Starting Out
 

I am just out of grad school and able to put a couple hundred bucks aside each month. I have been buying Berkshire Hathaway B in $250 increments through Sharebuilder.com I am doing this after tax since I am not eligible for our 401K for another 6 months. I am in real estate development, but don't really follow the public markets too much. I figure that this is a good way to get started. I don't have any need for this money any time soon. Thoughts?

Re: Starting Out
 

What thoughts are you looking for? Berkshire is a good company (did anyone not know that? In case you didn't, it is). Do you want tips on how to become involved in public markets?

Re: Starting Out
 

Buy a couple shares of ebay each month.

Re: Starting Out
 

Open a Roth IRA. Contributions to a Roth IRA are made after tax, but earnings in the account grow tax free. Earnings cannot be withdrawn until you are 59 without penalty, but you can withdraw your CONTRIBUTIONS at any time penalty free. You can also withdraw money for certain expenses like education and a down payment for a house. However, because of the tremendous tax advantages, you should probably view it as a retirement account and leave as much money in there as possible.

The contributions limits for the Roth IRA are $3000 for 2004 and $4000 for 2005. You have until April 2005 to make the contributions for 2004. You can open one at most brokerages.

Another thing... at $250 per transaction, it is very difficult to outperform the market purchasing stocks when taking transaction fees into account. If it costs $10 to buy and $10 to sell, that is already a signicant percentage of your capital that you need to make up for. Investing that amount of money, I would consider purchasing no-load index funds. This has the added benefit of diversifying your portfolio as well. Look for funds with low expense ratios such as Vanguard. If you insist on investing in stocks, consider saving up more capital and purchasing in blocks of $1000 or more.

I would be very conservative about what you invest your money in right now. FWIW I think Berkshire Hathaway is a fine investment.

Re: Starting Out
 

[ QUOTE ]
I would be very conservative about what you invest your money in right now.

[/ QUOTE ]

Why would you be conservative? Wouldn't someone just starting out want to be aggressive?

Re: Starting Out
 

These are funds you should consider that invest large amounts in BRK.

Mutual fund:
Sequoia (SEQUX): http://finance.yahoo.com/q/hl?s=SEQUX
Weitz: http://finance.yahoo.com/q/hl?s=WVALX
Contra: http://finance.yahoo.com/q/hl?s=FCNTX

http://www.lionshares.com/details.cf...B5897&PID=

Exchange traded: BTF BIF
http://www.cefa.com/scripts/fundstat.asp?id=BIF&d=1
http://www.cefa.com/scripts/fundstat.asp?id=BTF&d=1

If you choose to buy BTF or BIF go to www.cefa.com and educate your self about closed end funds and what 'discount/premium' is. No matter what you buy go to www.sec.gov and look at disclosures (last annual statement). Make sure you know what the fund expenses are and the effect on investment returns.

Given the large number of working years you have ahead of yourself, investing in yourself and ways of increasing your earned income would be your best bet. Spending $250 on cloths or drinks after work with the 'right' people might turn to have the best return on investment.

I personally am not impressed with the sharebuilder concept and would avoid it. consider www.freetrade.com if commisions are an issue.

Re: Starting Out
 

Honestly? My advice is based on my views of the US economy and stock market, not on his investment horizon. Stocks are grossly overvalued right now by just about any historical measure. The economic "recovery" is being fueled by a massive consumer credit bubble and short-sighted monetary policies that are, in the long run, unsustainable. I wouldn't invest a lot of money in the stock market right now unless I really knew what I was doing.

I give the original poster a lot of credit for acknowledging that he is not yet a master investor, and instead delegating that responsibility to someone else (Warren Buffett) until a time when he does become more knowledgable.

Re: Starting Out
 

[ QUOTE ]
My advice is based on my views of the US economy and stock market

[/ QUOTE ]

The US economy is doing pretty well isn't it? GDP rose 3.9% for the 3rd quarter. The Fed has been raising the interest rates because they feel the economy is recovering.

Follow up questions and comments
 

First of all, thanks to all who commented--there were some good ideas generated. I will open a Roth IRA this year and put my money into it. That should eliminate some of my tax concerns.

As to transaction costs hurting my returns: I hear ya. My thought is that this ends up being more like a forced savings program for me. I set it up and am able to put this money in without thinking about it too much. I like the Sharebuilder concept personally, it allows me to buy into BRK without having $2,700 + transaction costs. Maybe there is something wrong with that thought process, but there is some psychological gain for me to know that I am able to put my meager money in the hands of one of the best managers around. GeorgeF I would like to hear what your specific concerns are with this concept. Maybe I am missing something.

Finally, I do spend a good amount of money on myself and my career. This is just extra dough that I would blow on eating out or other such nonesense that I would rather save.

PS At what point do I have enough money to start talking to a FA?

Re: Follow up questions and comments
 

If you need 10 transactions (at the basic level) to get a B share you end up paying $40 or 1% of the investment. I personally would not choose a broker that charged that kind of money. I think you are better off going with freetrade.com and saving up the $4000, then buy the BRK B share. If you need to sell the commision at sharebuilder is $16.

I personally feel that you would be better off choosing a different investment until you had the money for a B share.