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Warren Buffett Helped Max out my Roth IRA :) Again.

by J. Money on Wednesday, July 21, 2010

Maxing out retirementAnother year, another maxed out IRA!

Last week I xfered all $5,000 of it in one fell swoop (not to be confused with “fowl swoop” which I thought it was all my life), and then yesterday we had some fun stock-picking :) If you recall from last year’s Roth adventure, I basically treat it as my treasure chest full of stocks.  My 401(k) is full of the boring, but important/safe mutual funds, already, so I allow a chunk every year to be allocated to more risque holdings.  This way if I really screw things up, only a small % of my overall net worth is phased (now at about $17k vs the $140k+ in safety accounts).

Only the thing is, I don’t really know what I’m doing in that department. With all the blogging and traveling in life, who’s got time to research it all? ;)  Well I’ll tell you who – Warren Buffett and Josh Alexander. The first I’m sure you’ve heard of before (and if you haven’t you better look him up ASAP), and the second you wouldn’t have unless you live in Chicago and frequent Spanish bars every other night (and you’re a girl).  That’s cuz Josh is a friend from college who spends a good 60 hours a week pouring through every last detail of bank stocks (and he hits on any chick that moves after dark ;)).

So instead of trying to research everything from scratch, I lean on these 2 pimps to check out the scene for me and watch what they’re adding to their portfolios. Then I cherry pick!  I look for the companies I’ve heard of and I like, with a little dabbling of my own research, and I invest away!  It’s not as sexy as finding my own, but it feels risky w/out being totally risky – does that make sense?

Here are my latest additions:

  • Sandy Spring Bankcorp (SASR)
  • The Coca-Cola Company (KO)
  • Berkshire Hathaway (BRK.B)

I couldn’t help that last one, I’ve been wanting to own a portion of Buffett’s Berkshire Hathaway for years! But who could afford Class A’s $116,000+ share prices?  For just ONE! Haha…So when these B’s came out (or split, or whatever they did) I knew I had to jump on ‘em. Regardless of whether or not they’ll still rule once the big man leaves this earth. Or if my stocks are now overlapping, which I’m pretty sure they are.

The beauty of the Roth is that you can invest in pretty much anything you want as long as you set up the account that way (I have a “Brokerage Roth” for ex. which allows me to invest in stocks, funds, etfs, etc, while the wifey used to have a Roth for CDs only). It’s basically one rockin’ retirement tool.

The point of all this is that it let’s me have FUN. I get to go out of my comfort zone a bit and invest in things that my conservative side won’t let me. And If I lose it all, I lose it all!  Highly doubtful in my opinion (esp w/ the backing of my 2 said friends), but in the world of stock-picking anything’s possible. I wouldn’t advise this for everyone – like those without emergency funds or barely any retirement saved up – but it’s a nice way to play the markets if you’ve got the extra cash laying around. Now let’s hope my spidey-senses pays off!

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PS: 2010 Roth and Traditional IRA contribution limits


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{ 15 comments… read them below or add one }

1 FinEngr July 21, 2010 at 10:53 am

This Josh character sounds like a reputable (and entertaining) source ;)

The benefit of Buffet is even if he kicks the bucket, as long as new management doesn’t change the holdings or strategy – BRK.A/B should be good for another few decades after his passing.

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2 J. Money July 21, 2010 at 11:03 am

That’s what I’m hoping! And by then I’ll be MUCH better at researching and knowing what I need to invest in too :) Right now I’m just going with the flow and making SURE I’m invested while I can. I’ll def. be due for an overview in a bit.

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3 Kira July 21, 2010 at 2:47 pm

I used my Roth to buy BRK.B shares too, the idea being the same as yours, that everything else is in the safe accounts (Mutual Funds) and this allows me to have a little fun. Plus, if I hit it big (BRK.B up $2.4K so far), those earnings are tax free! My version of gambling for free on Uncle Sam.
But so you’ve got me curious and I just have to ask – did you use the USAA Brokerage IRA? I know you’re a USAA lover like I am!

