Rich Habits Podcast - 112: The Art of Staying Rich

Episode Date: April 7, 2025

In this week's episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz demystify the "Art of Staying Rich." ---⭐️ Trial the Rich Habits Network completely for free for 7 days, click here!---💰 It's time to take your investing seriously! On Public, you can invest in just about everything. Transfer your old portfolio and earn up $10,000, click here!---🗣 Investing alone sucks. Find your community on Blossom, and social investing app with built-in education. Click here!---⭐ Download our FREE Financial Planner –⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Download our FREE Budgeting Template –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Earn 5.1% on your savings with a High-Yield Cash Account –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Trade stocks, options, music royalties and crypto on Public –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Automatically buy stock where you shop with Grifin –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Protect your family with term life insurance from Suriance –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Use code “Spotify” for 15% off our 4-module video course –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Optimize your portfolio with Seeking Alpha –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠---👤 Explore everything Austin does –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠👤 Explore everything Robert does –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠❓ Ask us questions for our Q&A episodes – @richhabitspodcast on Instagram📬 Inquire about working together – [e-mail]: A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. As of 4/7/25, the average, annualized yield to worst (YTW) across the Bond Account is greater than 6%. A bond’s yield is a function of its market price, which can fluctuate; therefore, a bond’s YTW is not “locked in” until the bond is purchased, and your yield at time of purchase may be different from the yield shown here. The “locked in” YTW is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. Public Investing charges a markup on each bond trade. See our⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠Fee Schedule⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. See⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠https://public.com/disclosures/bond-account⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to learn more.Hankwitz Group LLC has an existing business relationship with NEOS Investment Management LLC. The opinions expressed are those of the author, and the author owns several NEOS ETFs.

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. Since quitting my full-time job in corporate finance a few years ago, I've built a seven-figure media business and actively advise some of the most well-known fintech companies, companies around the world. As the show name might suggest, every episode, we talk about rich habits as they relate to business, finance, and mindset. 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, we have a really exciting episode in store for everyone today. So why don't we break it down? What are we going to be talking about? In this week's episode of the Rich Habits podcast, we're diving into the art of staying rich. You heard the saying, it's not about what you make, it's how much you keep. And today, we're breaking that down step by step with three of our favorite wealth retention strategies. So this isn't about flashy spending or chasing the next big paycheck. It's about respecting the wealth that you've accumulated thus far. It doesn't mean you're going to be cheap. It means

you're going to be more defensive for the future so you can retire with dignity. So let's Let's break down the three ways that you can stay rich and keep your money throughout your financial journey. And Austin, take us away for number one. So the first wealth retention strategy as it relates to the art of staying rich is to live below your means. This is hands down the best advice you can ever act upon. Yet a lot of people often ignore it.

Our goal is to have every single one of you listening in a position financially that you're saving 15 to 25% of your monthly take-home pay. And that's like every single month. Like not, oh, I had a pretty good month. I saved some money, but now I'm going to go spend it. We're talking every month. That's after taxes and all of your bills, 15 to 25%. So for example, if you take home $6,000 per month after taxes, we want to see you saving at least $900 of that per month, 15%. If you're not doing that, we have a ton of episodes and resources to help you. understand where you can find margin in your budget. It's really tempting to level up your lifestyle every time you get a raise or a bonus, but that is the trap. We actually asked last week on our

episode talking about overspending and undersaving for you all to comment on Spotify, sharing some of your favorite ways that you reel back your spending and begin to invest. And someone said in the comments that every time they get a raise, they take 50% of their raise and they automatically start investing it, right? So they only actually realize half of it and the other half just gets automatically invested going forward. The real flex is keeping your expenses steady while your income grows. That gap is your wealth building fuel. It is how you can actually begin to get ahead with money. You start small if you have to. This means maybe cutting a subscription, cooking more at home, not drinking the $6 latte's, but it adds up so much faster than you think.

