of the coffee can portfolio lies in analysing and selecting a high-quality business. So, as an investor, you must pick stocks with these factors.
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- The business should have been in existence for 10+ years.
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- The revenue growth should be at least 10% or more in all the years.
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- Return on capital employed must be more than 15% in 10 years.
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- The market capitalisation should be more than Rs 100 crores.
Apart from this, there are three more things you must check.
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- Pick stocks that have a competitive advantage over their peers in a sector.
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- Add 10 to 15 stocks to your portfolio and churn less than one stock per year.
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- Don’t focus on a particular sector; diversify your portfolio to minimise risk.
The Easy Way Out!
The legendary investor Warren Buffet says, “The stock market is designed to transfer money from the active to the patient”. And the coffee can portfolio aptly makes you fit in this strategy.
Building a coffee can portfolio may seem easy, but researching and finding quality stocks is daunting. Don’t worry. You can rely on Teji Mandi – a Sebi-Registered Research Analyst, experienced in making the investment process easy for you!
So, make the most of the coffee can idea and fill your life with showers of wealth this Christmas and for the rest of your life.
Merry Christmas!