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4 Samurai July 21, 2010 at 3:09 pm

Nice work J! Might as well let the best investor in the world run yo monay!

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5 kt- lifedividend July 21, 2010 at 3:12 pm

i prefer following how they do their due diligence and then looking for stocks on my own. This is because i have a feeling that millions of other people are also doing the same thing giving off some kind of herd mentality. What is they are wrong? ok maybe they are not wrong but i want to be a successful investor by thinking out a situation independently other than trying to mirror what other super investors are doing. BTW do not take the above comments the wrong way; i tend to be a little blunt sometimes

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6 J. Money July 21, 2010 at 4:08 pm

@Kira – Yup, I sure did! I actually converted all our random Roths and Traditionals all over the place into 2 sturdy Brokerage Roths at USAA :) One for me, and one for the wifey. I know the trade prices may be a cple dollars more than other places like E*Trade, Scottrade, etc, (I think it’s $11.95 to buy or sell) but as I only make a few trades a year I find the convenience is well worth it. Plus I never get pissed off at USAA ;)
@Samurai – Will do a much better job than I would ;) Btw, enjoyed your guest post today. Always fun reading about blogging businesses!
@kt- lifedividend – Haha, it’s all good! I like all comments here – even the tough ones – cuz it gets us to think and start more convos :) And I think you’re partially right on that one – there are thousands who make moves based on what Buffett and his team do, so it’s certainly something to watch out for. In a perfect world I’d spend an hour or two a day researching and coming up with my own ideas of what’s hot or not, but I’d much rather spend my time doing other things (like blogging, working on my side hustles, etc etc). So I’ll gladly take what comes to me by riding on his coattails. I seriously doubt I could do better.

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7 Drizzt July 21, 2010 at 6:46 pm

nice article. i would prefer to own dividend aristocrats or companies that gives out dividends.

it forms your passive income cashflow and helps create a consistent stream of income.

companies such as MCD, JNJ and my current purchase TEF >> http://www.investmentmoats.com/money-management/dividend-investing/bought-telefonica-adr-tefundervalued-dividend-income-stock/

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8 myfinancialobjectives July 21, 2010 at 9:15 pm

haha, I love that you stated that the reason for this was to have fun! I agree with you that this is a fun thing to do. The funny thing about it is that a lot of other people will not only have no idea WHAT you are talking about, but even if they did, they’d think you were crazy and boring lol…. Ahh the life of a PF blogger :)

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9 TODHD July 21, 2010 at 10:28 pm

If you listen to Buffett, you will make a lot of money

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10 J. Money July 24, 2010 at 2:14 pm

@Drizzt – Dividends are always good, for sure.
@myfinancialobjectives – Life is better this way ;)
@TODHD – We shall see!

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11 finallygettingtoeven.com July 25, 2010 at 1:32 pm

I just want to say I love Warren, in fact-I wish he were my grand-daddy….

Yea for you on the max!

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12 BuffettFan October 15, 2010 at 11:30 am

I saw this article saying Warren Buffett has not generated any alpha in 10 years:

Warren Buffett’s Alpha and Returns

Does this make sense to you?

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13 J. Money October 16, 2010 at 10:09 pm

No, none of it really makes sense to me to be honest with you. All I know is that he’s The Man! Haha…

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14 Moneycone November 7, 2010 at 9:22 am

Why BRK/B and KO? BRK/B has a good portion allocated to KO. No?

I bought BRK/B right after the split – went up by a decent amount since then. Too scared to get into banking stocks yet! :)

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15 J. Money November 7, 2010 at 1:10 pm

Oooh well done! Yeah I def. waited to long to get in, but whatev – I’m there now :) And yeah, KO is in those BRKs but I had already bought them before BRK and really wanted ‘em so oh well. At least it’s a decent stock ;)

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