Rich Habits Podcast - 177: What Skills Make People Rich?

Starting point is 00:00:00 Hey everyone and welcome back to the rich habits podcast, a top 10 business podcast on Spotify, brought to you by public.com. By the end of this episode, you're going to know the four skills that actually separate rich people from everyone else. And not one of them is taught in school. Not one of them requires a degree, a trust fund, or permission from anybody. My name's Austin Hankwitz. I'm joined by my co-host, Robert Croke. Robert is a seasoned entrepreneur with lifetime revenues of over 300 million, and I'm a multimillionaire in my early 30s with a background in finance and economics. As the show name might suggest, every episode, we talk about rich habits as they relate to business, finance, and mindset. So Robert, specifically, what are we talking about in

Starting point is 00:00:43 today's episode? In this week's episode of the rich habits podcast, we're tackling a question that doesn't get asked enough. What skills actually make people rich? Not degrees, not job titles, skills. A study from Fidelity found that 88% of millionaires are self-made. So what did they do differently? Because it wasn't luck. It was a specific skill stack. Today we're breaking down four skills. Sales, distribution, financial literacy, and tenacity, each one building on the last. Sales without distribution has a ceiling. Distribution without financial literacy is a leaky bucket. And none of it matters if you don't have the guts to actually go. go for it. So Austin, let's start with the one that makes everything else possible. Yes, skill number one is sales, but it's not exactly door-to-door sales or something of that nature. Scales is a skill no one wants to learn because it can be intimidating, but it's a skill that everybody needs. And again, I'm not talking about cold calling. I mean the ability to communicate value in a way that gets people to take action. Let me say that again. Sales is not cold-calling. It's not door-to-door. It's the

Starting point is 00:01:54 ability to communicate value in a way that gets people to take action. Whether you're negotiating a raise and the action is to pay you more money, or maybe you're pitching a client for your startup or website business, or maybe you are selling a product or a service to someone online. All of that is sales. Because every dollar that's ever been made ever started with someone convincing someone else that it's worth paying money for that thing, that widget, the service, whatever it might be, every business, every career advancement, every partnership, it all starts with a sale. And now here's the part that people miss Robert is real sales is not about convincing someone to buy something they don't need. It's about understanding somebody's problem,

Starting point is 00:02:40 clearly articulating how you can solve that problem and being a good listener to ensure that that articulation actually solves the problem that they need figured out. That is sales in a nutshell. And the cool part for everyone watching this episode and listening, it's completely learnable. People treat it like it's a personality trait. You're either a good salesman or you're not. And that is just completely wrong. It's a set of techniques, active listening, objection handling, understanding, timing, framing

Starting point is 00:03:10 value in a buyer's language, and the one that kills most people actually asking for the clothes. You can study these the same way you'd study coding or accounting or any other skill set. and learn them just the same. And once you internalize these, you see sales everywhere. Negotiating your salary is a sale. Pitching your boss on a new project is also a sale. The skill transfers to every part of your life.

Starting point is 00:03:37 And if you're looking to brush up on your sales skills or you feel you're lacking in general, we recommend a couple books to help you along the way. A couple of our favorites are How to Win Friends and Influence People and the Psychology of Persuasion. But sales have a natural ceiling, and that brings us to skill number two skill number two is distribution you've learned to sell but now you need the distribution and we're not talking about millions of followers on social media distribution comes in many forms and fashions it's a skill of getting your value in front of the right people at scale so because

Starting point is 00:04:09 sales is one-to-one distribution can be one to many the difference between earning a living and actually building wealth if you're an incredible salesperson and you can close one deal an hour you're still limited by the hours in a day, but distribution can remove that ceiling for you. When you can get your value in front of thousands of people through a system that works whether you're in the room or not, income stops being linear and becomes exponential. This happens when the one to many model skills beyond just you in that personal time that we're alluding to. And distribution, Austin, is more accessible than it's ever been in human history. 20 years ago, reaching a million people required a TV deal or a massive ad budget,

Starting point is 00:04:50 Today you can do it with a smartphone and a simple social media account, which is fantastic. A study by LinkedIn found that professionals who consistently built their personal brand earned 20 to 30 percent more than their peers in the same exact role, 20 to 30 percent more earnings, not just because they're better at their jobs, because they have that distribution. People know who they are, opportunities find them, not the other way around. So what does distribution look like? a few paths. Content creation. Think LinkedIn, post, YouTube, podcast, newsletters, Instagram. Every piece of content is a distribution asset that works for you 24-7. Network building,

