I was taking a ride with one of my colleagues a few days back in his car.
He just happened to mention about how his brother had spent a few thousand rupees that he had got as gifts, in a party.
That day I just happened to mention to him that if he was able to show his brother the power of compounding at two different rates of interest of 15% and 25% it may make a difference in his brothers attitude of investing rather than spending.
My take was that at 25% the money can grow to 10 times in 10 years (1000 to 10000) and 100 times in 20 years(1000 becomes 100000). While at 15% it can become 4 times in 10 years and become 16 times in 20 years(1000 becomes 16000). This was just a conversation we had while travelling to a customer meeting. I did not know how he could actually get 25% returns per annum if he had asked me.
However last week I was at Crossword in Logix Mall in Noida and I happened to glance at this new book by Saurabh Mukherjea , Rakshit Ranjan and Pranab Uniyal, titled Coffee Can Investing. Being a voracious reader, I generally end up buying a lot of books, the moment I get into a book shop – physically or on Amazon. Then I end up reading them on a flight or at my leisure. but there is always a backlog to my reading, with a lot of books lying unread.
This title however caught my attention and I got to reading it immediately and completed it in a day. The best part of this hardbound book is that it is written in simple language, with examples of Indian companies which you can directly relate to.
He has written a wonderful thesis on how by selecting some stocks on a given set of rules, people can get returns of close to 25% per annum on a consistent basis. Since I am always curious to know how compounding has helped people I read this book end to end in record time.
Saurabh shows with various data points how getting to 10 times your money in 10 years and hundred times in 20 years is not a theoretical exercise…. in the appendix he has done back calculations to show how over multiple years this strategy has worked.
The good thing about the book is the fact that the authors have looked at building a portfolio with combination of shares, mutual funds etc. to ensure that you get an adequate return in Indian circumstances.
Most of the investment books I have read are by international authors and with examples of international companies. This book has a completely Indian take and therefore I would recommend reading this for sure. If you are interested in seeing how others have been involved in getting 25% returns, I suggest have a look at this book. I found it extremely interesting reading
Till next time then Carpe diem!!