Rich Habits Podcast - 101: Conquering Your Financial Fears in 2025

Starting point is 00:00:00 Are you one of those media strategy people clicking through slides, scrolling spreadsheets? Yes? Good. This is for you. Because on Spotify, there's an audience that's different. Locked in. Loyal, invested. They're called fans. Fans don't just listen to music. They feel seen by it, like it belongs to them. So when your brand shows up on Spotify, that's who you're talking to. And you're right next to artists like me, Lizzo. So, are you ready to talk to fans? Spotify Advertising. You're among fans. Hey everyone. Austin Hankwitz here. Before we jump into this Monday morning episode, I need to address a mistake that Robert and I made. And you all held us accountable. You left us several comments on Spotify about this mistake. And that's what's so cool about this podcast is I'm learning. Robert's learning. We're all learning in real time here. So let's address this mistake. There was a question that was asked on Thursday's episode that pretty much was saying, hey, my wife doesn't work. My spouse doesn't work.

Starting point is 00:01:00 work, how can we contribute to her Roth IRA? And Robert and I said there's really no way you can do that without putting her on payroll or having her be on some sort of like earned income where she's paying taxes and things like that. And you all did a great job of bombarding us with the real answer, the correct answer, which was to consider a spousal IRA. I've never heard of this, but I looked it up here on GROC and there's tons of information about it. It's pretty much designated for a spouse who either doesn't work or earns less income than is needed to contribute to their own IRA. The spouse must be married to someone who earns income. The working spouse must have enough earned income to cover contributions to both their own and the spousal IRA. So just to make

Starting point is 00:01:43 sure we're on the same page, we made a mistake. Thank you for holding us accountable. This is the real answer. And we hope to not make mistakes again in the future, but when we do, of course, jump in and say, hey, we made a mistake. Here's the real answer. And let's all learn moving forward. And then finally, before we jump into this episode, I just want to thank everyone from the bottom of my heart. Monday's episode, which was titled our 2025 market predictions, topped at number eight across the USA on Spotify. Like that episode was the number eight most popular episode on Spotify last week in the United States. Unbelievable. Unfathomable. So thank you so, so much. And we cannot wait to continue to share awesome episodes like that again. in the future. Okay, I'm done rambling. Let's now jump into this episode with Robert and myself.

Starting point is 00:02:34 Hey, everyone, and welcome back to the Rich Habits podcast, a top 10 business podcast on Spotify, brought to you by public.com. My name is Austin Hankwitz, and I'm joined by my co-host, Robert Croke. Robert is a seasoned entrepreneur in his 50s with lifetime revenues of over 300 million, and I'm an entrepreneur in my late 20s with a background in finance and economics. Now, since quitting my full-time job in corporate finance a few years ago, I've I've built a seven-figure media business and actively advised some of the most well-known fintech companies around the world. As the show name might suggest, every single episode. We talk about rich habits as they relate to business, finance, and mindset.

Starting point is 00:03:12 However, we try and bring you two unique perspectives. One from an industry veteran, which is Robert, and the other myself, someone who's still in the process of building wealth and figuring it all out. Robert, what are we going to be talking about in today's episode? In this episode of the Rich Habits podcast, we're going to help you conquer your financial fears in 2025. Specifically, we're going to address the three most common financial fears. Our followers, listeners, and subscribers share with us. Not making enough money every month to make a difference and get ahead.

Starting point is 00:03:43 Number two is always analysis paralysis. And number three is not having enough money to retire. And we want everyone in 2025 to feel equipped and in control of their money. because we take pride in our podcast's ability to give our listeners the confidence they need to make real change in their lives and their financial futures. Robert, I think this episode's going to be a blast. I really hope our listeners will feel empowered and ready to take over the world after listening to us on here. But I just want to really speak to the person who might be listening right now, who really does feel like they're stuck in a rut. 2025 hasn't been off to the best start.

Starting point is 00:04:22 Maybe something happened financially recently that just took. them off, Kelter, right? They really just feel like they're not putting their right foot forward here to start the new year. Listen, it's only a couple weeks in. We got a whole big year to make change, make difference, really get over our financial fears, and there's so much to look forward to. So not only do we want this episode to give you confidence, but we also wanted to give you hope. We want you to feel hopeful for your future, specifically your financial future, and we think you are going to feel that after listening to this episode. So Robert, why don't we walk our listeners through how to get over that first major financial fear of not making enough money every month

Starting point is 00:04:59 to get ahead financially. Yeah, I'm super excited about this episode because through all the one-on-one calls I do and in the Rich Habits network community, there's just so much fear always around growing personal wealth and finance. And I think this is an incredible episode to really break it down and make people realize everyone has fear. Life gets in the way. You get kicked around sometimes. and things happen with your money. And that's why we're here to break it down and really help everyone understand that it's not just them.

