Having more than one IRA can be wise
Q: Does it make sense to have multiple IRA accounts? — F.W., South Bend, Indiana
A: It could. You might have a traditional or Roth IRA through a regular brokerage for investing in individual stocks. Meanwhile, you might open another IRA with a mutual fund company, if it’s the best way for you to invest in a particular fund (some funds are not available through brokerages). Also, if you change jobs, you might roll over money from your 401(k) into a new IRA so that you can manage that money separately.
Multiple accounts are fine as long as you can keep track of them all. Know that the total contribution limit for 2017 (and 2018) is $5,500 ($6,500 for those 50 or older).
Fool’s School: Investing wisdom
There’s a lot to learn from luminaries in the investing world. Here are some nuggets to digest:
■ Don’t let panic over a market drop prompt you to sell, and don’t let greed tempt you to pile into overvalued stocks.
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If you’ve invested in the best stocks you could find, consider adding to those positions with new money. Don’t spread yourself thin. Aim to hold 10 to 20 stocks and focus your dollars on your best ideas. Alternatively, just stick with simple, low-fee index funds.
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Tremendous stock gains tend to happen over many years. Patience can be profitable.
■ Peter Lynch: “Know what you own, and know why you own it.”
Don’t buy into stocks just on hot tips. Do your homework and get to know your holdings well. Keep up with their developments, too.
■ Charlie Munger: “The No. 1 idea is to view a stock as an ownership of the business and to judge the staying quality of the business in terms of its competitive advantage.”
It’s best to favor promising companies that have sustainable competitive advantages, such as a strong brand, economies of scale, or superior technologies or production processes.
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You don’t need to be a genius to make a lot of money investing. You can outperform most professionally managed mutual funds just by buying and holding shares of a low-fee, broad-market index fund. As long as you know what you’re doing and you stick by your strategy without acting impulsively on emotions, you’ll probably do well.
Name that company
I trace my roots to 1848, when one of my namesakes emigrated from Germany to America. By 1869, he was in business helping small companies get short-term loans. His son-in-law and his sonin-law’s name joined me in 1882.
I eventually grew big enough to help the U.S. government secure financing for World War II and the Korean War and to bring companies such as Ford to market via initial public offerings. Today, I’m a New York City-based financial giant, sporting a market value above $90 billion, and raking in more than $30 billion in revenue annually.
Who am I?
Last week’s answer
I trace my roots to a 1962 store opening in Arkansas. Today, I’m the largest non-government employer in the world, with about 2.3 million workers globally, roughly 1.5 million of whom work in the U.S. I rake in close to $500 billion annually. Who am I? (Answer: Walmart)