transcript

Speaker 1:
[00:00] Hey, everyone, and welcome back to the Rich Habits Podcast, a top 10 business podcast on Spotify, brought to you by public.com. These are our Thursday episodes. In these Thursday episodes, we answer your questions as if we were going through whatever you're going through. We receive questions from you all on Instagram at Rich Habits Podcast, as well as email at richhabitspodcast.gmail.com. And Robert, it is seven questions today. They're all pretty good. They're not your normal. What do I do with a Roth IRA type questions, right? These are some really cool, fun questions. We try and find the best ones for you all, and we're excited for today's episode.

Speaker 2:
[00:37] Yeah. When you guys stop me on the street or see me in an airport or any of these things, and you ask me all these cool questions, send them to us. Go to our Instagram, go to our Spotify, get your questions answered in real time on the show, because we love engaging with each and every one of you, and today's episode is going to be amazing.

Speaker 1:
[00:57] That's a great reminder. I hope that all of you are watching us on Spotify. This is video, right? Don't listen to us on just Apple or listen to us on whatever. I heart media. If you want to listen, that's fine. But these are video episodes, and those video episodes go to Spotify and YouTube. I hope if you are someone who's listening right now, but you want to watch, you're watching on Spotify. We've also got polls on Spotify, comment section on Spotify. Spotify is doing some cool stuff, Robert. Shout out Spotify. Definitely go watch the show over there if you're not already. Now, as a quick reminder, this episode is brought to you by Public, the investing platform for those who take it seriously. On Public, you can build a multi-asset portfolio of stocks, bonds, options, cryptocurrency, and now generated assets which allow you to turn any idea into an investible index using AI.

Speaker 2:
[01:50] It all starts with your prompt. From renewable energy companies with high free cash flow to semi-conductor suppliers growing revenue over 20% year over year. You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one-of-a-kind index, and lets you back test it against the S&P 500 all with just a few clicks.

Speaker 1:
[02:10] Generated assets are like ETFs but with infinite possibilities. They're completely customizable and they're based on your thesis, not someone else's. So go to public.com/richhabits and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com/richhabits.

Speaker 2:
[02:29] Paid for by Public Investing, full disclosure in the podcast description.

Speaker 1:
[02:33] It reminds me, Robert, we got this comment on Spotify from Zack four days ago. Zack goes, hey, this is random, but I just want to thank you guys for introducing me to Public. It's a phenomenal platform. I've used some other big name brokers like Fidelity, Schwab, etc. But for ease of use and UI, Public takes the cake. I think that's what we've been trying to help people understand. If you are new to investing, if you're someone who's like, I don't know where to start, I don't want some financial advisor, I don't know. Go check out Public because Public is the easiest platform to just start investing. If you're a serious investor, you're not trying to blend your, what is it? Your broker and your bookie shouldn't be on the same app, Wink Wink Robinhood. If you're actually serious about investing, Public allows you to unlock a ton of different asset classes, like the treasury bills, like cryptocurrency, like corporate bonds, like generated assets, like they're building this all-in-one platform that they've done really well over the last several years. So again, shout out Public. We're so grateful to have them in our corner. I love Robert being able to work with companies because Public has been a company that I've worked with personally for the last six years now. I've been using Public for more than a half decade. I started using the platform when it was a social investing app. It was awesome. And I think what's so cool about what we've been able to do with them is over the years, they've built in the right direction. When you look at some of these other brokers, again, like a Robinhood maybe, that is building in the betting and sports betting, and who's going to win the Masters and who's going to win the Super Bowl direction, like that's not investing, right? That's not what we think people should be doing. We think people should take investing seriously, which is why we really, really like Public.

Speaker 2:
[04:12] Yeah, I think the key takeaway for me is we try to lower the barrier of fear and friction for people to start investing, because most people don't ever start or they barely invest because they're afraid and they don't know where to start. So between our message and our education and the tools that Public provides, I think it's the perfect storm for the everyday investors so they feel confident and can be consistent because that's the key in all investing is being consistent. So that's the big takeaway for me.