Starting point is 00:05:31 This is across the board for all people. And as soon as you can get a handle on these fears and really overcome them, you can be on your way to a really fruitful financial life. So number one, this really starts with creating an honest budget or auditing your existing one and taking a serious look at the totality

Starting point is 00:05:50 to figure out how to overcome your lack of insurance. income. Remember, it's not what you make. It's always what you keep. And your monthly income could be 15,000, but if you're spending 15,000 each month as well, you're never going to get ahead. We always talk about lifestyle creep, living beyond your means, and this one hits that right on the head. So it doesn't matter if you're someone making 300k or 50k a year. Having a monthly budget in place to identify the margin opportunities is where you can really begin to get ahead. So, for example, we like to call them ankle biters. These are those small $10, $20, $50 events that happen over and over again six to ten times a month, resulting in an extra $100, $300, $500 in spending,

Starting point is 00:06:38 throwing off your entire budget, especially if you're only making $50,000 a year. That's right. So if you're someone who's struggling to get ahead financially, addressing these ankle biters and making the necessary changes is paramount and will result in 100,000, or even thousands of dollars more in your investment accounts every single year. Finding that margin in your budget doesn't just have to be ankle biters. It might be a subscription. It might be eating out less. It might be not shopping and things like that.

Starting point is 00:07:07 But for me and my friends, it's the ankle biters. It's the Uber eats on a Sunday when I'm bored for 60 bucks. Or the Uber eats when I get home from work and I'm tired and I don't want to cook for $47. Or maybe it is the, oh my gosh, something just popped up on my TikTok. or my Amazon feed that I really, really want to buy. And so I go and I swipe the credit card and I buy it for $34. Or maybe it's a hygiene thing, right? So for example, something that throws me off sometimes, Robert, is I'll have a budget, my hygiene budget or whatever and I don't run out of my hair gel like I thought I would. So I didn't spend the money that month, but then I got to spend it another

Starting point is 00:07:42 month that I wasn't planning for it. Or maybe I got to go buy the, you know, I don't know about you, but I'm showering every day. I'm washing my hair every day, which means that I go through one of those big bottles of the hairy shampoo, like once every two months or something, it's like a big old thing. So if I'm someone who's buying something every two, three or four months, I kind of forget about it. It doesn't make its way into the budget until you need it. And now it's $47. So just like having those little opportunities to predict these ankle biters and find that margin in your budget will allow you to get ahead financially and conquer that fear of not being able to make enough money, find the extra money to invest, things like that. We've had a couple episodes in the

Starting point is 00:08:22 past that we've done. I want to say it was like somewhere in the 70s, Robert, we made a really great episode explaining to people how to find an extra $2,000 a year to invest. Go listen to that episode. It's going to help you find that margin in your budget annually speaking here. But man, making sure you're dialed in on that and getting over that financial fear of like not thinking you can make enough or have enough, just you got to switch that mindset away from scarcity into. abundance and have that same mindset from a disciplined perspective when it comes to your spending. Yeah, I couldn't agree more. And I think the most important part of everything you just said is creating or updating your honest budget. Because I look at a lot of budgets every year from

Starting point is 00:09:03 people that reach out for me for consulting and want help getting direction. And the number one thing I see is the ankle biters that don't exist in budgets. They put down insurances and cell phones and car payments and mortgage payments and utilities. But I never see dog treats. I never see supplements. I never see beauty products. It always gets left out. And those are big, big ankle biters as we call them. So it's very important for people to really flush out. And that's why we have coined the term honest budget, not just budget. Because the more honest you are with yourself, the more you can get to a point where you can get ahead and start putting aside that 10 or 15% a month for retirement instead of kicking the can down the road because you don't know

Starting point is 00:09:51 where your money's going every month. It's so important to automate it as much as possible. So let's get into number two. And this one is very, very important. This is a big one and really break it down for everyone. And that is analysis paralysis. You've heard us use this term a thousand times, but no matter how many times we talk about it, it remains the number one issue causing people to either not start and sit on the sidelines because they fear their lack of knowledge or prior experience of losing money in investing

Starting point is 00:10:21 will happen again. So let's go through this one because I think this is the number one thing hurting people of all ilks and walks of life and all levels of investing, whether you're just getting started or you've been doing it for 30 years and you still suffer from analysis paralysis. You're absolutely right. The number one issue causing people either not to start or they're scared to start because they don't want to lose money investing. So news flash, investing is risky and people lose money sometimes. But here's the thing, Robert. Investing is risky in the short term, right? But it's all but guaranteed in the long term, especially if you're investing into a diversified index fund or an ETF like the S&P 500's VOO.

Starting point is 00:11:08 On average, no matter when you buy into the S&P 500, if you wait and you hold onto your position for 10 years time, right? So a long period of time, like we just said, your chance of being in profit is at 96%. There's nothing risky about a 96% chance, right? Though it's risky is buying it and hoping it goes up in a week and if it doesn't, you sell it and you go, man, I lost money. So let's address this overall fear of analysis paralysis one step at a time. If you're scared because you don't know where to start, which I know.