Starting point is 00:05:33 becoming genuinely useful to people in your industry. So your name comes up first when opportunities arise and platform leverage. I love this one. Guest appearances, partnerships, speaking at events, to tap into audiences that already exist, but wouldn't know who you are. otherwise without that distribution? I think the key with distribution, Robert, is the compounding effect. Every subscriber, every follower, every relationship stack on each other. And the combination of now selling your value, if that's a service or a product or or something of that nature, and pairing that with distribution is where, again, things become

Starting point is 00:06:12 exponential and no longer just linear. You can sell one to one and have a channel putting you in front of thousands. of people at the same time. That skill set stacks and that is what separates people from the I earn, you know, six figures to I earn seven figures per year. But the problem is with earning all this money that you're now going to earn because you're great at sales and you have a cool distribution is you might still be broke. High earners can be broke. And that's because they do not understand our third skill, Robert, which is financial literacy. Yeah, it is definitely a problem. We talked about this a while back and I think the stat is like 64% of high earners making over six figures still live paycheck to

Starting point is 00:06:54 paycheck in the United States. And when it comes to financial literacy, our third skill, money's flowing in. You're making it, but this is where most people fumble because making money and keeping money are two totally different skills. A FINRA study found that only 34% of Americans could answer four out of five basic financial literacy questions. Compound interest. In inflation, diversification, any of those, and people with low financial literacy are significantly more likely to carry high interest debt and less likely to have their retirement accounts set up or have any savings. It's the most common pattern in business. Someone has strong revenue, high personal income, and almost nothing to show for it. They didn't understand tax strategy,

Starting point is 00:07:40 didn't invest consistently, and spent like their current income was guaranteed and going to last forever. So let's just recap here. Sales are important because it helps you share with your boss why you need a higher salary, right? Listen, let me convince you of this thing, persuade you into paying me more money or let me go take on this new project so I can earn more money. Distribution is important because you get to go to these events and speak on stage or be a thought leader in your community and get those new opportunities like a brand new job because they know that you crush it and have been crushing it for years in this industry. And now you've got this brand new job. You're earning more money than ever. and financial literacy is what's going to ensure that the money you're earning actually is maintained. It's not about what you make, it's what you keep. We talk about that all the time inside the Rich Habits Network. So let's talk about the five components of financial literacy that are really going to help you maintain and keep this newfound wealth that you have because of the sales and the distribution. One, compound interest, we know this one. Your money's making more money while you sleep.

Starting point is 00:08:39 Stop trading time for money. Invest your money into businesses that are going to grow over a long period of time. let that compound tax strategy Robert alluded to this this I think is more important than some you think if you had a hundred thousand dollars invested in the stock market and it made 15% that year you made 15,000 dollars on your hundred thousand dollar portfolio you didn't really do too much for it right it's passive it's great you don't have to do too much for tax strategies sometimes working with the right tax strategist paying a couple thousand dollars here or there to ensure that you're doing the right things can save you 20,000 dollars right that's a 20% return on

Starting point is 00:09:15 a portfolio that doesn't even exist yet. That's how you should be thinking about tax strategy. How do I save tens of thousands of dollars per year on my taxes? So that money is now working for me. That's a great return on time. Number three is debt management. Mortgage at two, three, four percent interest on an appreciating asset. That's fundamentally different than credit card debt at 24% interest. Paying off 24% interest is a guaranteed 24% return on your money. No investment can reliably beat that. That's why we always say you can't out-invest high-interest debt. Robert, walk us through our last two financial literacy points that everyone that's a high earner needs to completely understand. Yeah, number four for me is asset allocation. A 28-year-old person should be heavily

Starting point is 00:09:57 invested in equities, yet a 58-year-old needs more stability. So understanding that difference in diversifying based on your timeline is what is protecting you from growing wealth and not growing wealth. And this is why we aren't fans of the target date funds you see out there, because weirdly enough, they park young investors' capital into bonds and cash equivalents in their 20s and 30s, and they generally just underperform the markets. That's why we always say you have to keep a watchful eye on your money. And number five is cash flow awareness and having that budget. So many people, we see it every single day in the Rich Habits Network. People talk, tell us about their situation. They're living beyond their means. They don't have to

Starting point is 00:10:40 a proper honest budget and they really don't know where they're at financially. They don't know what goes out and they don't know what's left to deploy to the dollar. And we need people to stop that right now. They need to be tracking their money, having the honest budget, and keeping control of their finances. So they're not always living beyond their means. The framework match beats Roth beats taxable. Max your employer match first. That's a 100% instant return.