Speaker 1:
[04:44] So our first question comes from CC, which are their initials because they say, hey gents, please don't use my name on air. So no problem. CC is what we'll go with here. CC says, I love the podcast and the wide range of information you all provide. I'm 54 years old and we have $2.1 million saved in our 401Ks and IRAs. We max out on an annualized basis our contribution amount plus all the catch up contributions every year. We have $50,000 cash saved in an emergency fund, $40,000 invested in Bitcoin and make about $350,000 a year as a couple. We owe $300,000 on our home that's worth $900,000 and we have $19,000 of debt on one vehicle at a very low interest rate. I would personally love to retire from what I'm doing but not stop working, but just not relying on my salary to live. We only have money in tax-deferred savings that cannot be touched until 59 and a half. Fortunately, we were taught to save until it hurts when we were young. So we have $2 million. But unfortunately, they're all in these 401Ks that we can't touch. My question is this, should we stop putting the max and catch up contributions into our 401K and instead split it up between 401K contributions and taxable brokerage account contributions? It really is the only tax shelter we have except for our giving contributions. I just wish someone had taught me the concept of a bridge account to get me from here where I am now at 54 to my retirement. But I had never heard of the concept until listening to your show. We are in the most expensive years of our lives. We have two kids in college, a third child that's getting married and a wedding that we plan to fund, looking for some guidance on how much money we should give toward their wedding, where to get the funds for it, how to limit taxes. Still do we do this bridge account thing? We're kind of in a sticky situation here. So any perspective from you all would help. Robert, let's walk through this one, one at a time. First off, the good news. You all are rich. Congratulations. You're multi-millionaires. You've got 2 million here, 50k here, 40k here. You make 350. Your house is 600,000 equity there. You all are crushing it. So the big thing that I want to just hammer home here before we start dissecting ways to optimize is no matter how you move forward, you are going to be fine in retirement. You could stop investing altogether, put all of your spare cash into a bridge account or a taxable brokerage account, and your 2.1 million will continue to double if invested in the stock market aggressively every seven years. So it turns into 4 million, then 8 million, then 16 million. Like you guys are going to have a ton of money. So let's start with that. Congrats, you're rich. Now let's start dissecting this, Robert. So they make $350,000 a year as a couple, which is an incredible amount of money. But they also said they're in the most expensive years of their life with two kids in college and a third that's going to get married. So I'm assuming they are spending money on the college for both kids, and they want to do what they can for this wedding while also trying to retire early. Here's my perspective as to how I'm starting to see these puzzle pieces come together. If I were truly in your shoes, CC, you're 54 and you can't touch this money for about five more years until 59 and a half. If I were truly in your shoes, I would bite the bullet, I'd suck it up, I'd said, I got kids in college, I got weddings, I got real expenses here, and I got a great, great income of $350,000. I'm going to do and keep doing what I've been doing for the next, call it four or five, six years now and continue to work at this $350,000 income and not think about an early retirement. Because the only way an early retirement would work is if you had some sort of portfolio income, Robert, that you could lean on there, 4% rule, whatever you want to call it, to help bridge where you are from a monthly income perspective here from 54 to 59.5. But you don't have that. What you're forced to do then is work in $350,000 a year. Cry me a river, that's awesome. I would continue to work. I would continue to do all the right things when it comes to earning the money. Now you're saying, okay, I've earned the money, worked really hard for this money that I earn every single year. What to do with it? You asked, do I continue to max out my 401k and the catch up contributions on that? Or do I do something else with it? If I were in your shoes, I would either cut in half my current 401k contributions or maybe pause them all together and then take whatever that delta is and use that to get really ahead on if you want to build out a taxable brokerage account, if you want to maybe pre-fund weddings in the future, if you want to just knock out the kids' college, like there's a couple ways, a couple things to think about that are, only you know what that priority list is for you. I don't have that perspective, CC, but I don't think that I would continue again, at $2.1 million, have to feel the sense of urgency that I've got to contribute tens of thousands of dollars a year into my 401k or I'm not going to make it. Like you guys are going to make it, which by the first thing I wanted to reiterate was you all are rich. Now it comes down to, let's assume that you're still working for the next four, five, six years here at this $350,000, but we're not putting in however many tens of thousands a year into that 401k. Maybe it's going to again, pre-funding a wedding in the future, paying toward these tuitions, getting maybe your own bridge account, savings account, they're going up with some NEOS funds, right? But that's my perspective, Robert, I'd love to hear your framework.

Speaker 2:
[10:28] Yeah, I think you're pretty close, and I like everything about it, and they're spot on, they're already wealthy, they're crushing it, but they do suffer from not having the bridge account. So just a little bit different for me, being closer to their age, I would probably stop the contributions into the 401ks, I would pile all of that money into the bridge account, but I wouldn't make the bridge account super aggressive. I would go with the three, four, five ETFs we talk about all the time, so they can weather any storms and volatility, but I would really look at that as the way to give them the flexibility, because assuming they put in even five or $6,000 a month into this bridge account for the next three, four, five years, they're building this in a way that they have access to it. Like was alluded to in the question, with all these other funds, these retirement accounts, they can't get to it for five and a half years. Right now, as soon as they start building this bridge account, they have access to that money right away, so if the wedding comes sooner, they can get it. If they need more for college or cars or whatever they may need for the kids, they can get access to that money. Then the only other thing I would add, looking at the 50K cash emergency, I'm assuming that is their emergency fund and it's in a high yield savings of 4%. I'd maybe beef that up a little bit more too when pivoting to the bridge account, because in that way they have access to more capital if they need it, that they're not having to sell and have any taxable event in the bridge account. That's the only thing I would change. I would beef that up a little more because it sounds like they have a high cost of living and they want to have more access as the kids are going to college and need cars and weddings pop up and all of that. That's the only thing I would change.

Speaker 1:
[12:07] Something else I think CC should consider, especially as CC is thinking through future expenses of perhaps weddings in the future they want to cover or tuition, things like that. I'm sure CC is smart enough to have already thought about this, but if you are truly cash flowing college for your children, which means like, hey, I make $350,000 a year. I did not have a 529 plan. There's no college fund, but as I get these $8,000 bills from the university, I try and pay them on a monthly basis or installment, stuff like that. If you first open up a 529 account for your child, even this goes to any amount of money that you want to give to a university. It doesn't have to be the full amount, whatever, but if you pay them out of a 529 account versus out of your personal checking account, you could get some really cool tax benefits. Like let's say, for example, CC every single semester, he tries to pay $10,000 of each child's tuition. Instead of just paying $10,000 out of your cash emergency fund or your brokerage account or whatever it might be, and just going straight to the university that way, instead contributing that $10,000 first to a 529 plan, depending on the state you live in, you could be receiving some really cool tax benefits, which means tax deductions, tax credits. I mean, states like Indiana, Oregon, Utah, and Vermont offer straight up tax credits for 529 contributions. You're still paying the $10,000. It still gets to the university, but it's going through a different account before it gets there. Because it goes through that account in some states, again, Tennessee is not like this, which is whatever. But depending on the state you live in, any contribution, it could be a tax deduction or a straight up tax credit. So CC, if you are cash flowing here, want to encourage you to take advantage of 529s in that scenario there. Really good question and we are rooting for you.