Starting point is 00:11:38 is a lot of you listening. All you have to do is either, one, begin investing towards your company's 401k up to the match, or two, open a Roth IRA on public.com, deposit and then invest $7,000 a year through this account into V-O-O, VTI, and QQQ. That's it. Congrats. You've started. You started. You got over that hump. It's not a fear anymore. You did it. You started. Now, if you have more money and you want to invest more than just $7,000 and more that's your 401k match, things like that, open up a normal taxable brokerage account on public.com. This is your bridge account and invest that money into the exact same ETFs and index funds that are in your Roth IRA. The S&P 500 over a long period of time has a wonderful chance of going up until the right. For the last 90 years, it has averaged

Starting point is 00:12:29 10% every single year. That's the ups, the downs, the lefts, the rights, but 10% a year. But 10% a year, on average for 90 years. A lot of history is on your side when you're investing into something like the S&P 500. And one of the shocking statistics that I just looked up again, as of 2024, only 25% of U.S. adults hold a Roth IRA. And that shocks me. I think every person, if you're a parent listening right now and you have children that are going to be 18 years old soon, get them a Roth IRA, put some money in it, buy the basket of funds. we talk about for their birthday present. Don't buy them another consumer good or something they're going to not use or they don't

Starting point is 00:13:11 need or whatever. Get the Roth started. And for all of you that are above 18 that don't have a Roth IRA right now, that's what you're going to do as soon as you're done listening to this podcast. Get it open. It is one of the greatest gifts to humanity from an investment perspective, giving you tax-free growth in retirement. And it's just such a great tool.

Starting point is 00:13:33 and only 25% of U.S. adults currently have one, and we're going to change that and fix that today because it is so, so important. So now, let's go on to the next portion of this. If your fear is losing money with your investments because you lost money in the past, today is the day you move on from your fear and take control of your investment accounts.

Starting point is 00:13:55 In this situation, facts are your friends, and here are three facts. I want you guys to take notes on this because it's very, very important. you remember this or book market or however you save things to be able to reflect on later. Number one, the stock market on average goes up 10% per year over a long period of time. This comes with ups and downs, but you should feel reassured that knowing over the last 90 years, the S&P 500 has averaged double digits each year.

Starting point is 00:14:25 Number two, you only lose money when you sell. Having an unrealized loss in your investment account because a stock movement. down after a market overreaction. We're talking to you, Jenshin Huang. Doesn't mean you've lost money. It's so critical to understand this. I see people all the time that bought Navidia two years ago. They're up 300% on their investment and then it draws back down a little bit, has a correction of 15%. And then they panic sell saying they're losing money. These are unrealized gains. You only lose if you sell. And number three, not every investment will work out. I've unfortunately lost 100, of thousands of dollars in the past by trying to time the market and get greedy and be someone I'm not.

Starting point is 00:15:09 So if you do your research and have a clear investment thesis and an underlying conviction, you're going to be just fine and take this fear out of the equation because investing should not be emotionally based. I have also lost hundreds of thousands of dollars by trying to time the market and getting greedy and being someone I'm not. So it's not just you, And, you know, back to this point of like losing money, it sucks to lose money, right? It sucks being swindled into buying a penny stock because you saw someone tweet about it or talk about it on TikTok and then you lose $4,000. That, in my opinion, and how I've classified those losses in my brain is a stupid tax, right? This is the tax I pay for being an idiot with my money.

Starting point is 00:15:57 Now, as we look forward and think, okay, so that was a gamble. the gamble didn't work out, but I should not have that, like, weighing on me going forward. I need to realize and separate the two. I need to separate gambling from investing. Because I guarantee you, anyone listening right now that has actually lost money, did not lose money because they invested. They lost money because they gambled. Losing money investing, especially in the ETFs and index funds we talk about over a long enough period of time, I'm not going to say it's impossible, but it's really, really hard. At least since we started

Starting point is 00:16:33 this podcast, right, the S&P 500, the NASDAQ, the Dow Jones, it's all up multiples upon itself since it was back in 2023. Now, a single stock, you want to gamble on that? Of course you probably lost money or tried to do something crazy. But real true investing, if it's long term real estate, long term stocks, and index funds, things of that nature, I'd argue you probably haven't lost money. Yeah, I agree and I love talking about it because so many people don't know the distinction on whether they're a gambler or an investor. And we talk about it all the time and I love bringing it up because so many people think that when they get money, they're going to yolo that money and take that high risk on a meme coin or a penny stock or some tip they got from Bill at the barbershop. That is not investing.

Starting point is 00:17:18 That is gambling because you're not doing the work and doing the research to understand your risk tolerance and what you're investing. thesis is and also understanding that investing is a long-term process. You should not be investing your only $3,000 that you have or this lump sum of $20,000 on these very high-risk things. You should build your base, get your portfolio solid, then you can up the risk tolerance sum over time, but that's not how investing starts. And so if you're listening right now and you are serious about investing, it's time you learn about public.com and actually start using it. Public.com is where you can start investing in everything, including stocks, options, bonds, and cryptocurrency. They offer some of the highest yields in the industry, like their bond account that's paying 7.1% right now and remains locked in even if the Fed cuts rates.