Robert says it all the time. You either have an income problem or a spending problem. Sometimes you have both. If you have a spending problem, let's reel it back and find the margin. If you have an income problem, we got episodes about side hustles that you should go listen to. And it really comes down to automating as much of your money as possible. So many people, they get the money into their account biweekly or monthly, and it's not spoken for because they don't have any automation in their savings, in their investing, or they're, their retirement accounts, they may have a 401k set up so that's automated, but everything else just sits. That is a huge problem. You guys always hear me talk about you have to have your money work as hard for you as you work to get it. And so you really need to consider setting up and transferring money into that high yield savings account the day your paycheck hits. These automations help you keep that theory of out of sight, out of mind. We love public.com's high yield account no fees over 4% APY and it's really the best in the market and their customer support team actually cares it can help you through it if you need anything when setting it up i've been made fun

of for years because as soon as my money comes in from anywhere it is gone it is spoken for and we talk about this all the time but so many people miss this crucial part in their wealth building journey And it's just really so important for people to understand the more automation and forecasting they have in their money every single month, the better off they're going to be down the road. And so you just really have to look at it. Austin alluded to it earlier to not let lifestyle creep ruin your chances of retiring with dignity. And that's where living below your means is the underlying framework for building wealth. I hope you're listening. I hope you're taking notes.

Okay, so let's move on to point number two in this wealth retention strategies that we're sharing with you today. And that is understanding if you're buying a depreciating asset or an appreciating asset. And there is a huge difference here that we're going to touch on. And one of my probably favorite talking points because so many people do not understand the difference and they're just constantly buying these depreciating assets. think cars, boats, jet skis, these are money pits disguised as status symbols. I want to say that again, these are money pits disguised as status symbols. And according to Kelly Blue Book, cars lose 39% of their value in the first three years.

So think about that. That $50,000 SUV you have in your garage is only going to be worth roughly $30,000 in the next two, three, four years before you've even paid it off. not to mention all the interest you've wasted as you continue to pay down the load. You bought something that goes down in value and you're paying high interest on the same thing, which is a double whammy, and this is how the middle class stays middle class. So instead, consider buying a cheaper car, something reliable with low maintenance costs, or lean into ride sharing public transportation if that's something that works within your lifestyle. And if you must buy new, plan to drive it till the wheels fall off or consider leasing.

There's two sides of this fence. A lot of people come from me on this point, but here's how I look at it. You should always buy used and lease new. And here's my reasoning. Because of all this depreciation, if you buy new, you're the one eating that 25, 30% depreciation in the first few years. Whereas if you buy something, 2,000. three, four years old that still has low miles, somebody else ate that cost, not you, because the depreciation slows down. And why I like leasing for those of you that need a new car or want a new

car, whether it's because you drive a lot, or you want to make sure your children have the latest safety features or whatever it may be, I like to lease because I want to have a new car every three years, so I don't have to deal with maintenance, I don't have to deal with breakdowns, I don't have to deal with things just starting to fall apart over time. And that is why I lease zero out of pocket, lower payment, and I don't need to buy depreciating asset unless it's a classic car or something fun that I'm going to keep forever. So those are my thoughts on why you should look at this strategy and understand which is best for you. Something that I like to do is before I purchase something, I ask myself, will this add to my network?

worth or will it subtract from it? 99% of the time with cars, boats, jet skis, depreciating assets in general, lawnmowers, whatever, motorcycles, it's all going to subtract from it because these things go down in value. So let's just be very clear. We're not saying to never buy an asset that depreciates. For example, I have a car. I have a jet ski. I just spent $5,300 on a new custom couch that I've been really excited about.

First couch of my life. I'm really excited. I've been buying used couches on Facebook now for less like, I don't even want to talk about it. So it's so annoying. But we got a new one. But the reason why I bought the jet skis and I can buy a couch and I got the car, all that stuff, is because I like to reward myself after my portfolio has increased by X amount of hundreds of thousands of dollars. Right.