Speaker 2:
[13:54] That is a really good call out. I didn't think of that on the 529.

Speaker 1:
[13:58] So the next question comes from Ernest T. Ernest says, hi, Robert Nossin. I'm a new listener and would appreciate your guidance. Last year was my first full year of work. I'm 18 years old and I made $20,000. The bad news is, I'm not sure where most of it went. That's all right, we've all been there. Ernest says, I started a new job in February and I'll make $50,000 this year. And I want to avoid running into the same issue. I currently have little to no expenses. Highest cost is $700 car insurance bill every six months and $100 monthly phone bill. I have a Roth IRA, which I unfortunately overlooked, even though I know that I shouldn't have. Right now, I'm trying to build a six month emergency fund. I'd also like to set aside some savings in case something happens to my car. It is 16 years old and I need reliable transportation to and from work. I have a 401k through my employer with a 6% match. I also would want to start investing more seriously and I just don't know what additional steps to take from here. So can you guys help me out? Ernest, happy to help you out, my friend. So here's the mistake that 18 year olds and 68 year olds make all the time. They make money, their salary is coming in, they get that paycheck every two weeks if it's 2,000, 5,000, 8,000, 12,000, whatever it comes in and they spend it. They spend it because they don't have a plan. The plan you need to have is to ensure that every single dollar that hits your bank account, you know exactly where it came from, the amount of it and where it is going before the month even begins. We say this phrase all the time, broke people react, wealthy people forecast. Broke people say, oh, I made all this money last year, but I don't know where it went. I reacted to life around me. Wealthy people forecast with their money, and sometimes they forecast years and decades in advance, right? That's essentially what investing is, right? Delaying pleasure of spending money on things you want now, so you can have more money in the future with investments. So here's the first couple of things I would do if I were in your shoes. The first thing I would do is I'd go download our Honest Budget, make an Honest Budget, do whatever you can, budget app you like, it doesn't matter. What you need to do is have a clear sort of routine of every single time money hits your bank account, you write how much it was, where it came from. Every single time money leaves your bank account, you write what it was and where it went. And that means for everything, not just like expenses, but like investments. That means insurance premiums, maybe that means unexpected things, and also means sinking fund for your car in the future, right? I don't care what the reason why it left your bank account, but you need to document how much it was and what it went to. And then you're going to start to see a pattern over a two or three month period of time, because budgeting, it takes a couple of months, right? We all try and build a budget, hard to stick to it. Oh, I did not see this coming. I didn't know that happened. Like you're going to stumble and fall a couple of times here, but that's totally normal. After two or three months, you're going to start seeing, okay, cool, I tend to pay about $427 a month in gasoline. I tend to spend X amount of dollars eating out, or this is how much my whatever is on a monthly basis on average. And you can begin to tweak things and start to build your own budget around expected expenses and those amounts around them versus just like, oh my gosh, this thing came out of nowhere. I didn't know it was coming or, oh yeah, I forgot I've got this annual bill for this subscription I signed up for that I really love. I need to add that now to my sinking fund, things like that. It's going to take a couple of months to really get in the group here, but I've gotten to a point now where every dollar, I kid you not, and Robert, he makes fun of me sometimes for this, but I am so anal about the money that comes into my checking account and the money that leaves my checking account. I literally have it down to the dollar every single, I'll just look, I'll look it up right now because you guys are probably going to laugh at me and be like, what's this guy even talking about? So I'm going to pull up, I've got a comprehensive Google Sheet that I use that goes through all this stuff. So in the month of February, Austin Hankwitz spent $11,434 on stuff, things I've got all written down outside of my investing. 11,434, that is down to the dollar. If you don't know that number for yourself, maybe you have a budgeting problem, right? What is your down to the dollar? How much did you spend in the month of February, right? So like that's how locked in earnest I want you to get. And it's not because you have to be successful. We had episodes in the past helping people navigate budgeting in a more flexible manner, which is totally fine. But you specifically said, I'm not sure where it went. I want to avoid that in the future. This is how you avoid it.

Speaker 2:
[18:32] I would say you are the most passionate, precise budgeter I've ever seen. And it's incredible. I wish you would handle all my bills and money. It's just so good how defined it is for you. But earnest, listen, you cannot budget what you don't track. That's the number one thing. Austin says it all the time. It is so important. I deal with it every day on one-on-one calls. I deal with it in person with friends where they're like, yeah, I don't really have a budget. So I looked it up because of this question. And currently, less than 34% of US adults actually maintain a budget that they track their expenses. Everyone says they have a budget because they downloaded Mint or one of these budgeting apps, but they don't really keep track. If you really want to build wealth, it starts with budgeting and understanding where every dollar goes, like Austin alluded to. So Austin, you crushed it. This is right in your wheelhouse for the questions. And Ernest, get the budget, track your spending, and you'll see what happens.