Starting point is 00:18:13 What sets public apart is how they give you the tools you need to make informed investment decisions. Their built-in AI tool called Alpha doesn't just tell you if an asset is moving. It tells you why that asset is moving. So you can actually understand what's driving your portfolio's performance every day, week, and month. Public is a FINRA registered, SIPC-insured, U.S.-based company with a customer support team that actually cares. Bottom line, your investments deserve a platform that takes them as seriously as you do. Fund your account in five minutes or less at public.com front slash rich. Habits and get up to $10,000 when you transfer your old portfolio.

Starting point is 00:18:53 That's public.com front slash rich habits paid for by public investing, full disclosure in the podcast description. So if you're a serious investor, like we hope all of you are, public is your solution. Now, Robert, walk us through the third financial fear we want everyone to conquer in 2025. Yeah, Austin, number three is not having enough money to retire comfortably. This is a big one. so many people don't know how to calculate it. They don't know what they need for retirement. And we're going to break all that down right now to help everyone lose this very important fear factor that occurs

Starting point is 00:19:30 in so many people. And so the easiest way to address this fear is to calculate exactly how much you'll have in retirement, assuming you continue doing exactly what you're doing today. This will give you a baseline assumption of what your portfolio and net worth will be at 65 years old. And if the number is lower than you expected, it's time to make a change. And if it's higher than expected, you will be fine. There's a link in the show notes below that will take you to a retirement calculator that's super simple to use. We use it all the time to help people. And all you need to know is your age, what age you plan to retire, how much you have in your investment accounts today, how much you plan to contribute every month until retirement, and your expected annual returns,

Starting point is 00:20:16 and really, really simple to use. I know that might sound a little bit daunting, but think about what Robert just said. How old are you? When do you plan to retire? How much money you have invested now? How much money you plan to contribute every month? And what you hope your annual returns will be. Right?

Starting point is 00:20:35 Very simple math here. So walk them through an example, Robert. Yeah, this is a good one. So if you're 35 years old and you plan to retire at 65 and you have 40K in your investment accounts and plan to contribute 500 a month until retirement, and let's say expect a 10% annual return. In 30 years, you would have $1.9 million for retirement. Now, if you wanted to adjust this for 2.5% annual inflation, just bring your expected return down from 10% to 7.5% so that inflation adjusted, you'll have still $1 million on the nose for retirement from following.

Starting point is 00:21:15 this strategy. Now you just have to ask yourself, is this number that you see on your screen right now enough to retire off of, assuming you live off of 4 to 6% of the total portfolio's value? So in this situation, if you had a million dollars in your inflation adjusted portfolio and you wanted to live off of $50,000 a year, then yeah, you're good to go. Five percent of a million dollars is 50K. You can take that out all day long and you'll be just fine. Now, if that's not the number you want to see, if that's not what you can live off of, now it's time to make a change. Now it's time to contribute more.

Starting point is 00:21:53 For example, Robert, just going from $500 a month to $600 a month in this situation, inflation adjusted changes from $1 million in your retirement nest egg to $1.2 million, which means now instead of $50,000 a year, you're living off of $60,000 a year. And all because you made this simple $100 a month change today, which, by the way, go find those ankle biters and you can go put another $100 away. Now, if you have a number in mind of like annual income that you think you'll need in retirement, all you have to do to figure out how much your portfolio needs to be worth is to take that annual income number and then divide 0.05 into it. So for example, if you take $120,000 because that's what you want to live off

Starting point is 00:22:40 of in retirement and you divide 120,000 by 0.05, you get the number 2.4 million. So now you know if you want to live off of 120,000 per year in retirement, you need a portfolio value of about $2.4 million, assuming you were going to take 5% every single year from it. This strategy is the simplest way to figure out where you're headed, assuming you don't make any changes. And then two, I definitely the changes you need to make to actually retire comfortably. Yeah, I think it's so important for everyone to kind of pause on this moment and really understand you can't leave retirement to chance. You can't just put away money randomly without a plan and hope because at the end of the day, when you turn 60, 65, 70 and you're ready to go, you know, sip mitis on the beach or tend

Starting point is 00:23:35 to your garden or take up ukulele lessons, it doesn't matter. You have to have a plan. Because we always talk about it. It sounds good having family and friends and all this, but no one is going to be there to save you. You have to save yourself. And by planning ahead, that is how you do so, following these simple instructions and being able to really make a concerted effort

Starting point is 00:23:58 to set yourself up for financial freedom later on. And I think it's so important for everyone to do that because you have to have a plan. I couldn't agree more. So if you're someone who feels like your biggest financial fear is not making enough to get ahead financially every single month. Maybe it's not an income problem. Maybe it's a spending problem. Maybe it's time to figure out those ankle biters and find that margin in your monthly budget. Or maybe your biggest financial fear is just like getting started, right? You have