So the rule I do is every time I invest $100,000, I give myself the permission to spend $10,000 on something that makes me happy. And so that's why I bought the jet ski last year. I had invested $100,000 and I was like, this is amazing. I really, really wanted jet ski. I'm going to go find one. So I think I paid like $8 or $9,000 for it. It was a used 2019 Yamaha jet ski. I didn't go out and buy it brand new.

I didn't put it on payments. I was like, cool, I've got $8,000. I'm going to go buy this thing because it makes me really happy. And what's cool about that, again, is when I bought it, it was already five years old. So the major depreciation had already taken place. And good news for me, it still goes 55 miles an hour like the brand new one. So we're not telling you that like all purchases are awful and sinful. We're just really trying to help you understand that you aren't helping your wealth-building journey

by continuously buying these depreciating assets. From a purely financial standpoint, my jet ski was a bad investment. It's going to go down in value. But from a life perspective, it's awesome. And I've loved driving it and making memories on it and taking it out and enjoying my weekends with it. So it's really just like this balance of whatever I'm buying, is this going to have a big negative impact on my net worth? Is it going to bring down my net worth so much that it will impact my ability to build wealth

over a long period of time? Or is it something that I can save for and buy guilt-free knowing that I've got so much more money invested in growing for me, increasing my net worth over time as well? I love that story about the jet ski because it just shows that you practice what you preach. And it's just really so smart. always leads me back to one of the funniest stories of my career similar to this. And if you could think back, let's say, 2011, it was right at the height of silly bands. Everything was going crazy.

And I always wanted an Aston Martin DB-9 convertible, the James Bond movies. I'd always wanted one. And everyone was trying to get me to buy a new one. And I ended up buying one from New York, Manhattan Motors. and it was not even a year old. It had 1,750 miles on it. It still smelled like new, looked like new, and had 1,800 miles on it.

And I saved $80,000 by buying it used when I could have easily wrote a check for a brand new one and eaten the depreciation myself. So I love that story on the jet ski because I got made fun of from a few of my friends. And they're like, you have millions of dollars and you don't even own a new supercar. And it always struck me so funny

and I got just so much joy out of it because I too practice what I preach. I don't need the latest shiny thing because I know when depreciating assets are going to just eat away at my wealth. That's why I don't buy new. If I want a new car, I'm going to lease it. If I want a boat, I'm going to buy used.

And the same thing happened. And I got my DB9. I enjoyed it for years. and I saved on all the depreciation. So when I sold it, I didn't lose a bunch of money. And it was fantastic because sometimes in your financial journey, you really have to look at what is the fun quotient ROI. When you buy that jet ski,

how much fun are you going to get per hour owning it? And is it worth it to you financially? And in my opinion, I love toys. You just have to buy them the right way. And Robert, I just looked this up too. studies say that many millionaires would agree with you, they buy the used cars one to three years old use. We're not talking to a 10 year old junker, right? But they buy that one to three year old used car, fellow millionaires here in America because they want someone else to take that depreciation hit.

And I just found this out. The most common car driven by millionaires in America is the Ford F-150. It's not a fancy supercar. It's just a reliable, cool truck that I'm sure they use to move things around and they bought it used and it's just realizing that and I wish people understood as soon as possible in their lives that if you want to be an anomaly, aka a millionaire, you have to act like one. You have to forget about the status symbols. You have to forget about the things that make you feel like you're a millionaire. You have to actually study and see what millionaires are doing. And it's so cool to see that millionaires are actually buying one to three year old vehicles and it's a Ford F-150, the most common one.

Yeah, I had a bunch of youthful, exuberant people come for me in a comment recently because one of the fake gurus in Miami, I'm not going to say his name, was telling all these younger audience that the first thing they should do when they start making money is go buy a Lambo or a Ferrari because what it does is it's a status symbol that makes them more money. And although there is some truth to looking the part, I think it is horrible, horrible advice, because what these people do is they go out and lease the Lamborghini Euris for $3,500 a month. They go get the $6,000 a month apartment.

