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Originally published Saturday, July 14, 2012 at 8:01 PM

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The Motley Fool: Every Sunday, useful tips on investing

Keeping financial records; investing with Warren Buffett

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Ask The Fool

Financial records

Q: How long must I keep financial records for tax purposes?

A: Keep copies of all your tax returns forever.

Keep canceled checks, bank statements and receipts for at least three years, ideally seven — printing out copies if you receive them electronically. (Hang on to checks related to next year's tax return for an extra year.)

Retain stock-trade confirmation receipts and statements for as long as you own the stock and for at least three years (ideally seven) after you close out your position. (usually by selling).

Keep proof of improvements to property for at least three years after the sale of the property.

And think twice before you throw anything out.

My dumbest investment

No revenue, either

Dear Fool: I read a short article in some publication about how White Smile Global was going to hit the $2 range within the next couple of weeks, when it was trading for roughly 90 cents per share.

Like an idiot, I succumbed to my greed and bought in without really doing my homework. Well, the stock fell to less than 25 cents per share and has recently been around 50 cents. There seems to be something fishy here.

The Fool responds: Not doing your homework cost you a lot here. First off, know that penny stocks — those trading for less than about $5 per share, tend to be extremely risky, offering hopes and promises instead of solid track records. They can be easily manipulated sometimes, too, by hypers and scammers.

This tooth-whitening company's latest earnings report discusses many plans, but also notes, "We have not generated any revenues since inception."

Yikes! Companies without profits are risky enough, but this one has no revenue, either. Why take such chances when there are healthy, growing companies out there that are undervalued?

The Motley Fool take

Investing with Buffett

When you hear "Berkshire Hathaway" (NYSE: BRK-B), you'll probably think "Warren Buffett." Buffett is only one part of why Berkshire Hathaway might be a key component of your portfolio, though.

At its core, Berkshire Hathaway is an insurance company, owning the gecko-fronted GEICO, as well as more specialized insurance operations.

But it's also a railroad operator, having bought BNSF. And it's a chocolatier, with See's Candies.

It's also an energy utility, a paint company, an underwear manufacturer, a furniture seller, a modular-home builder, a fine-jewelry seller, a boot maker and much more.

You'll find a list of its subsidiaries at

It's also an asset manager, with a massive stock portfolio that includes some big positions.

Indeed, it owns 8.8 percent of Coca-Cola, 7.6 percent of Wells Fargo, 5.5 percent of IBM and 13 percent of American Express.

Despite all his stock holdings, Buffett greatly prefers to buy entire companies and let their talented managers keep running them, sending the cash they generate to Omaha, for him to invest elsewhere.

Berkshire offers high-quality diversity with great long-term promise.

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