Wednesday, February 22, 2017

The Coffee Can Portfolio

I have invested in dividend growth stocks for over a decade now, and shared experiences and knowledge with you on the Dividend Growth Investor site along the way.

One of the lessons I have learned is that once I buy a solid company, I should hold on tightly and not sell no matter what "noise" I see or hear. When I evaluated my sales, I noticed that I would have been better off simply doing nothing, rather than sell to pay capital gains taxes, and to buy another company that did not do as well as the original one.

My evaluation of the Corporate Leaders Trust in 2015 confirmed the observation that time in the market trumps timing the market. It simply pays to be patient as an investor.

I recently learned of an interesting concept called the Coffee Can Portfolio on the Sure Dividend website:


The idea is that investors can craft a portfolio of large, blue chip stocks, and simply hold them forever. The idea is to never sell these investments, which serves several purposes.

First, investors will avoid fees and costs, that eat away at total returns.
Second, investors will let compounding interest work its magic.

It definitely makes sense that by holding blue chip dividend stocks for the long-term, without selling, you will reduce investment costs and also reduce the impact of errors due to frequent transactions. Research has shown that investors tend to sell at the wrong times. This is why a do nothing approach may provide you with very good long-term results ( provided you also keep taxation costs low as well)

Do you follow the Coffee Can approach of not selling? I'd love to hear your thoughts on it.

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