And they have no money left because they're spending their life putting on a show. To me, I crack up. I've had the Lambo's. I've had the Ferraris. I still have cool cars. Even at my status, I would rarely ever consider going buying something brand new. So I love that you look that stat up. So let's now jump to our final point.

Point number three with our wealth retention strategies episode here, and that is to diversify your investments. It's so easy to want to go all in on a stock, a crypto, a whatever the thing is, that seemingly is skyrocketing in value. If it's Nvidia, Hems and Hers, Palantir, you know, whatever crypto can come up with or anything else that's going up 3, 4, 5, 6, 700% in the last 12 months. It feels like you should go do that, but that's a gamble. That's not a strategy. are wealth retention strategies. Diversification is your shield. It protects you when one piece of your portfolio takes a hit.

So here's a quick test you can do to see if you're diversified enough. If all of your assets are moving up and down together, you're not diversified enough. So for example, Robert, this is a specific callout as it relates to my stock portfolio, but this is something, you know, we have a red day to day in the stock market and I'm looking at my portfolio. I've got about a dozen names in my portfolio that are green while, let's call it, a couple others are in the red, while the S&P and the NASDAQ is down about 1.5% 2% today. If all of your portfolio on any given day is following the S&P 500 or the NASDAQ or the underlying indices that are around us and that people benchmark against, you might not be diversified enough. So just keep that in mind. And then take Robert, for example, right?

Crypto is, you know, we've got a shaky start to 2025. But he's got some gold. He's got his precious metals, silver. He's got his fix and flip real estate portfolio. All these things are balancing out Robert's portfolio as well. So spreading bets across the stocks, the ETFs, the real estate, the precious metals, the alternatives, the crypto, the fine art at Masterworks. Whatever it might be allows you to feel diversified weather the storm and retain the wealth that you worked so hard to build. Yeah.

for me it's really all about we talk about this constantly building your base and diversifying. So many of the fake gurus out there and the people that don't really know what they're doing and talking about, they're always telling you to go all in on one thing. Don't listen to that.

They're wrong. Trust me. And you see it all the time because somebody's all in on real estate. Then there's a real estate crash. Let's talk 2009, 10, and 11. And all those people driving the Lambos and having their Rolls Royces went broke and they were calling me to borrow money. So that is why you will never see a time when Austin

and I are not speaking about diversification. But I want to make sure to clarify something. We want to make sure you're building the base along the way because so many people jump around so much and they start out without having any base built and they go buy a real estate project. They probably lose money on that. Then they jump in on the latest crypto that Uncle Bob said to buy. They lose money on that. Build the base, then build the diversification. And the base starts simply with having that basket of index funds and ETFs, low cost ones that we talk about. So you can build that base and make money while you sleep. And then you start diversifying more into crypto, more into real estate, precious metals, masterworks, all of these different strategies that we talk about.

So that way you can weather the storm. That's the key here. is being able to weather the storm in the really good markets, in the really bad markets. You see how so many of the fake gurus go quiet when the markets are tough. Yet Austin and I are here every single day, every single week on the front lines, telling you what we think is happening and how you can respond to it and prepare for it. That is the key here, and that is why we will always be teaching and discussing diversification, because it is key to weather any storm and retire with dignity. And I think what's also really important to consider, Robert, is we tell people that they

should have $100,000 invested into the index funds and ETFs we talk about. And people look at that and they're like, oh, there's only two ETFs or three ETFs. That's not diversified. No, what you don't understand is each one of those ETFs has hundreds of different stocks inside of it and just buying the ETF like VOO unlocks your portfolio to 500 different stocks. So that in itself is like a diversified way to just begin investing altogether, which is incredibly smart for anyone who's starting out, right? Go build your base by investing into the S&P 500.

