Just finished reading RULE #1 and really enjoyed it. I have 2 questions for you:
1. Can you invest in 3 month t-bills in a Roth IRA?
2. If so, if the 3 month t-bill stays over 4% why not just invest in that every 3 months and then roll over your money and the earnings each time it comes due and then continue to add to the Roth like normal?
Sure you can do 3-month t-bills in a Roth. They pay 4% per year, so that means 1% per quarter and you'll need to roll it into the next t-bill to get 4% for the year.
As I search for companies that stand up to our criteria, I'm coming across banks and holding companies that seem to have wonderful numbers. The question is, do I treat them like any other sector or do I have to be aware of anything that would be specific to banks and/or holding companies?
Be sure you are watching the PE ratios for banks. The historical PE is usually quite low relative to the growth rate. Also be very aware of the direction of the group. Banks tend to move together. And finally, don't forget to do a good job on the 4Ms with a particular emphasis on Moat. Is your bank just a bank or does it have something going on that locks in the customer? (By the way, Buffett like Wells Fargo at one point — so why not do a bank?)
Now go play.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.