Speaker 1:
[19:30] And it's not that you need to feel guilty about your spending. Like, I don't feel guilty that I spent $11,343 in the month of February. And it's a much larger number in the month of March because I had to fly to a funeral. I pre-purchased a vacation I'm taking this summer. I don't feel guilty about spending money. I'm going to a couple of weddings. I got to buy stuff for that, right? Some months are going to be lumpier than others, and you shouldn't feel guilty about money that you've spent knowing that you are intentional with your spending. The purpose here is to track your spending. This is not, I spent this much money on this, like, oh, I feel so bad about it or whatever's going on. I feel so bummed. This is me not trying to tell you that you need to spend less money. I'm not saying that at all. What I am saying is, I also fell victim to, where did all my money go? And so now I refuse to ask myself, where did all my money go? I have every single month, a breakdown of where every single dollar that left my checking account went. And I know where it went. And then I can say, okay, am I happy with this amount? Did I like it going to this thing? If not, then I'll make some changes in the future. But I'm telling you, the wealthiest people that I've met, when it comes to really leaving the stratosphere of building wealth, they find themselves in this like wishy-washy spot of I make a lot of money, but because I make so much money, I think I can out earn my stupidity. Yeah, there are some people that literally make millions of dollars a month and millions of dollars a year and can out earn their stupidity. But for most of us that don't make all that much money a month, right? Like, I mean, I'm not talking about like millions, I'm like, you know, I make tens of thousands a month, but it's like from that perspective, I don't yet have a crazy amount of money where I can out earn my stupidity. I have to continue to be smart with it. And the wealthiest people I know that are in that range of making tens of thousands of dollars a month, thousands, whatever it might be for you, you have to stay diligent because it's so easy. Think about like this, Robert. A business wants to have a 0% profit margin. You want to go have the nicer furniture. You want to subscribe to the newer things. You want to go on these trips and meals. You want to do these things because money comes in. But because of our diligence as business owners, we do not let that happen. We need to maintain specific profit margins. And you have to have that same perspective when it comes to your own personal finances. You see the money come in and naturally, you want to spend more because you have more. But as you now go from this, I think you said 18,000 or yeah, 20,000 to 50,000, you're going to see a lot more money come in, as most of us do throughout our lives. And you're going to want to spend more money, but you have to stay diligent. And if you do spend that money, that's totally fine. You have to then understand where it goes, so that you're not at the end of the year saying, holy crap, I made 30,000 more dollars in 2026. My name's Ernest and I have nothing to show for it. All right, that's my Ted Talk. Thanks for coming.

Speaker 2:
[22:23] We can just end the episode there. Oh my God, I love, love, love. That should be the whole episode. Great, great work, Austin. Keep going.

Speaker 1:
[22:30] All right, all right. Next question comes from Grayson. Grayson's a high school sophomore, new listener to the show. Find your episodes very insightful and helpful, but I'm an aspiring entrepreneur and I will become wealthy like both of you. But I understand the entrepreneur journey is very difficult, and I was hoping that you can lend some insight into the type of person and mindset it takes to excel in entrepreneurship. I've watched dozens and dozens of videos on business. I've earned money through some side hustles and jobs alongside school and inquired a few wealthy individuals in their journey. It would still be amazing if I could hear your positions on the topic. Incredible question here, Grayson. So cool that you're so young asking about this. So Robert, I've been doing a lot of talking. I'd love for you to spend five or 10 minutes sharing your perspective. Going from call it 22 years old to now in your 60s, the top three maybe biggest things you learned as an entrepreneur, from failure, to success, to managing people, to ideas, just everything. Try and find your top three just biggest pieces of advice that you can give to Grayson and of course everyone else listening.

Speaker 2:
[23:37] Wow. I would say number one is you have to be tenacious. So many people and there's a lot of people on the internet that share content saying, hey, follow your dreams and you'll never work a day in your life. And I always say that's cute, but that's for people that are already rich. In the beginning of your careers, for any of you that are watching and listening that are younger, you have to go get the money. And that starts with a job, a side hustle, multiple jobs, a side hustle, everything else. You can still be an entrepreneur while holding multiple jobs because you have nights and weekends to start building out wherever you're going to start. Because early in your career, you need to be more concerned with getting the money so you can survive the downtime it takes to build up entrepreneurship. It's a big mistake that most people don't even learn until their 40s and 50s. When you launch a new company, I'm launching a new company right now. When I launched the Rich Habits Podcast with Austin, it took us a year and a half before we took a paycheck. A lot of people don't get this, so they go right into entrepreneurship and they don't understand. There isn't a consistent check coming in every week. It just doesn't work that way. And it might only take you a few months or maybe 8 months, 12 months, but sometimes it's 2 years before you ever see any fruits of your labor for starting out in entrepreneurship. So I would always rather see people, and I didn't heed this advice, but now I can share it with you. I would rather see people get a job. You don't have to love the job. It doesn't have to be your passionate job. It has to put food on the table, keep your cell phone on and keep gas in your car so you can work on yourself and your career. So that's number one is tenacity to get started. Number two, in my opinion, you have to be so into learning. You have to be a tenacious reader. You need to be an avid learner because you want to figure out what it is you want to do with your life. I've had multiple journeys in my career of different things where I was heavy in real estate, then I wasn't, I was big online, then silly bands happened. I've been all over the place, but one thing I've never swayed from is I always am an avid learner. I have to stay ahead of the curve, so I know what's going on in the world, so I can use it to my advantage. So number two for me is education. I'm not saying go buy all the fake guru courses for five or $10,000. I'm saying using AI as your friend, use books as your friend, and use the internet as your friend because everything you need to know is already out there, and it's already been taught. You just need to absorb how it affects you. Those are the two things, tenacity and education. And number three is you need to be able to keep going. That's kind of tenacity, but the number one thing is a lot of people do is they quit too early. They start something, they get into entrepreneurship, they're three months in and they give up too soon because they expected it to be easy and they expected to make all this money. Trust me, I've been all over the place. I was very fortunate. I came from a broken family, so I was very poor growing up and I was able to build a decent amount of wealth by 24 years old. But that was because I worked nonstop from my teens into my 20s when all my other friends were out getting drunk and going to parties on weekends. I wasn't that person. So those would be the three things for me is tenacity, don't give up too soon and be an avid learner. So you're always educating yourself. Right now, if I were 21 years old doing it again, I would move somewhere warm where all the money is. I would absorb every bit of AI and where things are going in the future so I could figure out where I could fit into that to build wealth and have a higher paying career or service that I would provide. And that is exactly where I would be because the sooner you get all of that out of the way like Austin did and like I did, the easier it is because you let compounding build on itself and build more wealth because you're investing consistently over time because you're a higher earner from these three things.

