Many investors don’t have the patience to let their TFSA (Tax-Free Savings Account) unlock the magic of compounding. Indeed, it’s tempting to chase the hottest trend at the moment rather than settle for a stock that can slowly but steadily get you toward that retirement finish mark in 10-20 years’ time. Indeed, the allure of quick riches is hard to resist, especially if you’re new to the investment game!
Right now, it’s all about artificial intelligence (AI) and everything it touches. ChatGPT is an incredible technology, and large language models (LLMs) like it could change the world and enhance margins for a wide range of companies.
That said, any AI stock going for a high double-digit price-to-earnings (P/E) multiple isn’t worth ploughing considerable sums into if you have no gauge for its intrinsic value.
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Get rich slowly: A much better strategy with your TFSA
Buying a stock because it’s “hot” or because your friend is doing so is not good enough. As a self-guided investor, you must always conduct a thorough valuation before even thinking about buying. When it comes to hot AI stocks, you must also be prepared to face massive bumps in the road. Volatility tends to come hand in hand with hot growth plays. And though the AI trend could enrich many, you can still take a hit to the chin if you end up overpaying.
Further, just because a stock is a play on a trend doesn’t guarantee you’ll make money. The key is to steer clear of the overly inflated stocks that could lead to permanent losses. If you’re caught on the wrong end of a stock that sheds north of 50%, it can be a slog to recover. And if a stock loses more than 75%, things start to become really grim!
In this piece, we’ll look at one relatively boring stock that may be flying under the radar as more hype and attention surrounds AI. So, if you’ve got the timespan, the following name looks like an intriguing buy right here and now.
Berkshire Hathaway
When it comes to getting rich slowly (think decades at a time), Berkshire Hathaway (NYSE: BRK.B) has to come to the top of mind. The behemoth has prudent long-term investing in its veins. And even once Warren Buffett, who’s now 93 years old, is no longer at the firm, I’d be willing to bet it will still stand by the man’s principles for the years and decades that follow.
Buffett is arguably the greatest investor of our time. And with great successors taught by the investment legend himself, I think Berkshire can retain its market-beating edge over the next several decades. With a value-conscious approach and a powerful liquidity position, Berkshire has tools that it can use to sail through the next period of economic hardship.
Whether the markets and the economy are on the uptrend, downtrend, or poised to flatline, Berkshire looks poised to prosper. Indeed, it’s a win-win-win type of scenario for the firm, at least over the long run.
With rates at these heights, Berkshire’s making a solid return on its cash pile, all while Buffett and company wait patiently for the next big opportunity to swing for a home run.
The bottom line
Berkshire Hathaway is the perfect stock to own to get rich slowly. Even if AI offers a shot at greater gains over the near term, I’d much rather stash Berkshire in a long-term portfolio than chase the hot stock of the day. When it comes to your TFSA, think about investing for the next 10-20 years! That way, you’ll be able to steer clear of trouble and punch your ticket to a slow but likely comfortable retirement.