Starting point is 00:24:25 this analysis paralysis. Maybe you lost money in the past. You're like, listen, investing's not for me. I can't do it. Guess what? Yes, you can. Absolutely you can. You probably confused investing with gambling. investing is very easy and it has a high likelihood over a long period of time of turning a profit. Or maybe your biggest financial fear for 2025 is just not knowing where you're going, will I have enough? Will my kids have anything after I'm dead? Like, what's my future look like? Now you have a very clear retirement calculator that you can use as a resource that's going to help you figure out, okay, here's how old I am, here's how much I have invested, here's how much I plan to continue to invest and here's what I want to retire and this is what the stock market does. What am I going to end up

Starting point is 00:25:10 with? Is that more or less than what I expected? And if it's more, heck yeah. Like I hope that gives you a big just pat on the back feeling because I remember Robert the first time I used one of these retirement calculators. I was like, okay, great, what is this going to do? Show me that I'm going to have 20 grand. You know, when I'm 60. Like I haven't started yet. This doesn't make sense. And then, you know, I had a Roth IRA with a couple thousand dollars in it when I was 18 and I was like, okay, well, if I kept putting some money in this way. And the stock market, you know, did a seven and a half to 10% annual return. And whoa, I'd have $900,000, really? And just being able to like conceptualize that gave me the hope, the excitement to keep after it. Right. I think a lot of people are scared to even want to figure out

Starting point is 00:25:53 that number because they don't even want to know what it is. They're so scared of how low it might be that they don't even want to try to calculate how much they're going to have in retirement because it means, Oh my gosh, I failed. I haven't started yet. I don't even want to think about this. I'm too late. Everything like that. Listen, leave that negativity in 2024. 2025 is all about hope, confidence, and retiring, really, really wealthy. I love it. And it's really the fear of unknown that we're trying to help everyone get rid of because we can lay all of this out, give you the tools, give you the path, and give it to you from experience with hopes that you latch on, you take notes, and you take action. Because in,

Starting point is 00:26:33 five, 10, 20 years down the road when you're ready to retire, we want you to be so comfortable and so happy and live without fear. So before we jump into our Q&A section of this episode, let's take a moment to hear from our episode sponsor, Blossom. Investing is more fun when you're doing it alongside like-minded people. From dividends to growth stocks, there's a community for every single investor on Blossom. And you've got to remember here, Blossom is not an online broker. It's a social investing app built around transparency. a social media platform built specifically for investors that, by the way, Robert, you were the only one using Blossom until this episode. I made my Blossom account. Took me a while. They weren't talking to my broker that I used. It didn't really make any sense.

Starting point is 00:27:16 But I got it figured out. So if you want to see my portfolio, my gains, my losses, my ups and downs and lefts and rights, you can go see all that in Blossom. Yeah, we just checked when yours got live and you were actually up a little over 3% today. And I was up a little under 3%. percent today. So I'm going to have to catch up before the market's closed today. So transparency is key when it comes to investing. You all know just how important this is because you listen to our podcast. I've already connected my personal accounts to blossom and I enjoy seeing everything, how it's divided up, and performing on a daily basis. Additionally, they also offer a dual-lingo style educational video content for those of you still learning. They were also just recognized as a top 25 app for 2025 by the Apple App Store and for good reason. So if you've not yet joined Blossom,

Starting point is 00:28:10 we really encourage you to do it and go look at myself and Robert's portfolios. You can join 200,000 other investors over there, go find your tribe, find the community of like-minded investors, if it's high-octane growth stocks, if it's dividend stocks, if it's monthly income ETAPS, like the Neos funds, right? There's a community for every single person on Blossom, especially if you're a lifelong learner like Robert and myself. So click the link in the show notes below to sign up for Blossom or just type Blossom in on the app store. But, Austin, before we get into the questions, I want to mention my excitement for the new Nios Fund, I-Y-R-I. So let's talk about it just for a second.

Starting point is 00:28:48 I'm super excited. We've been crushing it with the other Nios funds. And I think this one is a great opportunity. Yeah, so Nios just dropped a new E-T-F as of the day we're recording this, which is January 15. So this Wednesday here, the ticker. is IYRI. Now the ticker IYR is the I Shares real estate equity ETF, like the REITs, right? It's all about REITs. So what they did is they did a covered call ETF, a monthly income ETF that has all of the same underlying constituents that are inside of the I shares, IYR. But they added an I at the end like

Starting point is 00:29:26 they always do. And then they started selling covered calls. So it's a really cool ETF for someone that, one, prioritizes tax-efficient monthly income, but two, might be kind of pissed off right now about the lack of movement that they've seen in REITs. So, for example, Robert, I've got VNQ. VNQ is Vanguard's real estate like REITs, and it's been sideways for the last like, I don't know, 12 to 18 months. We saw a cool pop in REITs once the Fed started cutting rates in September, but that's kind of died down since because rates, the 10-year yield just keeps going up. So how I'm approaching this IYRI positioning is I'm going to sell my VNQ, move that money into IYRI, which will then allow me to, one, track the reits up and down over time, the price action there, which I think's going to do well if the tenure begins to come back down. But then two, until that happens, because I can't predict when the Fed's going to cut rates and what bond yields are going to do, mortgage rates, I have no idea.