And then once you want to start getting cute and fun and you want to have some strategies, then go buy some single stocks, go get the Masterworks, fine art, go get the crypto, go get the other things that make you happy. But you should have the vast majority of your portfolio invested into these well-diversified blue chip, longstanding, tried and true, index funds and ETFs that we talk about. 100% mic drop, end of story, period. This is an episode that everyone should save and share with everyone they know that's trying to figure it all out because these three points are so critical to building wealth and keeping it.

it's easy to make money, but money can be fleeting. You could lose a job. You could not get a bonus. Your company could lose a big contract. All of these things are possible. They've all happened to me over the last 35 years of my career. And so that is why you need diversification and you need to be prepared so you can withstand any rough times. The art of staying rich. I love it. Now before we jump into the Q&A section of this episode, let's take a moment to hear from our sponsor. Blossom. Investing is more fun when you're doing it alongside like-minded people. If that's dividends or growth stocks, there's a community for everyone on Blossom. And remember, Blossom is not an online broker. It's a social investing app built around transparency, a social media platform built specifically

for investors. Yes, and transparency is key when it comes to investing. You all know just how important this is because you listen to this podcast. I've already connected my personal accounts to Blossom, And I enjoy seeing how everything is divided up and performing on a daily basis. You can go check out my portfolio. You can go check out Austin's. And additionally, they offer dual-lingo style educational content for those of you that are just starting out learning. They were even recognized as the top 25 app for 2025 by the Apple App Store and for good reason. So if you've not yet joined Blossom, we encourage you to do so.

They've got over 250,000 users. it's a very easy way to find your community of like-minded investors and also manage and analyze your portfolio on a daily, weekly, quarterly basis. So click the link in the show notes below to sign up for Blossom or simply type in Blossom in the App Store on your phone. Now, our first question comes from Greg D. Greg says, good morning, guys. Newer listener here. I really love the podcast and the insight you provide to those of us who are trying to learn and navigate investing for the future. My wife and I have been saving $300 a month for our children. This money has been saving and sitting in a high-yield savings account.

I recently listened to an episode where you talked about a 529 plan, and while it was intriguing, I'm just not sure I want all of our eggs banking on the fact that our children decide to go to college. I've read about UGMA and UGTA accounts and learned that those are irrevocable assets once posted to the account. Please, help me understand what we should be doing to make sure our three kiddos have a much better start than we did. Really great question, Greg. So I think there might be some like miscommunication, misunderstanding when it comes to the 529 account. You said in your post that you're not sure you want all your eggs banking on the fact that your children may decide to go to college or not.

Let me remind you, the 529 funds are very flexible. Yes, you can use them for tuition and fees as it relates to college, universities, things like that, but also vocational schools and even international schools. And even for your kindergarten through 12th grade education, you can use up to $10,000 per year for tuition at a public, private, or a religious school. So it's not all just for, you know, college time for your children. You can also use this if they do decide to go to college for the room and board, right? Think about the meal plans. Think about the books, the supplies, the equipment, the materials if they qualify, computers, printers, software. Think student loans.

You can also withdraw up to $10,000 per beneficiary to repay qualified student loans, including those of their siblings as well. Apprenticeship programs. Literally, this is the most like flexible education related account that you can come up with. It's so flexible. And if they don't want to go, like straight up like, yo, we cannot figure out a way to spend this money to benefit our children's education as they're 18, 19, 20, 22 years old. you can roll over up to $35,000 out of this account into the child's Roth IRA starting at 18 years old. So you can do like $7,000 a year for the next five years and that's going to roll over to their account and they'll have now by the age of, let's call it like mid-20s, mid to early 20s here, $35,000 in their Roth IRAs. Guess who didn't have 35K in his own Roth IRA when he graduated college?