Speaker 1:
[27:43] That was great, Robert. I largely agree with all of that. Want to emphasize a couple of things. The first one I want to emphasize is the proximity. You mentioned to move somewhere where all the money is. You can't live in small town Utah. You can't live in small town North Carolina, small town Tennessee, right? Like I grew up in a town called Kingsport and it's very small. And I'm so glad that I moved to Nashville because now I feel like I'm around more people that are moving and shaking. But it's like one of those things like you can't stay in your small town and expect to have access and proximity to these people that are doing millions if not tens of millions with their business. Like sure there are some successful people every town, don't get me wrong. But if you are trying to go find your tribe, there are other places that you should consider moving to, to force yourself to be around those people. If you want to go work in legislation, you got to be in Washington DC. If you're going to go work in finance, you've got to be in New York City. If you want to go work in AI and tech, you got to be in San Francisco. Like there are some very specific places that is just a breeding ground for success as it relates to a theme. Or on the flip side, if you don't care about any of those things and you truly want to be like an online person, like that's cool too, but just like make sure you understand that you are picking one or the other, right? Another thing I would say, one of the best things that I learned about being an entrepreneur, and this goes for anyone 18 to 68 on your entrepreneurial journey, figure it out, be resourceful. It has never been easier to, back to what Robert said about education, to just figure it out, just figure it out. It's on the internet, just go figure it out. I don't know, how do I go build an app? How do I go start doing TikTok shop? How do I think about whatnot? What do I do about clipping? How do I run a social media? I don't know, go figure it out. It's all right there in the internet. Like we figured it out. There are people that are trying to sell you a $10,000, whatever, to figure it out, but you don't need that. Watch people on YouTube. Go spend 3,000 hours reading AIX, watching YouTube videos, listening to podcasts. After the first, maybe about 3,000, we'll call it 1,000 hours at least. It takes a long time to figure some of this stuff out, but being resourceful enough to want to spend your nights and weekends being resourceful, that's what separates you from the pack. And I think that's what Robert was alluding to when he was younger, spending his nights and weekends working and surrounding himself with people that worked in real estate, surrounding himself with people that were in sales, surrounding himself with people that were in the restaurant business, like figuring it out and putting yourself in a situation to succeed. And the last thing I'd really want to talk about, which is something that you didn't mention, but I think is very important, the sooner you realize it's not a zero-sum game, the faster you will win. I have tons of partners. I've got tons of people that I build things with, that I work with, that I can't touch every single dollar in my industry. I realize that, and there are competitors in my industry that I have very close relationships with because there are times that clients will come to me for a service or a product that I offer that I simply can't meet because of so much high demand or whatever might be, and so I give it to a competitor and that's all cool. It's fine. There's so much money out there to be made. I guess what I'm trying to say for you here, Grayson, is there might be people on X or Instagram or TikTok or whatever that are building a similar product or building in the same space as you, and you might have this lack mentality mindset of like, oh, they're trying to take my customers. I need to make sure that I steer clear of them. I don't want to know. MrBeast has very famously talked about how when he first started building his YouTube channel, every single day for months, him and three or four of these other YouTubers would jump on a Zoom call and talk about their thumbnails, give feedback on each other's videos, like they all tried to succeed together. I think as entrepreneurs, we have this automatic victim mentality mindset of any other entrepreneur that's working or doing anything in my space as a competitor, and I need to make sure that I just wall garden and don't collaborate, or don't share anything, or don't do anything with them, and that could not be further from the truth. Some of the best relationships I have, some of the best friendships, some of the best business partners, turn out to be business partners in the future, where competitors, quote, unquote, on the surface. And so as an entrepreneur, no matter, again, this is Grayson or anyone else listening, the sooner you realize that it is not a zero-sum game, that as entrepreneurs we can all win together, the faster you will be wealthy.

Speaker 2:
[32:11] This is a big episode. This is a good one.

Speaker 1:
[32:13] Yeah, man, I'm having fun. Our next question is coming from Trevor. Trevor says, hey, Austin and Robert, started listening to your show about a month ago, and I really like your content. I'm taking it one episode at a time, still back in 2023 episodes, but I'm wondering, what are your stock allocations in reference to the ETFs you mentioned? Do you have SPYI or VOO in your portfolio? How do I think about building a portfolio with these NEOS funds inside of it? I just switched over from having 100% of my 401k into the S&P 500, now into a different plan where I can diversify significantly. I have $370,000 in there. How should I be thinking about this? Robert, maybe walk people through our perspective on building the core satellite portfolio and then maybe where you think NEOS funds could fit into the equation here.