Starting point is 00:11:08 Then the Roth IRA, then back to the four or 1K, then taxable brokerage, follow that order, and you'll be just fine. So, Robert, we've talked about why sales is important, right? Being a good salesperson. We've talked about distribution, some more opportunities come your way. We've talked about what to do now with all this extra money you're making. But let's talk about the fourth skill that I think trumps all of it. Because without this fourth skill, skills one, two, and three probably just don't happen to begin with.

Starting point is 00:11:35 I agree 100%. And this skill is near and dear to my heart because I think it's, has been one of the biggest keys to my success over the last three or four decades, and that is tenacity. Having the ability to get out of your comfort zone and take risk. Everything we've talked about, sales, distribution, financial literacy, none of it happens without tenacity. The willingness to get uncomfortable, take these calculated risks we talk about, and keep going

Starting point is 00:12:04 when it would be easier to stop is everything. Tenacity isn't hard work either. Everyone works hard. Tenacity is the decision to do the thing that scares you. Make the call you're unsure about. Launch the product that might fail. Quit the job that's comfortable but going nowhere. Invest money you're afraid to lose.

Starting point is 00:12:24 All of these things revolve around having the tenacity to take risk over time and get out there and build yourself up through that tenacity. Yeah. Every skill we've talked about here, sales, right, is a great example. But every skill we've talked about requires discomfort. Learning sales means that you're going to get rejected. The boss is going to say, no, I don't think you can take on that project. No, I don't want to give you a raise.

Starting point is 00:12:47 No, I'm not going to buy your thing. Building distribution can be uncomfortable because now you're making posts on LinkedIn or you're making this newsletter or you're speaking on stage or you're signing yourself up for this networking event. Like that can be uncomfortable at times. Financial literacy can be uncomfortable because you're now facing the hard truths about your financial habits. All of this is uncomfortable. But the people who avoid discomfort never develop any. of the three skill sets we just talked about and tenacity enables that discomfort and allows us to

Starting point is 00:13:16 embrace it. The pattern is universal. Disproportionate rewards, right? The highest upside outcomes live on the other side of discomfort. I've heard this phrase and I say it all the time. Everything you want in this world is on the other side of cringe. What might feel uncomfortable and cringe and silly or stupid or hard or I don't want to do that. That's not what I've been up to. That's not how people that look like me or came from my neighborhood do. I'm not that type of person. You don't have to be that type of person. You have to just be a little bit tenacious. Tenacity is not being reckless. It's doing the work to understand the upside and the downside and then making a decision without complete information because no one's ever going to have complete information, but you have to commit and do it fully. I wouldn't be here today,

Starting point is 00:14:00 Austin, without tenacity. I remember when I first started building my personal brand and taking it seriously a year or so before I met you and I got made fun of from other business partners and friends are like, what are you doing on TikTok and Instagram? Why are you doing that? It doesn't make any sense. But I felt that my story needed to be heard and I could bring value and that tenacity to get through it and not let others get in my way just made all the difference in the world and I'm so glad I stuck with it. But one thing that I want to bring up here is before any big risk, ask yourself these three questions. One, what's the worst realistic outcome? And can I survive it? Number two, what's the best realistic outcome? And is it worth the downside? And number three, will I regret not

Starting point is 00:14:47 doing this in five years? If the answers are yes, yes, and yes, then it's simple. You have to go for it. And the comfort zone itself is more expensive than people realize. Every year in a role that's too small, every opportunity passed on, every skill not develop because learning is uncomfortable, those are all real costs that can show up and regret. They show up in the gap between where you are and where you could be. The people who build wealth aren't the ones who waited until they felt ready. They started before they felt ready and figured it out along the way. So to remind everybody, here is the skill stack. Sales teaches you how to create value and articulate that value to a potential purchaser, potential buyer. Distribution teaches

Starting point is 00:15:34 you how to scale that value to everybody. Financial literacy teaches you how to keep and grow what you've been compensated for in that value exchange. And tenacity is what gives you the courage to actually use the first three. None of these are talents that you're born with. I wasn't born with anything. I've had to learn it, Robert. You've had to learn it. Everyone has to learn. Trial by fire. You got to get in there. I've got to put yourself out there. Everything can be learned, can be practice, and can be stacked upon. Start with whichever one you're weakest at. The skills that make people rich aren't the ones that are taught in school. They're the ones that you build by doing the work nobody else is willing to do.

