Lessons from Ted Weschler's $264 Million Roth IRA

  • (0:30) - Wealth Building In A Roth IRA

  • (3:45) - Ted Weschler’s Lessons To Investing

  • (14:00) - The Power of Compounding: Can Anyone Achieve This Investing Success?

  • (23:10) -  Where Is A Good Place To Start Investing: Tracey’s Top Stock Picks

  • (32:45) - Episode Roundup: PYPL, BAC, SHW, JPM, WSBC, FISV, SONY

  • Podcast@Zacks.com


Welcome to Episode #242 of the Value Investor Podcast

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

Recently ProPublica published data from several millionaire and billionaire’s taxes, including several Roth IRAs that had millions, and in one case, billions of dollars in them.

One of those was a Roth IRA held by one of Warren Buffett’s lieutenants at Berkshire Hathaway, Ted Weschler.

As of the end of 2018, his Roth IRA was worth $264.4 million.

Weschler released a statement talking about how he started his IRA, and then converted it into a Roth in 2012.

Unlike some of the other huge Roth IRAs in the ProPublica reporting, Weschler’s wasn’t the result from having founder’s shares. His gains were due to several things, some of which provide some good lessons for other investors.

4 Lessons from Weschler’s Investing Journey

1.       Start young. Weschler said he was 22 in 1984 when he started funding his work IRA. When he quit that job five years later, in 1989, he had accumulated $70,385.

2.       Buy stocks. When Weschler left his job in 1989, he rolled the IRA over into a Schwab IRA account and he says he bought publicly traded stocks available to the general public.

3.       Stay invested. By 2012, he decided to convert the IRA over to a Roth IRA. By that time, his account was worth $131 million. He had, it seems, continued to stay invested through the 2000-2003 bear market and the Great Recession sell-off.

4.       Capture the power of compounding. Weschler said that each $1 saved as a 22-year-old in New York City had grown to $9,000 over the course of 35 years. Compounding is the most powerful tool an investor has.

Weschler said in his public statement, that “the investing success of this account has been a function of careful stock selection, exceptional luck and a multi-decade time period.”

You Can Do It Too

Nothing is stopping you from investing in your own IRA or Roth IRA. Small amounts can add up over time.

Weschler hoped by telling his story it would motivate others to save.

You don’t have to have a goal of $264 million. That’s extraordinary. But the key is to have time on your side.

Have a plan. Do your research. Know your investing style. And get started.

5 Stocks That are Values Right Now

The banks are still cheap and they’re now raising dividends and buybacks.

Two of the top big banks are Bank of America BAC and JPMorgan Chase JPM. But don’t forget to take a look at the regional banks like West Virginia-based WesBanco WSBC.

On the fintech side, some of the hot companies like PayPal may be pricey now, but Fiserv FISV, which operates Clover, its cloud-based point of sale solution, is not. Fiserv trades with a forward P/E of 19.6.

In technology, Sony SONY is still cheap. Shares are down 4% on the year. It has a forward P/E of just 17.2.

What else should you know about what is possible with an IRA account?

Listen to this week’s podcast to find out.

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Bank of America Corporation (BAC) : Free Stock Analysis Report
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Fiserv, Inc. (FISV) : Free Stock Analysis Report
WesBanco, Inc. (WSBC) : Free Stock Analysis Report
Sony Corporation (SONY) : Free Stock Analysis Report
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