Rich Habits Podcast - 182: You’ve Invested Your First $100K, What’s Next?

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Starting point is 00:01:07 By the end of this episode, you'll know exactly what to do after you hit your first $100,000 invested. And the four strategies that separate people who built a nice nest egg for retirement from people who build real generational wealth. My name's Austin Hankwitz. I'm joined by my co-host, Robert Croke. Robert is a seasoned entrepreneur with lifetime revenues over 300 million, and I'm a multi-millionaire 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, what are we talking about in today's episode? Austin, this is one of my favorite topics because we have been shouting from the mountaintops for everyone to get their base built first, and we both lived it. And here's the thing, getting to $100,000 saved an investment.

Starting point is 00:01:55 is genuinely the hardest part. Charlie Munger said the first 100K is the hardest, and he was definitely right. You've been grinding, contributing to your 401k, maxing out your Roth, building up a brokerage account, and now you've crossed that magical threshold of $100,000 invested.

Starting point is 00:02:14 So congratulations. And I mean that seriously for so many of you that have followed along with the Rich Abbots podcast to actually get this done. It's so important. But here's what nobody is. tells you. The playbook that got you to 100K is not the same playbook that'll get you to a million, 5 million or 10 million. The index funds and the Roth IRA contributions, yes, keep doing those.

Starting point is 00:02:38 That's your base. But your base is built now and the question becomes, what do you stack on top of it to ensure a lasting financial legacy? So today we're going to talk through those four strategies for specific things that you should be doing once that $100,000 foundation is in place. We're going to talk about diversifying beyond the stock market into asset classes most people ignore. We're going to talk about making asymmetric bets that could 5, 10, 15x your money or more. We'll talk about investing into cash flowing businesses. And finally, we'll talk about protecting everything you've built with proper estate planning and insurance policies. These four pillars build on each other.

Starting point is 00:03:21 the end of the episode, you'll have that clear roadmap for what your next chapter is going to look like. So, Robert, let's dig into it. Strategy number one is diversifying beyond the stock market. The first move after $100,000 is expanding your portfolio beyond just stocks and bonds. And I want to be clear, we're not saying sell your index funds, your S&P 500 position, your total market fund, your growth ETFs, those all stay. That's the wealth building engine. But now that you have your base, a real base, you have the ability and honestly the responsibility to diversify into asset classes that don't just move in lockstep with the stock market. Think about what your portfolio looks like right now.

Starting point is 00:04:03 If you're like most people who just crossed the $100,000 mark, you're 80, 100% in U.S. equities, maybe some bonds, maybe some international. And that has served you well and will continue to do so. The S&P 500 is average roughly 10% annualized over the long run. and we figure it's going to keep rocking and rolling and doing the same thing. But here's the problem with being 100% in one asset class. When the market drops 30%, your entire net worth drops 30%. And when you're at 100K, a 30% drawdown means watching 30K disappear. And we just recently had an 11% drawdown in the NASDAQ during July alone.

Starting point is 00:04:42 So that's psychologically brutal and it's exactly the kind of moment where people panic excel, have these knee-jerk reactions, and blow up years and years of progress. Which means that first move you should be making is deliberate diversification. And I'm not talking about just buying more international stocks. I mean, like, actually investing money into asset classes that are completely different from the stock market. Bitcoin is an obvious choice. People talk about cryptocurrency, Bitcoin Ethereum, things like that. Yeah, you could say they've got some similarities with the returns of the stock market. But over the long term, they're pretty different. I personally hold Bitcoin. I've been doing that for years now. You don't need to be

Starting point is 00:05:21 30, 40, 50 percent Bitcoin, but maybe, and like what we've been saying for a while now, five to 15 percent of your net worth invested into some Bitcoin, not mad at that. That's a good way to diversify into different asset classes that have been historically uncorrelated with the stock market over a long period of time. The key here, though, is that position sizing. You're not, again, betting 20, 30, 40, 50 percent on Bitcoin. You're putting five to 50, 50 percent. You're putting five to 15% of your net worth, a small allocation into a new different asset class that is not where all of your net worth and money is at the moment, which is U.S. equities. So, Robert, what are other asset classes that you've diversified into that you think others should be listening up for as