Starting point is 00:16:13 I'm so excited for this episode, and I hope all of you enjoyed listening to what we think are the four most important skills when it comes to building wealth and becoming rich. I love this episode as well, Austin, because I feel like it's a direct correlation to the last 30 years of my life. and also many of my friends and people that have gone on to be successful is watching the triumphs and failures and us spelling it out in an episode because even though it might seem rudimentary of sorts, it's just really good for us to get back to basics sometime and give people the framework that we believe can help them get to a place that they've always dreamed of getting to and what has worked for us. Well, I think this is a great opportunity to remind everybody that two years ago we started something called the rich habits network, which is essentially our community for people that are tenacious,

Starting point is 00:17:04 for people that want to learn, for people that want to take their financial habits and their financial literacy to the next level, that want to better understand retirement accounts, that want to better understand budgeting, that want to better understand venture investing, and what's going on in the stock market, and to stay on top of the headlines that matter most for their portfolios. And so for the last two years now, Robert and I have been building and active managing the rich habits network, which is going to be a link in the show notes below. And we're hosting two-hour live streams every Tuesday. We're hosting an hour-long office hours on Fridays. There's also eight hours of video coursework talking about tax strategy, talking

Starting point is 00:17:39 about retirement investing, portfolio construction, budgeting, like everything you need to actually take your financial literacy to the next level. And if you're someone who has hundreds of thousands or millions of dollars to your name and you're ready to diversify into some of these pre-IPO companies, Robert, we invested into SpaceX four separate times before the IPO. Yeah. We've invested into humanoid robotics companies, which are really sexy and fun right now. We've invested into fluid stack, a company that is like a NeoCloud that essentially everyone got a 24x markup on that investment.

Starting point is 00:18:13 Now, I'm not saying that anyone's going to go make money by investing alongside Robert and I, but that's the purpose of the Rich Habits Network is giving you all the access that we have been granted as business professionals for, you know, several years, if not decades now, we get invited to invest in these things and we say, hey, can we bring our friends with us? And nine times out of 10, they let us. And so you all are our friends and you can invest alongside of us into these things. But that's the Rich Habits Network. And if you're someone who's tenacious and you want to take your financial literacy, your sales, your distribution, whatever's going on for you to the next level, there's a link in the show notes below. Or you can just Google Rich Habits Network.

Starting point is 00:18:52 right up. It's a seven-day free trial. It's completely for free. You don't have to do anything out of pocket. You get to hang around a little bit. We've got almost a thousand people now that are inside this network, Robert, and I'm learning so much from all of them. They learn so much from us. It's literally a incredible place to be if you're someone looking to take your life, your financial literacy, everything to the next level. I love that call out because I don't think we talk about the rich Habits Network enough and how important it is. And what made me realize that last night is after our call, because you said we do the Tuesday call every Tuesday within the Rich Habits Network, I got two voice messages on Instagram from people that were on the call. One of them was in

Starting point is 00:19:37 tears and the other one was really happy talking about how it has changed their lives so much in recent months after joining the Rich Habits Network. So good call out. We need to talk about the network itself. We have hundreds of thousands of listeners to the people. podcast and we need to get them to understand if they want more of this, they can get it within the Rich Habits Network. So great call out. Yeah, it's not just more of Robert Nostin, but it's a community of people that are also high income W2 earners who are also entrepreneurs, who are also just graduating college and trying to find their next internship. Like, it's a community of the most helpful, kind, honest, just like incredible people that listen to the show. And I could not be

Starting point is 00:20:18 more grateful that almost again, a thousand of them have joined us over there in the Rich Habits Network. So if you want to take your financial literacy, your entrepreneurship, your income, your tax strategy, you're investing to the next level. There's going to be a link in the show notes below to join the Rich Habits Network for seven days