Starting point is 00:30:25 So until that happens, I'm just going to sit back and collect my monthly income. So this is a fund just like there are others that pay their investors every single month. So instead of, you know, trading sideways and just fingers across the price goes up, I'm going to have my real estate exposure. I might trade sideways for a little bit longer, but that's called diversification. But then while I wait for the price to go up, because Fed will cut rates eventually, we will see that monthly income every single month. Yeah, I like it. And, you know, Nios is doing something that we both really appreciate and that is providing us monthly income with our investments. So I really like the the idea of this one and the concept and I'm super excited to be part of it. So again, for those of you interested in real estate exposure and you're taking notes, the ticker is IYRI. All right. Let's jump into our first question from Gabrielle. She says, hi, I'm a senior in college about to graduate and I have $20,000 saved up. I recently opened a Roth IRA but I haven't been able to max it out yet. I don't have a job lined up after graduation and I feel like I'll probably need some money accessible for unexpected needs rather than locking away my money in a Roth IRA, which is why I haven't maxed it out.

Starting point is 00:31:35 So would it be better to invest this money in a bridge account on public.com into something like the S&P 500 so it can still grow over time while keeping it accessible if I need it? Or should I prioritize contributing more to my Roth IRA despite the limited access? really good question. So two things in here that you're assuming that are not true. The first thing you're assuming is that money that you invest in your Roth IRA is like gone forever until you're 59 and a half. That's not true. You can take out all of your contributions to your Roth IRA tax free, penalty free, like all as well. We just don't want you to. We want you to be investing your money. Notice I said contributions out of your Roth IRA, not

Starting point is 00:32:23 profits. You can't take the profits out. But if you contributed, you know, $7,000 this year to your Roth IRA and let's say it went up by 10% to $7,700 and you needed a crazy $3,000 for some unexpected, you know, deposit on an apartment or maybe got a job or like got to get some like whatever's moving expenses and you need three grand. Yeah, you could sell your Roth IRA investments, take out $3,000 of your $7,000 contribution, put it back in your checking account and use it as normal. We just want you to like mentally block that money off. So if you're in the situation where you think that you need $20,000 like sitting around, I'm so down for that. I think everyone should have an emergency fund of three to six months of expenses. Call it, you know, $12, $15, $20,000 for a lot of people.

Starting point is 00:33:10 Put that $20,000 in a high yield savings account on public. You can also use wealth front. You can use SOFI. There's a bunch of these different high yield savings accounts that pay like four, four and a half percent right now. And let your money grow that. that way. Something else to consider, though, is that once you get this new job, because I'm sure you're going to find a job out of college here soon, once you get that job, you now, assuming you don't have any high interest credit card debt, can just start funneling money into your Roth IRA. And you'll be able to grow that so quickly starting at the age of 22 here because you're a senior in college. I mean, there's so much to be excited about. But yeah, I think, you know, if you want to have the

Starting point is 00:33:48 Roth, just know that you can take those contributions out penalty free. But if you're weird about that, I'm down for you to just use it as your emergency fund and just start after you graduate and earn an income. Yeah, I like it. And one of the things Austin and I talk about all the time is not robbing from your future for current and present expenses. And I try to look at the Roth IRA as the forever money. So I don't want you to put money in there that you think you might want to take back later. I would rather see that money go into the bridge account we talked about or the yield savings account. So then it feels more liquid. It is more liquid because as soon as your mindset starts to feel that all of your retirement accounts are up for grabs still, you're always going to look at that money as money

Starting point is 00:34:33 that's available. So in my opinion, I would have the Roth money be the money you know that is there. It's going to grow. And that is your retirement and your safety. And everything else either goes into the bridge and the high yield savings or you could do both. That's my opinion. That's what I would do because then you.

Starting point is 00:34:51 You're just always going to have that retirement account growing and you're not continually taking from it. So our next question comes from Dr. Will. Dr. Will says, I learned about your podcast from a friend and would really appreciate your advice on my financial situation. Here's my background. I have $480,000 in student loan debt and I'm enrolled in the Public Service Loan Forgiveness Program. So if I serve at a federal clinic for 10 years and I make 120 qualifying payments, my loans will be completely forgiven. I've been in my career for three years now, and after spending my previous 10 as a career student racking up these student loans and becoming a doctor, I'm now a 39-year-old who is focused