Speaker 2:
[33:04] Yeah, I like this, Austin. This is a great question. Core portfolio strategy, we always want to see you follow this in the beginning. There are different ways you can look at it, but we want to make sure that you're looking at that 50, 60 percent, maybe even 70 percent depending on your age. We don't have the age here. Where you have these low-cost ETFs that we talk about, so you have the diversity in the S&P 500, in the NASDAQ, maybe you have some AI, we like AIQ as well, something like that. But then when you think about the rest of it, that additional 30 percent, you asked about SPYI, these would be NEOS funds. We love NEOS funds if you're looking to produce income. So that's a nice thing. So make sure you understand that because you want to understand the difference between income with growth but or just more a growth-oriented portfolio. So it's important to understand that. In my opinion, without knowing your age, I think the average person should maybe have 5 percent, maybe 7 percent of these income-based ETFs. But it's not a versus. For me, I own VOO in my retirement accounts and it is a major portion. I think for me, it's like 45 percent, maybe 50 percent. But I also own SPYI and QQQI to mimic VOO and QQQ. But I don't believe unless you're older and you're looking for the income for your portfolio, that you should have equals in those. It's definitely not a versus. You can own both because they both do different things for your portfolio over time. VOO and QQQ are your growth strategies, especially if you're younger, and SPYI and QQQI are the income portion of that to give you some of that balance throughout your career of investing.

Speaker 1:
[34:48] Yeah, I love that balance personally. I've got six figures in NEOS funds. I get paid well over $1,500, $1,800 something a month here. My NEOS funds are incredible. It's that awesome monthly income that I can receive down my portfolio. It's not a versus, it's a complement to. To your specific question here, Trevor, just like what Robert shared, you got the core and you got the satellite. The core is that 65-85% into the index funds and ETFs we talk about. The satellite is that 15-35% diversified elsewhere, sometimes even into different asset classes like real estate on Fundrise or blue chip artwork on Masterworks or venture with some of the stuff we're doing in the Rich Habits Network. That is a different way to think about it as well. If I were in your shoes, put the vast majority, I'm not going to give you numbers here, but put the vast majority of this, like Robert shared, into the index funds and ETFs we talk about. Have 5, 10 percent, whatever, 15 percent, whatever is comfortable for you in some thematic ETFs like NEOS funds, like an SPYI, a QQQI, a BTCI, an IAUI, IYRI. I love all these funds. I can go on forever about them. I have them all in my portfolio. Get yourself some of that passive tax efficient monthly income. Then what you can do with it is choose to say, do I want to reinvest it back into these, the DRIP stuff, Dividend Reinvestment Plan, or do I want to take that distribution and put it elsewhere in my portfolio? Right now with Bitcoin where it is, I've just been taking my BTCI distributions every month and reinvesting it back into BTCI, so I'm lowering my cost basis, knowing that Bitcoin will go back up in the future. So it's like, however you want to think about that, it's a really, really cool opportunity to make some choices with your money because of how often you get paid. So our next question comes from Carlum C. Hey guys, my name is CJ and I'm 25. I currently have monthly income that ranges between 10 and $20,000 a month pre-tax, both from my business and my nine to five job. These numbers are fairly new as of this year, and I finally got over that stagnant period of seeing little to no results and very excited about it. I've got a $14,000 car loan, $13,000 in student loans, and I was wondering, since these are not that large of balances, should I just pay them both off as soon as possible, or do I just continue to pay the monthly payments? Also, as my stock portfolio begins to grow, for future reference, I was wondering, how do wealthy people pay their bills using leverage out of their portfolios? Is it something that I should be considering now that I'm starting to make a little bit of money? Thank you so much. I'll start with the second question, Robert. How do wealthy people pay their bills using leverage in their portfolios? Well, let's be very honest here. I only think like multimillionaires, centimillionaires, like those are the type of people that are borrowing hundreds of thousands, if not millions of dollars against their investments at a very favorable three, four, five percent interest rate, and then using that to fund their lifestyle by whatever thing they want to go buy, like things of that nature there. I'm not doing that. I don't think Robert's doing that. I don't think CJ should be doing that. The people that do that, again, are like the Elon Musk of the world that are like, oh, I've got all this Tesla stock or SpaceX stock and it's worth $100 billion. I'm going to go ask JP Morgan or Goldman Sachs for a billion dollar loan or a hundred million dollar loan. Gosh, could you imagine a billion dollar loan? That's crazy. $100 million loan even at a 4% interest rate. And like, that's just, you know, stuff that I'm not doing. And I don't encourage people to do that, but that's kind of how it works, right? They don't sell it. They borrow against it. It's called, what is it called, Robert?

Speaker 2:
[38:25] Buy, borrow, die.

Speaker 1:
[38:26] Buy, borrow, die. That's what it is. So they buy the stock, they borrow against it, and they die, and then they don't have to worry about taxes and stuff like that. But CJ, don't worry about that stuff, my friend. You are on a completely different tax bracket than those people. So Robert, what advice do you have for CJ here earning, call it 15,000 a month, first time of his life, he's making this kind of money, mix of side hustle business, entrepreneurship, and nine to five. What would you do in CJ's shoes?

Speaker 2:
[38:52] We're going to go back to the 1800s. CJ, don't put the cart ahead of the horse. You are talking about all these crazy things, like you're already making $100 million a year. You don't need to worry about securities based loans. You don't need to worry about putting your stock shares up. You've got a few years ahead, and I hope you keep crushing it. But for right now, you need to build your base. I don't think I would even worry about paying off the car or the student loans just yet, because from what I see, you don't even have an emergency fund to keep you away from putting things on credit cards if an emergency pops up. So first and foremost, CJ, congrats on the new money. That's awesome. Build the base. We want to see you have that $100,000 saved and invested. Get that Roth IRA set up. If you don't have it yet, I don't see it listed that you have that. Get the VOOs, get the QQQ, get the AIQ, maybe VTI. Get this built so you have $100,000 saved and invested and making you money while you sleep. Now, for the car and the student loans, I'm assuming the student loan debt is probably five and a half or 6%. I would leave it rock and roll right now because there's always a way or always an opportunity where maybe down the road the government changes the interest on these, makes them no interest to get people out of these debts. I don't know about that. And then same thing goes with the car. It's not a big note. So if your interest rate is five or 6% on the car, we don't have those details, then I would just keep making the payments until you have the emergency fund built at the very least because right now you don't have anything to fall back on, but you're doing very well. That's where I would go right now at 25 years old. Congrats, you're doing a great job, but that's where I would start. Then after the base and after the emergency fund, then you might want to start chunking away to pay off the student loan and the car.

