SEP IRA

Posts Tagged ‘investing’

WHY FIXED IRA?

Question: What is better for a one employee S Corp(hair styslit) a SEP IRA or Roth Ira?

Total income is about 50,000

Answer: BOTH.. and with that income, you can have BOTH…

Remember.. the Roth is POST TAX… so your income from it becomes tax free…The SEP is PRETAX ( like a 401K..)…

Your Money: Roth IRA’s

Question: Would purchasing 2-3 shares of Berkshire Hathaway be a good idea to add to my portfilio?

My wife and I have money in various index funds through Vanguard, we have money invested in both of our SEP IRA’s through work and we also own a Duplex. I have been keeping my eye on Berkshire Hathaway stock (B shares) and was thinking of purchasing 2-3 shares and let it grow for 10+ years. I thought this may be a good idea to diversify our portfolio even more.I think each share is trading for around $4,100 dollars right now.

Answer: Since you are already diversified, it would be OK to make the investment. By the way, I faced the same problem when the Class A shares were on the market for about $4000 each. The last trade on October 12, 2007 was 127,100 for the A shares that I could have purchased for $4100 and less in the 1980s. I am more comfortable owning mutual funds that hold Berkshire Hathaway and other stocks in a well diversified portfolio.
The last 7 years have been good, but who knows if they can keep it up. Even Warren Buffet keeps asking that question.
In June 1996, Berkshire’s Chairman, Warren E. Buffett, issued a booklet entitled “An Owner’s Manual” to Berkshire’s Class A and Class B shareholders. The purpose of the manual was to explain Berkshire’s broad economic principles of operation. An updated version is reproduced in the link below.
Warren Buffet is a nice man, but who knows if he will be running the company in ten years? Warren has given much of his wealth to a foundation run by Microsoft’s Bill Gates and Gate’s wife.
Charlie Munger is a nice guy, but he could be gone in ten years too.
Warren has a team of people who he says are ready to replace them when the time comes. Will they be as successful? Who knows when you have a few billion dollars that you do not know what to do with.

Bottom line, it would be ok to place a moderate portion of your investment money in BRKB. If you decide not to do so, there are a number of good choices in Morningstar that offer better odds for long term money than a money market account. My point is that you are not limited in your choices to BRKB or a money market account which pays over 5 per cent these days.

Mitch Tuchman, MarketRiders CEO on CNBC Squawk On the Street with Erin Burnett and Mark Haines