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March 2019
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Money Ki Baat: The Coffee Can approach of Investing

 

Today we will discuss and elaborate one of the important principal of Investment –The Coffee Can approach.

Many investor never listen about this, and if some one than he might be not aware of the entire concept . This approach is based on a real life story.

There were a investor in US who would buy $5,000 worth of stocks and put their share certificates in a safe . After purchasing them he never look back  the valuation or performance of his stocks. After his death, it was found that some investments turned into losses and were valued at $2,000, many others were valued at over $100,000 and one investment had gained a value of $800,000!

This real-life story having different reactions among different individuals. Some would say you cannot buy-and-forget; some others would reminisce that is what their fathers did. But the key lesson is not buy-and-forget. Rather that, it is wise not to get carried away with market fluctuations and stick to your investments. This is the essence of Buffett’s investing style. “

Critics says long term investing approach or cofee can approach doesn’t work in India. But if we see few example in indian investing scenario , than its find relevant . Few Indian equities like Eicher Motors and Infosys  are good examples of long term investing.

On Contrary in Case of Mutual Funds Franklin India equity fund is a good example. As per one calculation, Franklin India Prima Fund, which manages assets of around Rs 6,600 crore, offered 20.30 per cent since its launch in December 1993. Continuing with the above example, an investor who started investing Rs 10,000 every month in the scheme since its launch would have made Rs 7.71 crore by now.
Both the Kothari Pioneer MF equity schemes (Now Franklin India Prima Fund and Franklin India Bluechip Fund) have outclassed the other schemes with their impressive performance. Franklin India Bluechip Fund, the largest of the nine schemes, has given 20.90 per cent CAGR returns since its inception. The largecap fund manages assets worth Rs 8,099 crore. If you have invested Rs 10,000 in the scheme since its launch in December 1993, you would have accumulated Rs 3.37 crore by now.

Performance of oldest mutual fund schemes

25 years of MF

So after looking these Schemes and there returns in Long term Horizon , we have to accept that Coffee Can approach worked also in Indian Context. But remember in investment no thumb rule is applicable everywhere. So you need to Track, Manage & Re-balance your MF Portfolio , in a fixed duration with the help of Experienced CFP.

Happy Investing

Jay Bhatt