Speaker 1:
[40:37] I think that's great, Robert. That's very much the similar path that I was on when I was around his age. I think that's just around what I was making on a pre-tax basis when I had first started my entrepreneurial journey. The things I focused on were building my emergency fund. At the time, I think I only had about $3,000 or $4,000 or $5,000 in it. It was very, very puny. Built that up to $10,000, $15,000, $20,000. Got that in a high-yield savings account because it's very important to have that buffer between you and life. The other thing that I started to fall for that I encourage you, CJ, not to fall for was like, oh, I need to figure out my tax optimization strategies because you mentioned pre-tax. CJ, you're going to see a lot of Facebook ads for tax strategists, so you've probably heard about bonus depreciation with AirBnB or all these little things that people are trying to do to save money on taxes. I don't believe you are earning enough money at this moment in time to really invest in these types of strategies. To Robert's point, I would much rather see you open up maybe a solo 401k, make some pre-tax contributions in your solo 401k to help you build your base, and you can use that maybe to offset some taxes if that's something you're genuinely scared about. What I did instead is I did the mega backdoor Roth solo 401k, so it's after-tax dollars that went into my account, but everyone's different. I would get that base built, and then after you have $75,000, $100,000, $150,000 invested by the time you're in your late 20s, then it's time to go around and say, okay, what's my car loan? What are my student loans? Let's just knock these out. Personally, I graduated with student loan debt, and it was one of the first things I knocked out because I hated it. I felt like I had a shackle around my neck of like, I need to get rid of this debt before I start moving forward, and that's what I did, but I did it after I had my emergency fund. I had invested a good chunk of money, and I paid them off. So I love your situation, your CJ. I'm excited things are breaking for you and moving in your direction. I hope it continues.

Speaker 2:
[42:28] And for everyone else listening, I see it every single day in my DMs and emails. People I meet on the street is realize this. If you're 25, 35, 40 years old out there, make the changes, but don't beat yourself up. Less than 25% of US adults 35 and over don't have a fully funded emergency fund, less than 25%. But it's not too late to make that change, especially CJ here, 25 years old. You've got this rock and roll. But if you're 30, 35 years old, you know who you are out there and you haven't yet done the honest budget, you haven't set up the emergency fund, guess what? Today's a great day to start after watching this episode or sharing this episode with a friend that you knows in that situation because it's never too late to get yourself on the right track financially.

Speaker 1:
[43:17] That's a great reminder Robert, because I think a lot of people have this mentality of, oh, emergency fund, cool, I'll just save it up real quick, no problem. No, emergency funds on average, I think it's like take 18 months. They take a really long time to build, just like building your base. I think building your base, it takes on average five to seven years, depending on your income to get your first 100,000 invested. It takes a long time to get there. I think as people don't see the progress that they were expecting in a short period of time, to your point, they fall off. They're like, this is never going to work for me, I don't want to do this. But once you stick to doing something for three months, six months, nine months, 12 months, and you start to see that progress and you said, okay, entered 2026 with $2,500 in savings, and I exited 2026 with $10,000 in savings, that's cool. Let's now do that again in 2027, and so it's 15,000, and then again in 2028, so it's 20,000, and now I've got that fully funded emergency fund. That's okay. That is normal. It doesn't take an overnight, oh, you guys talk about these $20,000 emergency funds, like they grow on trees. They don't, they take years to build, and that is what's normal for people. And I think having this sense of urgency of like, oh, I need to go do this and do that and invest and build the emergency fund, and like, it's important to really have a priority list for yourself and figure out what is the one thing that I really need to lock in on and do really, really well for the next 12 months. And then what's the thing after that? And what about after that, right? It goes back to our phrase of forecasting, right? Wealthy people forecast, and you need to be forecasting too.

Speaker 2:
[44:50] Yeah, it's called an emergency fund for a reason. I see it all the time, people are like, well, I had an emergency fund, but then I went on this trip, and then I went to a wedding, and I bought a new phone. That's not what it's for. I mean, I'd rather you do that than put it on credit cards, but an emergency fund is for emergencies. It's not to upgrade your lifestyle. So just keep that in mind. It is critical to have the base and have the emergency fund. So for anyone out there, I know this was a very long-winded answer, but well worth it if it helps any of you change your path.

Speaker 1:
[45:21] And before we answer our final question, gotta give a shout out to public.com, the investing platform for those who take it seriously. Go check out Generated Assets. It's the coolest product we've ever played with and it essentially allows you to say, I have an idea where I wanna invest in drone stocks or I wanna invest in companies that benefit from Claude or I wanna invest in companies whose founders, I don't know, are over the age of 50 or younger than 50. Like, I don't know, like you come up with anything you want, type it into Generated Assets on Public and they will screen thousands of stocks on your behalf that align with that specific filter you're trying to invest toward. Give you 20, 30 names, if that, like who knows, depends on what your strategy is. And then you just click Invest, a thousand bucks, boom, and now you're investing in that strategy. It's awesome. So go to public.com/richhabits, get an uncapped 1% bonus when you transfer your portfolio and go check out Generated Assets. So our last question comes from Dylan W. Dylan says, Hey guys, I love the show. You all are so helpful. I wish I would have learned these things in school at some point. Instead, I'm in my 30s and I learned them for the first time. Well, you know what, Dylan? That's okay. That's everybody. That's the reality that a lot of people have and you are not behind. I promise. Dylan says, My employer matches 100% with no contribution cap to my Roth 401k and my pre-tax 401k. Which one do you guys think I should be putting money into? I'm 33 years old living in San Diego. Cost of living is very high. I have three kids. I own a house. So I am not getting taxed that much at the moment. So that's why I was living toward maybe the Roth 401k. I'm still getting back a big tax return this year, about $8,000, but I make about $110,000 a year.