This guy, right? So it's like how cool the head start with. that be for your children? There's so many cool ways to use this account. I know there's like UGMA and all the other cool things like go do that too, but like the 529 is just my favorite hack for building generational wealth for children. I don't have much to add other than the fact for any of you listeners out there that have teenage children and you own a company, you could look at doing a custodial Roth IRA for them and that is a good way to do it if they have earned income. That's another little hack that parents can do if they are, you know, business owners. But

But other than that, I think a lot of people just don't understand how many benefits there are for the 529 plan. That's why I love it. I've learned so much about it from you, Austin, in the last couple of years. And I think it is just something everyone should consider for their kids. So our next question comes from Rob M. And by the way, these are all questions coming out of the Rich Habits Instagram DMs. So if you have a question for us, send us a DM. We'll hopefully read it on the show.

Rob's question says, hello, Austin, and Robert. you often advocate for the Roth 401k because we don't know what future tax rates will be, but how do we weigh that against the benefits of deferring taxable income now, letting more money grow and potentially being in a lower tax bracket in retirement? Is there a framework you all use for deciding if Roth or traditional is the better move based on income levels, retirement goals, tax projections, things like that? Robert, do you want to kick this one off? Yeah, sure.

I'll take a stab at it. I love this question and how I look at it is this. Never in history have we seen a time where taxes are going to go down over time. And so I don't like to kick the tax man down the road and pay it later. That's why I love the Roth component, the Roth IRA, just because it's after tax forever. And I think it's just the best strategy. But let's break it down on why I believe that. If you believe in your wealth building journey, you're going to continue to make

more and more money into retirement, then you want to pay the taxes as early as possible because we believe that those taxes are going to be the lowest they're ever going to be today, considering they're probably going to be much more later on. However, if you're in a position could be a doctor, you could own a business, you could be trading time for money in which as you get older and you get towards retirement, you might start making less money, then that's where you have to figure out that balance of which is the better route for you because maybe you're in an effective tax rate of 30% right now because you're a high earner, but then 20 years from now, maybe you're winding down your practice, your dental practice, and you're making

less money than you are now, and you might be at a 20% effective tax rate. In that instance, it would make sense to kick the tax man down the road, but it's just one of those things. it's going to be person to person dependent based on how you make your money and how much you perceive your wealth is going to grow over the years. So it is a very tricky topic and that I hope helps you understand a little bit better in everyone listening of why I feel the way I do on this matter. Yeah. So to add even more color here, for example, if you're a high earner right now like myself, my effective tax rate for federal income tax in 2024 was 30%, like effective tax rate, which means that for the money I made, effectively 30% of it was paid to the federal government

in the form of income taxes. We all have like tax brackets and things like that, but like that was my effective tax rate. And so in Rob's question here on Instagram about like, should I take a traditional IRA or traditional 401k approach and save 30% by being able to write off my contributions in the beginning, right, and save that 30% effective tax rate. Like, what if my effective tax rate in retirement is only going to be 20%? Like, isn't that the better way to do it? You very well could be right. I just have no idea what my effective tax rate's going to be in 40 years, right? We can look back to 1944 when the highest marginal income tax rate in the United States was 94%. All I'm saying here is,

is that taxes and tax rates are very fluid, and we've seen that over the last hundred years. I don't know what the next 30, 40, 50, 60 years are going to turn into. And so, like, I just feel good knowing that, okay, I paid my 30% taxes already. Like, I'm going to let my money grow. And if I'm going to enjoy this money in retirement, it's going to be worth millions upon millions upon millions of dollars. I'm not going to have to worry on required minimum distributions nor taxes in retirement. There is a math problem here. I 100% agree.

And there is a correct answer to that math problem. But the math problem's biggest variable is the assumption of what is your effective tax rate going to be in the future? And none of us know the answer to that. And so unless we knew that answer, it's impossible to solve this question. We can make hypothetical guesses and like try and strategize. But I think at the end of the day, what's most important is not if you use the traditional or the Roth or what kind of strategy tax things you want to do. what's most important is that you're actually contributing and you're actually investing and you're doing that for 10, 20, 30, 40, 50 years. Yeah. For me, I just want to know where I stand. Where am I at? What is my actual net worth? Where is it going to be in retirement? And for any of you listening, I think that's the important takeaway of this part of the podcast today is to understand. I feel like it's almost gambling. If you put it all on the line that later on, the effective tax rate is going to be okay and you're going to,