Starting point is 00:06:02 well? Yeah, definitely, Austin. For me, it's been precious metals and real estate. I've held gold in some form or another for over 20 years. And trust me, I know gold isn't sexy. It doesn't 10x. It's not in all the headlines every single day. But, when everything else is falling apart, gold tends to hold its value and go up. So for me, it's always a hedge and insurance for my portfolio. But the one I really want to highlight is real estate because it's become so much more accessible than when I started. Back in my day, if you wanted real estate exposure, you had to go buy a building.

Starting point is 00:06:35 I would literally have to go raise capital, borrow from friends, do this, do that, just buy a building. But now we have platforms like Fundrise, InvestFunder, where you can invest $1,500, and get exposure to commercial real estate, residential portfolios, development projects, all without being a landlord or qualifying for a massive mortgage. So much better with these tools. So we've talked about precious metals, real estate, cryptocurrency. There's also other things like fine artwork with masterworks,

Starting point is 00:07:06 alternative assets like wine and whiskey, farmland, timberland. There's so many different asset classes that have historically only been reserved for the ultra-wark. wealthy, but because of technology, it has now democratized the access to these things. So data on find art as an asset class is really compelling. You can say the same for wine and whiskeys. So what is that? Masterworks. There's a Vino vest. There's vino.co, I think. Oh, there's one with farmland that we used to talk about a lot too. But like there's so many different platforms people can use to add exposure and diversify their portfolios into different. Here's the key now. Listen up. un-correlated asset classes to the U.S. stock market. Because again, back to what Robert was just

Starting point is 00:07:53 talking about, if you've got your whole net worth into something and that thing goes down by 20, 30 percent, did someone say Trump tariff tantrum? Right? We saw that 20 percent correction last year. Well, smokes, man. Your stuff's like, you just got smoked. So, but if you have your money diversified into other asset classes, you will be able to outlast and continue to build well. and build legacy over a long period of time. And now we're not saying to go out 40% of your portfolio all in, hamming into wine barrels. The framework we use is once your stock market base is solid,

Starting point is 00:08:30 your 401k is getting maxed out or close to it, your Roth is fully funded, you have your core index fund positions. Then you start allocating that 10 to 20% of new investment dollars into these alternative investment classes. You spread it across two or three categories that you actually understand and believe in. For me, for many years, it's been Bitcoin, real estate,

Starting point is 00:08:52 through the platforms we mentioned like Fundrise, InvestFunder, and some exposure to fine art. We like Masterworks. So for someone else, it might be gold, real estate, and farmland. It's all about what you understand and what you feel comfortable investing in because personal finance is personal. The specific picks matter less than the principle, which is that your portfolio at $200,000 should look meaningful,

Starting point is 00:09:16 different from your portfolio at 50,000. Well, Robert, I could not agree more. Let's now move on to our second strategy, right? Let's say, okay, strategy one, we're going to diversify in a different asset classes. We've hit this 100,000 base. What's next? Let's also now make some asymmetric bets. So the second strategy here, this is one that Robert and I are deeply passionate about, and it's making those asymmetric upside bets. We're talking about pre-IPO investing. And it's something we do a lot inside of the Rich Habits Network. Link in the show notes below to go check that out. But here's the concept. An asymmetric bet is an investment where the downside is capped and small, but the upside is potentially enormous. Classic example, you allocate 2, 3, 4, 5% of your portfolio to a pre-IPO company.

Starting point is 00:10:01 If the company goes to zero and some will, you're now out maybe 2, 3, 4, 5% of your portfolio. Okay, that does sting, but it's not life-changing. But if that company goes public or gets acquired at some sort of massive premium to where you invest, that 2 or 5% allocation can return 5, 10, 15x on your money. That is an asymmetric payoff. You've got the limited downside, but that outsized upside. So, Robert, let's talk more about why this matters so much at this $100,000 stage as people go from $100,000 to $250 to $500 to a million. And it matters because now you have the financial stability to take those calculated risks.