Starting point is 00:35:31 on building a financial future I can be excited about. So my current financial situation is this. My monthly income after taxes is $8,600. My monthly expenses are $3,700, which include only $1,400 for rent, $1,500 for food, and I do not have a car payment. I have $130,000. I have $130,000. saved in my checking account, which I reserve for emergencies and potential property repairs. I have $49,000 in my TSP. I have $13,200 in a target date fund, and I have $10,000 in a high-yield savings account with public.com. What advice do you all have for me to do better with my money, so I have more of it when I'm ready to retire? Robert, you want to take a first step about this situation? Yeah, this is a tough one because 10 years to pay back to student loans is rough. And at 39

Starting point is 00:36:24 years old, you definitely got to get moving on some of these things. And the big glaring thing that I see is why do you feel you need $130,000 sitting in a regular account? I've never heard of an emergency fund being that large unless you were a big corporation and you'd like to keep hundreds of thousands of dollars sitting around for equipment or payroll or anything that might come. up inventory. But in this situation, I just don't see a world, especially with monthly expenses of only $3,700 of why that money is sitting. I would get rid of the $100,000. I would leave $30,000. I would get the $100,000 invested into a bridge account that you control and get that moving or maybe start with maxing out the Roth IRA for 2024 and 2025. But I would get that money moving because right now

Starting point is 00:37:14 Parked money is dead money, and I just don't understand why you would have that much. Yeah, Robert, so just to piggyback on what you said about the 100,000, right? So if you have that 100,000, you go invest it in the S&P 500, and it returns what it has for the last 90 years. And then you also have this 49,000. So if you also add in that 13 in your retirement account, you'll have just about $3.5 million at $65. So, like, you're pretty good. From an investing perspective, assuming you have this, let's call it $100,000. $65,000 invested and it's invested correctly, you'll be just fine. What is not being invested

Starting point is 00:37:51 correctly, though, I do want to call out. The first thing is you don't need to be inside of a target date fund, in my opinion, at 39 years old. I think you could probably park all, if not the majority of that 13,200 that was in this previous 401k, roll it over to a traditional IRA, park all of it into, do it on public, right? Get yourself a bonus of a couple hundred bucks. Park it in V-O-O, V-G-T, V-I-L, let your money actually grow. I think your TSP weightings look great. You mentioned that you're about 90% into the C-fund and the S-fund combined with about 10% in the I-fund. So I think that's all good. Something else I'd want to call out, and this is more of just like a mind exercise for you to do. You mentioned you have this 120 qualifying payments that you need to make.

Starting point is 00:38:36 So 10 years, you're already three years in on that. I would just be curious, right? Because you're only making $100,000 a year after taxes, which means you're probably. Probably your salary is around, like, let's call it, 135 to 150, depending on the state you live in. $150,000 as a doctor, I feel like is on the low end. Maybe it's your specialty. Maybe you're like general practice. And I really don't know. I'm not an expert.

Starting point is 00:38:57 But I would just really encourage you to run some numbers and say, okay, if I didn't work at a federal clinic, which you're probably underpaid because you work at a federal clinic. If you didn't work at a federal clinic and instead you worked at a thriving practice or, whatever like i i'm not an expert here but i just want to encourage you to think about like would your salary go from the 150 it's at right now to 300 would it go to 400 do you have a path to owning the practice right there's no path to owning a federal clinic so i guess all i'm trying to say is like it seems like you've sort of pigeonholed yourself into this like scarcity mindset of like you have to work at a federal clinic because that's going to be the only way you'll ever pay off these four hundred and eighty thousand dollars of student loan debt when in actuality maybe there's a

Starting point is 00:39:43 world where you were working at a thriving private practice where your salary was $300,000, and you lived off of 30% of that. And the other $150,000 could be used to actually pay off your student loans. Therefore, you'd have them paid off in three years. You know what I'm saying? And then now three years later, now you're making this like $300,000, $400,000 and your entire life can change. So maybe you've ran those numbers.

Starting point is 00:40:06 Maybe you've already done all the math there. And you've already figured out like this is your best course of action. But if you've not yet run those numbers, highly recommend doing that. But beyond that, I mean, yeah, you're taking home 100K, you have very low expenses. You've said you spend $1,500 on food. I have no idea what you're spending that much money on food for, which is crazy. But that's all you. Have fun.

Starting point is 00:40:24 So actually, too, you already have $10,000 in this public account. So put in another $100,000, invest it into the index funds and ETFs. Take the $10,000 out of that savings account since you already have $30,000 of savings elsewhere. And then get that money invested, too. so now you have 110,000 investing and working hard for you throughout your life. Yeah, and I want to touch on that. I think that is a really great strategy, and I hope Dr. Will is actually considering that is, I feel like he put himself in a box where he said, okay, this is the only way to pay up

Starting point is 00:40:54 these student loans and get them forgiven. So this is what I'm going to do. But maybe there is a better alternative elsewhere. And I hope that he is looking at all options rather than leaving a ton of money on the table over the next 10 years, maybe there's a better solution like you alluded to. I love that outlook. And I hope he really looks into it and does the research to make sure he's not leaving something like that on the table. Yeah, I wouldn't just keep a 10 year outlook. I'd keep a 20 year outlook, right? I mean, think about if you could own a practice and that practice pays you profits and those profits turn