Starting point is 00:20:35 completely for free. Literally go to go test out. You have nothing to lose. It's completely free. And if you like it, you like it, you stick around. If you don't, there's no hard feelings. Link in the show notes below to go check that out. Now, Robert, we've got our Q&A section of this episode. We have three questions coming from our Instagram account, Rich Habits Podcast on Instagram. If you have any

Starting point is 00:20:54 questions for us, you send us a DM over there, or you can email us at Rich Habitspodcast at Gmail.com. But before we jump and answer our first question from Jordan on Instagram, I have to give a shout out to public.com, the investing platform for those who take it seriously. Because on public, you can build a multi-asset portfolio of stocks, bonds, options, cryptocurrency, and now generated assets which allow you to turn an idea into an investable index using artificial intelligence. And it all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year. You can literally type any prompt and put the AI to work. It even screens thousands of stocks, builds a one-of-a-kind index,

Starting point is 00:21:37 and lets you back-tested against the S&P 500, all with just a few clicks. Generated assets are like ETFs with infinite possibilities. they're completely customizable. They're based on your thesis and not someone else's. So go try it by going to public.com slash rich habits. Go transfer your portfolio over to public. Go get started with generated assets. They're agentic brokerage accounts. They've got some really cool stuff over there. Really, really exciting. This is paid for by public investing. Full disclosure in the podcast description. So Austin, let's get into the Q&A. So our first question comes from Jordan on Instagram. Yorden says, I absolutely love your podcast. I listen to it every single

Starting point is 00:22:15 day on my commute to work. I'm active duty military who doesn't have time for side hustles, but I love your advice on investing in stocks, ETFs, treasury bills, and I'm willing to put into practice on different strategies and platforms you all have recommended. However, can you please explain to me how covered calls work, specifically how I can use them to build passive income? I love this question. What is a covered call? How do they work? How do you use them to build passive income? There's a great opportunity. If you have a notepad, take it out, start making some notes here. Essentially, Nios funds have become incredibly popular because they have made it incredibly easy for anybody to earn income via covered-call option contracts against the S&P 500, the NASDAQ, gold.

Starting point is 00:23:01 They've also have Bitcoin and Ethereum. They've got real estate. They've got a ton of different things. And so what they've done is they've made it systematic and easy for people to earn passive income, they go out and they do the covered call strategies and they pay you a portion of the income that they earn, if not all the income that they earn, right? Very simple, very easy. That's like what they do. But if you wanted to be someone that wants to manually do this yourself and you don't want to just rely on Neo's Funds Management team to do this for you with SPY or QQQI or BTCI or IYRI or IAUI, whatever, you want to do it yourself. Here's what happens. You're essentially saying, I'm going to go by 100 shares of a stock, let's use Amazon for example, at $240 a share. So I'm going to go spend $24,000 to buy 100 shares of Amazon stock. I use the quantity 100 because you need at least 100 shares to do this. You then go to your public app and you say, I'm going to sell someone the right to buy these 100 shares of Amazon stock from me, buy a specific date. So let's call it, I don't know, July 31st.

Starting point is 00:24:10 for $250 a share. So $10 per share more than I bought it. The way that you earn passive income is that by selling the right for someone to buy your stock at $250 a share by that specific date of July 31st, they will pay you for that right. And the reason they're paying you for that right is because they think it's going to be worth a lot more than $250 by July 31st. So right now, if you logged into your public account and you did this, you could earn $730 paid straight to you for selling this covered call option contract.

Starting point is 00:24:40 That's how covered call options work. I've been doing this for years. I've made, gosh, probably close to now $60,000 of premium income by selling covered calls against Tesla in Amazon. I just did some Amazon 270s by the end of July. I did four contracts. I made over, I think, around $1,200 or $1,200, something like that doing that. So that was great. But, yeah, it's super simple, Jordan.