Starting point is 00:10:41 when you had $20,000 invested, putting $1,000 into a pre-IPO company was 5% of your entire portfolio. And honestly, you probably needed that $1,000 for more foundational things. But at $100,000 allocating $2,000 to $5,000 in a high-conviction pre-IPO deal, that's 2% to 5% of your portfolio. And if it goes to zero, your financial plan is completely intact. You barely feel it. But trust me, if it hits, that's, that's, single investment could turn into $10,000, $25,000, even $50,000 added to your net worth. And that's what we like to see with these asymmetric bets.

Starting point is 00:11:22 And this is exactly what we've been doing through the Rich Habits Network for a couple years now. We give our members access to these pre-IPO deals in companies that we've personally vetted and invested in ourselves. Companies in AI, robotics, space, defense, energy, and we're actually investing in a BCI company right now as we speak. And it's a competitive Elon Musk's neuralink. And we're super excited about that one.

Starting point is 00:11:46 These are companies that are on a trajectory towards going public or getting acquired by a larger player. And getting in before that event is where the outside returns come from on these asymmetric bets. Yeah, Robert, you mentioned investing in these companies before they go public. And you've got this, you know, single investment could add 10, 25, 50,000. We invested into SpaceX four separate times inside the Rich Habits Network before. the IPO. The lowest valuation that we got in at the first time we offered it, it was $210 billion valuation. Right now, SpaceX is trading on the stock market at $108 a share. That's a $1.65 trillion valuation, which means it's still a 7x on that person's

Starting point is 00:12:32 original investment, right, at that $210 billion. So that's what we're talking about, like that 2 to 5% of your portfolio that you've got that deep conviction, high conviction pre-IPO company that's maybe two, three, four, five years away from a really outsized, you know, outcome. Like, that's the part of the Rich Habits Network with these pre-IPO deals. That's so exciting. The company that we're investing in right now, Robert was alluding to it, this brain computer interface company that's competing with Elon Musk's Neurrelink. This is actually the third time I've personally invested in this company. Same for Robert. The first time we invested was 18 months ago. And at this new valuation, our original investment is now up 5.3x. That's, of course, all on paper, right? There is no

Starting point is 00:13:16 liquidity on that. Liquidity is everything. But you start stacking a couple of those two, three, four, five, six, seven Xs here and there. And yeah, you start now making some real headway toward that one million, two million, five million net worth goal that you've given yourself. And again, personally, I invested $20,000 on that first go around 18 months ago to this company. now that is worth over $100,000 on paper, which is pretty cool. And that is the case, all while my core investments, my index funds and ETFs and things that need to continue to trend up into the right have been doing so over the last 18 months, that's the power of these asymmetric bets.

Starting point is 00:13:53 Yeah, and the key here is to understand this is a small portion of your portfolio. These are higher risk, helping you diversify and helping you take some shots on a smaller level to accelerate your wealth. So here's what I want everyone to understand. This is not gambling. This is not throwing money at some meme stock or crypto tokens you saw on X. This is disciplined allocation into vetted private companies with real revenue, real technology, and real pass to liquidity. And the disciplined part is critical. You size the position so that even if every single one of these bets goes to zero, your financial life doesn't change. But when one, two, or three of them hit, they meaningfully, accelerate your wealth trajectory. Yeah, so the mental model is portfolio construction. And we've talked about that here in the show a whole lot. Not lottery

Starting point is 00:14:44 tickets and gambling. You're not looking for that one moon shot, right? You're building a small portfolio of 3, 5, 7, 10 pre-IPO positions over the course of 2, 3, 4 years, knowing that the math is going to work in your favor when the winners more than offset the losers

Starting point is 00:15:02 that are inevitable as well. That's how venture capital works. And that's what institutions have been doing for a really long time. And it's access now that we're able to provide to our people inside of the Rich Habits Network. So again, go check out the Rich Habits Network. Use the link in the show notes below. I think, Robert, we are now up to 992 people inside the Rich Habits Network. A hundred and like 20 something people have joined us in the last 30 days. We're super grateful for that. So go be number 121. So Robert, walk us through strategy number three here as we think about what to do after we've built this $100,000 base.

