Coffee Can Investing: The Low Risk Road to Stupendous Wealth
Coffee Can Investing: The Low-Risk Road to Stupendous Wealth
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People focus too much on building careers. As a result, they don't have clarity on future financial needs and a roadmap to achieve financial freedom. Most people randomly invest in usual assets: (1) real estate, (2) gold, (3) mutual funds,(4) fixed deposits, and (5) stock markets. The smart ones generally make a handsome 8 to 12 percent per annual return of investments in their lifetime.
What if, there was another way, all the time, to get a 20 percent CAGR?
Bestselling author of Gurus of Chaos and The Unusual Billionaires, Saurabh Mukherjea writes down his secret recipe to generate stupendous wealth.
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It is an introductory book written for the simplest understanding of the Indian market and financial investments. Given how ubiquitously misinformed, ethically challenged and poorly accounted Indian market is, the book does a decent job of providing a big picture. Indians are quite comfortable investing heavily in real estate and gold due to social pressure and memetic rivalry. The book articulates why it's not a wise path and offers more profitable alternatives. For example, gold has given only a 2 percent return per annum on an inflation-adjusted basis from 1990 to 2017. Rs 1 lakh become Rs 11.2 lakh in 2017 if invested in gold. Had the same money been invested in the Sensex for the same period, it would have become a whopping Rs 35 lakh. Indians don't prefer financial assets because of the (a) lack of sound financial advice; (b) lack of trust in financial institutions due to different scams in the 90s; and (3) lack of easy access to financial tools without fraudulent brokers. Now with the change in generation and improvement of technologies, there is no reason for equity not becoming attractive and popular. In this regard, the book offers some solid advice backed by numbers and stats on how to build a strong equity portfolio. For new investors, the takeaway from the book is as follows
1. Stock market is not a place for the gambler
2. Buy and hold trusted quality stocks for a long time (10 years). This book defines a good company as one that has consistently grown revenue by 10% and ROCE of 15% at least in each of the last 10 years.
3. Selling stocks frequently attract brokerage, tax, and other charges, so hold good businesses for a long ride.
4. Mutual fund houses purposefully make it difficult for you to take their service
5. Invest in "direct", "growth" mutual funds.
6. Invest in index funds than large-cap funds.
7. SEBI, the watchdog is always working to protect investors.
A must-read for beginners and even for seasoned investors.
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