Starting point is 00:25:04 All you have to do is figure out what stocks do I want to buy. What stocks do I care to own for a long time? Because if you do not get assigned and you have to keep the stock, then you have to sell another option, another option, another option, right? So what stocks do I want to buy? What sucks my comfortable owning for a long time? And you also have to be comfortable getting your stock sold at a $250 when Amazon might be trading at $270 by the end of the month. I think that's a great breakdown. And the only thing I want to add for you guys, because Austin crushes it with covered call strategies is if you don't have that kind of capital, you can buy cheaper stocks. look for something that you think has good stability and upside potential, like a Ford or a Pfizer or some company you may like, that doesn't cost you $240, $300 a share. Maybe you can find a $10, $15, $20 stock that can give you that covered call option strategy while still being more affordable for you to be able to own

Starting point is 00:26:01 that minimum of 100 shares. Yeah, Robert, stock I've actually done recently a Sweet Green. Actually, I just sold covered calls. I've got 800 shares of Sweet Green that I bought around. $8, $9, sold a bunch of covered calls at a $10 price there, made like $3 or $400 by doing that, and I plan to continue to do that. So Sweet Green's trading at $9 a share right now. $100 is $900, so it's like not $24,000. So maybe that's an opportunity to get yourself into the covered call options, trading sort of passive income stuff with Sweet Green. So our next question comes from Mike on Instagram. Mike says, hey, I'm 37. I'm married. My wife works two days a week to help with child expenses. We have two kids currently three and five. I max my 401k at work,

Starting point is 00:26:44 my HSA and my Roth IRA. My wife maxes her Roth IRA and I have a brokerage account that I put a decent amount of money into every year. My wife and I also have 529 accounts for each child and we contribute 5,000 each year toward that account. With everything that we have going on already and we have a million dollars in retirement savings is maxing out a Trump account for my child a wise choice. I can easily max it every year with my income. And I also know that in the future, I can convert it into a Roth IRA. What am I missing? Seems like this is a great way to get money into a Roth for my children, especially when they're young. Robert, what's your take? I think it's a great idea. You already have the 529 accounts. You're doing a good job there. And the Trump account,

Starting point is 00:27:25 I mean, they seed it with $1,000 per child, that initial deposit, which I think is phenomenal. It's a great way to get people started that aren't in your situation. So I already like that, There's no earned income requirement, which I like that as well. So I think it's really good. And I like the fact that you get tax deferred growth because you have to remember, you have very low fees here. You have that tax deferred growth. And then you can roll it over into a traditional brokerage account and pay the taxes later.

Starting point is 00:27:53 You just have to remember the one and only thing is that this money is kind of unavailable until the child turns 18 years old. So just keep that in mind. Keep rock and roll. And I think everything you're doing is great. and the Trump accounts are really, really awesome for people that have kids. Yeah, I agree. I think what's interesting about Trump accounts and, you know, oh my gosh, I'm a Democrat.

Starting point is 00:28:13 I don't want Trump in anything my kid has to do. Like, sure, like, call it an Invest America account. Like, like, let's move politics aside here. If your child is born between January 1, 2025, in December 31st of 2008, the government wants to give your child $1,000 to invest in the S&P 500. Have that click for a second. $1,000 of free money sounds awesome to me, especially if it's just invested in the S&P 500.

Starting point is 00:28:37 And if every month you're adding $100 from age, essentially born to age 18, plus that $1,000 seed money, you now have $70,000 when your child is 18 years old. Off $100 a month and $1,000 seed money from the government. Like, do you not want your child to have $70,000 when they're 18? Did you have $70,000? I didn't have $7,000.

Starting point is 00:28:59 I was 18. And if the government wants to give it to me, sounds cool to me. Right? So it's like, Oh, who doesn't want this? But long story short here, Mike, yes, I would do this. The downsides, I guess, could be, you know, to your point, yes, it's locked up, you know, to your 18 years old, Robert. But then once they're 18, they can use the money for college. They can use it to start a business. They can use it to go down payment on a home. Maybe they want to convert it to a Roth IRA and, you know, pay your taxes on that 18,000, which, you know, you will have to do when you do the conversion from traditional to Roth IRA. And if you continue to invest 100 bucks a month into this from age 18 to age 16, and they just keep this and use this as their traditional IRA. It's going to be worth over $6 million adjusted for inflation.

Starting point is 00:29:41 And there's the Michael Dell thing going on where he's granting people. I think it's like $200 or $500 or something of that nature, depending on what zip code they live in. So like there's a ton of different things going on with these Trump accounts. As you can tell, I'm excited for them because I truly think who doesn't want to get a free $1,000 from the U.S. government to then invest into the stock market. Like, isn't this what everyone wants? Like, don't we want to have our children be equity owners?