going to make more later, but you don't know, I feel like it's a gamble. I like to know where I stand. So if I can get it out of the way now and know exactly where I stand, it just feels like I can sleep better at night knowing where I'm at and what that tax rate is. So that's my opinion. I love your takeaway, Austin. Good luck, Rob. And Robert, just to make sure we're on the same page here, people might be thinking like, oh, I could put money into my traditional IRA or my traditional 401k. I can offset my ordinary income tax bill now and that money can grow and then I can just take it out in retirement and do the long-term capital gains of 20%. Traditional IRAs, traditional 401ks, none of that stuff is taxed long-term capital gains. It's all taxed as ordinary income, all of it, right? So like,

don't think about that. I want to make sure we're on the same page about that. That's not the case. If you are using a contribution to offset your ordinary income up front, then the money you make on the back end will also be taxed as ordinary income to offset your original offset, if that makes sense. That makes great sense. And I'm so glad you clarified that because that is a kind of a wild ride of a question to understand the best way. You know, and I was reading up on this the other day after talking to my CPA about it because so many people think, you know, because they hear us talking about Roth all the time that Roths aren't great because you can't get access to the money until you retire. And they don't understand. You can't.

take out all the principle if you want with no penalties, just like Austin alluded to. You just can't take out the gains. That is the difference. So make sure you guys understand this and really do the research because we always preach to the mountaintops. It's not what you make. It's what you keep. And the more literacy you have on all of these points, the better off you're going to be in retirement. So our final question comes from Julie D on Instagram. She says, what is the best wallet for crypto? One sentence, seven words. Super. simple. I love it. Best wallet for crypto. So I keep my cryptocurrency on a platform called my ether wallet. That's where I keep a lot of my like Ethereum alt coins and stuff like that.

I've also got a soul flare, I think while solar flare wallet for some Solano that I've got. I use Phantom as well. I've got one of those wallets. I've got a coin base wallet as well for like some NFTs. I obviously have some cryptocurrency on like public and some other these like, Robin Hood investment platforms, but it's really up to you. Here's what you don't want. You don't want to be using a platform that doesn't allow you to send and receive cryptocurrency. I know public is like kind of like that right now. I'm not bashing public. They're fixing that. If they haven't already fixed it already, they know it's a problem. They're going to fix that. Robin Hood recently just fixed it themselves. But if you're super into like crypto storage and you

want to like really feel good about it, using a platform. that you can send and receive crypto in and out of is like bar none the most important aspect of it. And yeah, that's what I do. Those are my sort of platforms that I use. What about you, Robert? So for me, I use a ton of wallets, cold storage, and on platforms. My favorites are probably the Ledger NanoX, the Treasurer wallet, and the Arculus wallet. I use all three of those.

I have a coin-based wallet. I have several other wallets. But the number one key thing when thinking about cold storage, Actually, there's more than one point, but I'll keep it brief. Number one, do not buy any cold storage wallets from eBay or any aftermarket sites, Amazon, or anything. Because what happens is people buy them new from the originating site, the manufacturer. They open them up. They put in back doors.

They reshrink wrap them and send them back. And then they can get access to your crypto once you buy that wallet. So that's number one. number two and this is going to sound really old school don't let the gray hair bother you i promise you it's really really smart if you have your seed phrases do not take a picture of them and store it in your phone's library of your seed phrases and what i would recommend you do because you never know when your house is going to have a flood or something bad's going to happen i laminate my seed phrases and make sure they're somewhere very very safe so no one can get to them and i know it might

sound archaic because we're talking about cryptocurrency in the blockchain, but then we're laminating the seed phrases. I just want to make sure everyone understands the important of being able to retrieve those seed praises, no matter what, especially those of you that might live at a lakehouse or on the water. You never know with a hurricane or a storm. So those are two things. And then I would say lastly is just make sure that you understand, maybe watch a couple of YouTube videos or something else first before you do a transfer and all. always make a test transfer first. I have people all the time that'll say,

oh, I'm transferring $50,000 onto this wallet. They don't do a test transfer. Something goes wrong, and they lose money. So just make sure you do those three things, very, very important, and make sure, most importantly, that you don't buy any cold storage wallets from used or from a secondary market website.