Speaker 2:
[47:10] Wow.

Speaker 1:
[47:11] No cap on contributions. So the question is pre-tax or Roth 401k? Robert, what's your take?

Speaker 2:
[47:19] Dylan, great situation, but I want to clear up something real quick for anyone else that's listening as well as you. Having an uncapped 401k, Roth 401k here is a great opportunity. But just keep in mind for 2026, that $72,000 is the max and that's combined. That's your contributions and the companies. So make sure we clear that up first. I don't think you're there yet where you're going to be able to eclipse that amount, but I just wanted to be clear. But the other part of this is I think at your age, the Roth 401k is the better move. As long as you have a decent amount of diversity that you can have within the Roth 401k, I'm assuming you do because we always want to make sure you have options enough so you're not in just some target date fund, that you can have the VOOs and the QQQs of the world. So you have S&P 500, you have NASDAQ coverage, maybe some small cap coverage, maybe a little bit of bonds, stuff like that. But overall, you're in a great situation having this uncapped 401k situation. So I love this for you, but just make sure you have that diversity and understand the total cap, because there is a cap of $72,000, but that is the combined amount of what you would put in and the company can match.

Speaker 1:
[48:34] Yes. So your employee limit is 24,500 here for 2026. And the employer could obviously put up the rest of 72,000 total, but I don't think that just doesn't make sense in your situation. So it's really, do you want to put in and max this out so that you can afford it and get a free $24,500? I mean, man, if I were in your situation, I would be doing everything I possibly could to get this free money. I would be scrimping on eating out, subscriptions, vacations. Like think about it, literally every dollar that you don't spend in real life and instead put in this 401k gets a 100% return on investment immediately. Every single dollar up to 24,500, because that's how much you can contribute. So it's like, dude, I don't know what you got going on on the weekends, but I'd be working crazy side hustles so I can contribute more from my 401k and take lower paychecks because more money is going to go to that 401k. Now, the question of Roth or traditional, I would choose Roth because you're 33 years old. You've got obviously 30 more years of investing ahead of you. I have no idea what the tax situation is going to be like in 30 years from now. You're not making a crazy half a million, million dollars of taxable income so you don't really have to worry too much about trying to optimize for taxes and things like that. Making 110, three kids own a home, that's all great. If I were you, you're getting this big tax return of $8,000. I wonder if there's a world where you can boost up your 401k contributions for the next couple months, live off of this $8,000 refund. You know what I'm saying? You're trying to put the pieces together for a limited time, boost that 401k contribution so you can get the match while you live off this $8,000 refund and then maybe you pull the 401k contribution back down. I don't know how often you can change these contributions. At my old employer, I was able to change them every single pay cycle. So maybe you're able to move them around. It's not an annualized kind of thing here. But again, Dylan, 100% match with no cap is literally like the craziest thing I've ever heard. I've never seen something like this before. And I would be, like I said, doing everything to get $24,500 contributed to this 401K. So you get a free $24,500 match from your employer. I mean, just think about how much money that is gonna turn into. I mean, we talk about this all the time. What's the number, Robert? Every dollar invested in your 30s turns into how much in your 60s?

Speaker 2:
[51:05] Yeah, $26. Yeah, so if you're in your late 20s and early 30s, every dollar you invest turns into $26 in retirement, which is just insane.

Speaker 1:
[51:16] Yeah. So one year here of getting all $24,500 from them is essentially $500,000 to $600,000 in retirement. Like every year that you scrape and do everything you can to get this 100% match is half a million more dollars in retirement. Think about it like that. Like this is a crazy cool blessing. I'm glad you're in this situation, Dylan, and we're rooting for you, my friend. Everybody, thanks so much for tuning in to this week's episode of the Rich Habits Podcast Question and Answer Edition. As a reminder, we've got the Rich Habits Newsletter completely free. Go check that out. Just type in Rich Habits Newsletter on Google. We've got the Rich Habits Network, seven day free trial on that. Please go check that out if you want more access to Robert and myself via weekly live streams and investment opportunities into things like SpaceX and other really cool stuff. For example, you probably saw that Jane Street just invested into Fluidstack, the sort of NeoCloud company at an $18 billion valuation. We, in the Rich Habits Network, invested in the Fluidstack at a $700 million valuation. So nice little 20X on our money over the course of about two years here. Really cool stuff. So again, that's an anomaly, but those are the type of venture investments we're making inside of the Rich Habits Network. So if that's interesting to you, if you're at that part of your wealth building journey where you can do some of that stuff, feel free to join us over there. And as always, we are so grateful that you watch us on Spotify, leave us comments, vote in the poll, leave us these five-star reviews on Spotify and every other platform that we're on. We're just so grateful and we are so excited for the rest of 2026 with you guys.

Speaker 2:
[52:50] Thank you everyone and we'll see you tomorrow for the Rich Habits Radar episode.