Starting point is 00:30:04 in U.S. capitalism through the S&P and the Dow Jones and the NASDAQ, like, isn't that the goal for everybody? So like, yes, go get the Trump account, though the Invest America account, whatever you want to call it. Go get your free bag. Go get it invested for your children. It's a no-brainer, my opinion. I agree 100%. People get all up in arms, you know, because of their political stance or beliefs or whatever. Get the free money. Help your kids build wealth. Set them up the right way. Get the bag. That's all I have to say. And the last thing, Robert, you only get that free thousand if they were born. between January 1st of 2025 and December 31st of 2028.

Starting point is 00:30:38 But any child in America can open up a Trump account, assuming they're under the age of 18. I think I mentioned this in a previous episode. My fiance works at IHeartMedia. IHartMedia is doing like a match or like a contribution type thing to these Trump accounts. So like maybe if you open a Trump account, go ask your employer if they're contributing to Trump accounts

Starting point is 00:30:57 because that could be a cool way to grow your child's net worth over a long time as well. So go check those out. those are pretty important. Austin, before we go to our last question, let's hear from our sponsor. Yes, Masterworks. So Cap Gemini just released their 30th edition of the World Wealth Report this month. And according to the report, the wealth of the high net worth individuals grew almost 9% last year, strongest pace in the last five years. But buried in that report is an actual rich habit. Cap Gemini surveyed 6,500 wealthy individuals and investors, and nearly half of them named the same priority

Starting point is 00:31:32 of fractional ownership of real assets being their primary focus. Not just more index funds, but shares of real scarce things. And outside of the report, this is exactly what our sponsor MasterWorks does, and we've been invested with them for years. They're opening a market that's shown to move independently of equity for 30 years. That's kind of independence is really hard to find right now. With Masterworks, you can invest in shares of museum quality post-war and contemporary artworks featuring Banksy, Bosquiat, and Picasso without having to spend millions.

Starting point is 00:32:08 You don't have to be Jay-Z to get involved and own this cool artwork. Over 70,000 members have invested more than $1.2 billion across over 500 artworks. And across 29 exits to date, investors have seen net annualized returns like 16.5, 17.6, and 17.8% returns, not including those that are unsold as of yet. And the art market's been making major headlines this year. Over $2.5 billion worth of art has sold at auction in the month of May, more than twice the amount of 2025's May auction season. The UBS Art Market report shows that the global art market returned to growth in 2025,

Starting point is 00:32:52 with $1 to $5 million range growing over 40% since 2024. So wealthy individuals are literally telling their wealth managers that they want fractional access to real assets, something that Masterworks has already built. As long time partners, our listeners can skip the wait list at masterworks.com. That's masterworks.com slash rich habits. Link in the show notes below. And investing involves risks. So don't forget that. Past performance is not indicative of future returns. and see important regulation A disclosures at masterworks.com slash CD. Robert, I just logged into my Masterworks account here.

Starting point is 00:33:33 I'm up 44.9% on one of these Basqueath paintings that I invested into. So you know what? Rock and roll. I'm here for it. Yeah, I looked recently as well. And I was kind of excited. I was at an event and somebody was talking about art. And I'm like, I own art in a bunch of different ways.

Starting point is 00:33:51 And so I opened up my Masterworks account. And they had not heard of Masterworks. And I showed them my returns, not as good as yours. I think I was like 37%. And they were shocked. They didn't know that you can own fractional pieces of these big, expensive, famous artworks. So definitely a fan of Masterworks. All right, Robert.

Starting point is 00:34:08 Last question. That's coming from Jennifer on Instagram. Jennifer says, I love the podcast. I'm going back and listening to old episodes. I've got a 401k through my employer that have contributed pre-tax dollars. It's got $200,000 in the account. I recently found out that it could be contributing to a Roth 401K. There's no match to the Roth 401k.

Starting point is 00:34:27 I've recently opened up a backdoor Roth IRA that I plan to fund in full. My question is, do I keep contributing to the account that has $200,000 in it? Should I divert those funds to a Roth IRA? Should I flip my contributions to a Roth 401k? I feel like there's a lot of money in the account, and I'm going to get hit with a pretty big tax burden at some point when I retire, and I'd love to get your take. I'm 47 and make $160,000 a year.