These are great points. I want to expand on all of them. The first one about the used wallets stuff and secondhand, best buy. Don't buy it at best buy, right? People will go buy it brand new, then they'll return it at best buy saying it's like a new thing and then it'll be restocked on the shelf. Like literally you cannot buy one of these hardware wallets from anywhere but the manufacturer's website. Like that is the only place you can buy it. The thing about the seed phrase to make sure we're on the same page there. The seed phrase is essentially your universal

password for any wallet. So for example, I've got my MacBook pro right here and I've got my phantom wallet and some other wallets on it that are like installed as like plug-ins to the browsers and things but before this computer i had a different macbook pro with the exact same wallets installed onto those browsers and plugins essentially all you have to do is take this 25 word or 30-word seed phrase say import wallet on any computer any laptop any phone any device type in all those words and it's like your password it just like automatically gives you access to that wallet again no matter where you are which is why it's so important important to never share your seed phrase. If anyone has your seed phrase to your wallet,

they can type it in on any device, get instant access to all your crypto, and then they can send it out, and you're just, you're done so. And then the third thing about sending and receiving the crypto, the way you described, I just want to clarify, you said that they don't like send a test transaction and they just like send off 50,000 and they lose it. The reason they lose it is because like, as you guys know, those crypto addresses are a bunch of like numbers and letters and like exclamation points or whatever is like going on over there. And just like for example, you might type someone's email address in wrong and you'll try and send it and like not knowing it's the wrong email address and it'll just say like can't be sent and it like bounces back to you.

You don't get like a can't be sent bounces back to you with crypto. You get a, oh, you sent it to this random thing and you might have got a letter wrong or you might have got a number wrong or a character or wrong and it still sends it to this mystery wallet that nine times out of 10 because you, you know, mess something up there doesn't exist and you have no way to create that address from scratch. And so now you send $50,000 to something that doesn't exist and now it's gone, right? So your money's gone. And so that's why it's important.

If you're making a big transfer, send $5 first and make sure the other wallet gets the money because in case you do, you know, accidentally click a Y when it's supposed to be a Z or something on the wallet, you get to know that, hey, it didn't show up. Okay, what happened here? Why did I do this wrong? Then you realize your mistake before you send the 50 grand. These are great, great crypto tips and tricks. Yeah, what a great episode. I just really enjoy covering all these things where some people might say, oh, I already knew that, but just giving out the hacks, giving out the goods and making sure people are just on the right track because we always say personal finance is personal. And I just want to see everyone win. We've been,

getting all these people asking about us doing an event this summer, which we're going to work on, but think about the event we're going to do in 10 summers from now, when all of a sudden everyone's got millions more dollars, everyone's crushing it, we're growing the Rich Habits podcast, the Rich Habits Network is huge, all of that is what I look forward to being able to do five, ten years from now, but providing value each and every week, whether it's a bull market or a bare market, so everyone can find their way to financial freedom. And speaking of the Rich Habits Network, don't forget, we're running a seven-day free trial right now.

We have nearly 600 of you that have joined over the last several months. Almost 100 of you guys did the seven-day free trial, and like 80% of you stuck around, and you're just enjoying it. You're loving the live streams, the video coursework, the questions, the DMs, the answers, like you guys are loving this stuff. So again, link in the show notes below to try the Rich Habits Network. work for free, no strings attached, decline and unsubscribe if you hate it. It's seriously all good. You're going to love it. Link in the show notes below. Go check that out. And as always,

thanks everyone for tuning into this week's episode of the Rich Habits podcast. We hope you have a great start to your week.