Starting point is 00:41:28 into millions of dollars a year. Like, there's a bunch of different ways to think about that. And I really agree that he should consider all of his options. Our last question, comes from Evan F. Evan says, hi, Austin and Robert, I love the podcast. I'm looking for advice on whether to sell my house or keep it as a rental. I bought the house with plans to flip it, but I would also enjoy having the cash flow from a rental. I'm almost finished remodeling it and either need to take out a mortgage on it or I need to sell it. Right now, I have a loan from a family member at 6% interest. My goal is to build enough monthly cash flow from real estate or other businesses to make $5,000 per month, and I think this could be a good start to this goal.

Starting point is 00:42:07 bought the house for $105,000, and it will be worth about $210,000, maybe $220,000 when I'm done. I will also have about $30,000 in remodeling costs and holding costs. I would self-manage if I did rent it out since I live in the area, and I'm pretty handy. Market rent is $1,400 to $1,400 right now. I would probably consider a $1031 exchange if I could find another property that suits my goals. I also wonder if a cash-out refi could be a benefit to me in the future. I just don't know. much about the process. Robert, what do you think? Yeah, I think right now, I first go to the 1% rule. Assuming you have a $105,000 purchase price plus closing costs plus the $30,000 remodel cost, it puts you in a tough situation because if the comps in the area for rent are $1,400 to $1,400,

Starting point is 00:42:57 you're going to be able to barely meet the 1% rule, which means that you can rent it for 1% of what you're all in cost is on the property. But that's not. going to produce much cash flow for you, especially because we don't have all the information. We know you're paying 6% interest, but we don't know what the terms are of the loan to know if you're cash positive at $12 to $1,400 or cash negative based on the total length of the loan term. So that's important to understand. Secondarily, I personally feel you should flip it if you can make a profit because then what that does, it gets you a base of money so then you could go on to the next project.

Starting point is 00:43:37 and use some of that money to get moving on another project. But without the information to know, do you have your base built? How much are you actually going to net on this project? How much time have you put in? Because you have to assign a value of your time so you can calculate what your ROI was on this project. Because a lot of people getting into real estate in the beginning just trade time for money and they don't actually make a profit because they're doing so much sweat equity

Starting point is 00:44:06 on the project themselves. So all of those things come into play. My initial reaction is sell it, make the profit, get it invested, and move on to the next project. Yeah, I'm right there with you. I don't know those things either, but I did do some math. He'll come out with about 80,000 in profit I'd imagine from this situation. So take that 80,000 and, you know, take Robert's advice and use that as your sort of starting point for your next property. Or if you don't have your base built yet, build your base with it.

Starting point is 00:44:36 use that 80K to build your base. And if you're worried about like, if you want 5,000 in passive income, put this 80,000 into SPYI, QQQI, IYRI, and NUSI, and you will be paid anywhere between $750 to $900 a month by NEOS funds every single month in passive income. Right? So like I think this is a cool best to both worlds if I were you, Evan. You're able to get out with this 80K, you can start building up your passive income with it. And maybe in the future, use some of that money to begin remodeling and do what you do best, which is being a handyman. Yeah, because if you think about it for Evan's situation, if he doesn't sell and he turns it into a long-term rental, but it doesn't cash flow, or maybe it cash flows $200 a month, you can't really do much with that. And then all of your equity

Starting point is 00:45:28 is tied up until you sell the property anyway. And then that is problematic for me because you're kind of handcuffed and you can't do a lot with it unless you're a high earner already and you can go get money repetitively from family members or the same family member to buy additional properties. But for me, I'd want to sell that first one, get it out of the way, get that 80 grand into my pocket so I have flexibility to do more projects. I love it. Written free Evan as well as Gabrielle and Dr. Will. Everyone, thank you so much for listening to this week's episode of the Rich Habits podcast. 2025 you might be thinking is not off to the right start. Maybe you're not that hopeful. You're not that confident yet with your money. But after the

Starting point is 00:46:11 end of this episode, listening through the playbook that we laid out for you, we just really, really hope that you take notes, take action and have that sense of confidence, the hope and the steadfast you need to be better with your money in 2025. If you like the episode, please share it with a friend. Leave us a comment below on Spotify. Follow us on Spotify. leave us a review. Five stars would be preferred. Follow us on YouTube. Follow us on Instagram. Join the Rich Habits Network. Subscribe to the newsletter. I mean, we've got so many cool things that we're doing here in 2025. And we can't wait to bring you all along for the ride. And as always, thank you so much for all the support, all the shares, you know, all the DMs. We are here to just educate and bring each and every

Starting point is 00:46:54 one of you as much value as possible. And we appreciate your support every step of the way. Thanks, everyone. And have a great start to the week. Thank you.

Rich Habits Podcast - 101: Conquering Your Financial Fears in 2025

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