Starting point is 00:34:53 So let's just make sure we're super clear in a couple things because I want to make sure that our friend Jennifer here is not confused. Jennifer has 200,000 in a pre-tax 401k. If Jennifer leaves her job, she can then transfer that $200,000 pre-tax 401k and roll it over into a traditional IRA because she left her job. No tax consequences there, pre-tax to pre-tax. If Jennifer wanted to roll it over to a Roth IRA, she can roll over the full $200,000 amount, but she will be hit with a $200,000 earned income in that tax season, that tax year, that she'll have to pay normal, ordinary income tax on, which is something you don't want to do at 47 years old on that big chunk of money, in my opinion.

Starting point is 00:35:40 Now, you're talking, though, as if you're not leaving your job, you're talking as if you're going to stay at your job, but if you should flip the contributions to a Roth, 401k. Yes. So here's what I would do if I was in your situation. I'd max out that Roth IRA, doing that backdoor Roth IRA, rock and roll, have fun with that. Stop contributing to the $200,000 pre-tax 401k account. Make sure it's invested correctly. It's got the index funds and ETFs and things that we talk about, mutual funds, what do you want to do there? But make sure it's in the S&Ps and the NASDAX of the world. But all net new contribution dollars should go to this Roth 401K. Make sure

Starting point is 00:36:17 it's invested the same way correctly and rock and roll that way. I'm all about this. I think it's great because now you're getting your Roth IRA maxed out and you're getting a ton of money in an after-tax retirement account where you're not going to owe a diamond taxes on those profits. At 47, you've got 20 more good years of investing in this account ahead of you. We're talking about several hundred thousand, if not, maybe one or two million dollars in this Roth 401k over the next 20 years, that same $200,000 and the pre-tax is going to double every seven years if it's invested correctly, which is incredible as well. Now, the only thing I want to add, and this is actually a question for you, Austin,

Starting point is 00:36:57 do you feel she should separate some funds either from the $200K or net new funds into a traditional bridge account, a brokerage account that's a bridge account? So she's not all invested just in retirement accounts. So she has some wiggle room with some money along the way, or do you like it just all in the Roth IRA. Yeah, so we're not going to withdraw money from our retirement accounts early because then you're going to pay a penalty on the withdrawal. But depending on how much you're contributing to these retirement accounts and depending on how much you have elsewhere invested, if you want to scale down those retirement contributions and then scale up after tax bridge account contributions into a public or

Starting point is 00:37:40 you know, a fidelity, something of that nature and you're putting into index funds and ETFs, go for that, go do that. But don't do that. But don't do that. unless you think that there's a real chance that you're going to retire early, right, before 59 and a half years old, because that's the whole perk of having a bridge account is it sort of bridges the gap between I retired early and I can actually access my retirement accounts without paying a penalty for an early withdrawal. Beautiful. That is exactly what I was hoping you'd say. Perfect. I love this. Everybody, thanks so much for tuning into this week's episode of the Rich Habits Podcast. I really hope you're taking these skills seriously. You're learning.

Starting point is 00:38:16 to sell yourself and you sell yourself to your boss, to your employer, to customers of your business, whatever they might be. You're thinking about distribution, the newsletter, maybe the LinkedIn post, or maybe going to that networking event, or, you know, putting yourself out there in your community so you're thought of as the thought leader and the person to choose when people are looking to solve this problem. You're learning financial literacy, obviously, by listening to this podcast, and you've got that tenacity that Robert always talks about. Definitely. And what a great episode. I feel like we really laid the framework here. And also, I really enjoyed the call out of the Rich Habits Network. I just want to bring it up one more time. If you're looking to level up,

Starting point is 00:38:55 you like what you see here on the podcast. And you just want to learn more and get closer to Austin and I. Definitely check out the seven day free trial in the show notes for the Rich Habits Network. It's an incredible community of great people. We have lawyers, doctors, finance people, and everything in between real estate people. And I think anyone that's looking to level up and get involved with a really cool community should check it out. Or maybe you're already at your peak

Starting point is 00:39:23 and you're feeling good and you're ready to start diversifying into some of these series A, series B, maybe even pre-IPO companies. We have got tons and tons and tons of awesome investment opportunities inside the Rich Habits Network. We're investing about one deal every single month.

Starting point is 00:39:40 So if I were you, I'd go check out that 70 free trial, see what's being offered right now. And if you're into that sort of stuff, stick around because we'd love to have you. Thanks, everyone, and we'll see you on Thursday.

Rich Habits Podcast - 177: What Skills Make People Rich?

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