Starting point is 00:15:37 100% investing in cash flowing businesses. This is where real wealth gets built, and I don't say that lightly. When you invest in the stock market, you're buying a tiny fraction of a giant company, and that is great. We're always going to be investors in American capitalism, and that is really good for passive growth. But when you invest in a small cash flowing business, whether you buy it outright, partner with an operator or invest as asylum.

Starting point is 00:16:03 partner, you're buying actual cash flow. Real money that hits your bank account every month or every quarter. And these types of businesses, I'm not talking about Silicon Valley startups, all these crazy, sexy ones. I'm talking about boring laundromats, fence companies, roofing companies, pressure washing operations, even landscaping or construction-related services. These are businesses that have existed for decades that people need regardless of what the stock market is doing, and that generate real predictable cash flow, no matter what is happening in AI, what's happening in the straight of her moves,

Starting point is 00:16:41 or any of those things. These are real tried and true, boring businesses, and that is the next place we believe you should be allocating some capital. And a lot of them are acquireable for less than you might think. There are thousands of small business owners in their mid-50s and 60s who are running these profitable cash-flowing operations

Starting point is 00:17:00 for 20, 30 years now, and they're looking to retire, but they don't have their succession plans figured out. Their kids don't want the business because, Dad, I went to college. I don't want your laundry mat. What the heck? This is sillier. Mom, I want to work in AI. I don't want to work in fencing or roofing.

Starting point is 00:17:17 What's going on, right? So, like, the kids don't want them. And these businesses are, you know, printing money and profits. So might as well go buy them at two, three, four times their annual profits, which means you could buy a business for perhaps 200, 300, 400. hundred thousand dollars and you don't necessarily need to have all that money in cash you can think about sba loans or owner financing things of the sort but then you go acquire these businesses plug in an operator yeah you should have some unique experience and some know-how as to what you're doing

Starting point is 00:17:47 but it's it's pretty simple robert yeah i agree and the number one thing is there's a famous quote that says you don't get what you want in life you get what you negotiate for so when you get to this stage and you're really thinking you know what i want to go buy this business i understand it. I can do some value add. I'm really good with marketing. Whatever it may be, always remember to negotiate what you want because so many, and I've been doing it for 30 years, of these business owners that don't have that succession plan, they're willing to do a large part of owner financing many times because they're still cash flowing without doing the work. You might want to give them a good little interest rate to help them along the way. So never

Starting point is 00:18:27 be afraid to negotiate for that. And always remember this. You don't have to quit your day job. A lot of these businesses, especially service businesses, can be owner-operated on the side, or you can hire an operator to run the day-to-day while you focus on the growth and the finances. I know plenty of people who work full-time jobs and own laundromats that generate $3,000 to $5,000 a month in profit with minimal involvement once they're up and running, and you've got your processes in order. So the difference between investing $50,000 in the stock market and investing $50,000 as a down payment, on a cash flowing business is the difference between hoping for that 10% annual returns and potentially generating 20, 30, 40% returns, cash on cash returns with the small business.

Starting point is 00:19:14 And the business itself is an asset that appreciates as you grow it. So you're getting cash flow and equity appreciation, which is great if you ever want to exit down the road. So, Robert, you've done this recently with you own a pizza company in Florida. maybe talk about what people should look for when they're evaluating these types of businesses and how you plan to, you know, you've got the cash flow from this pizza company that was existing when you bought it and then you also plan to sell it for a profit. Like maybe talk about that too. Yeah, for sure. Three things. Recurring and repeat demand. We talk about AI all the

Starting point is 00:19:48 time taking all the jobs. We talk about all these things. But grass always grows. Fences always need repairs. Roofing always needs replacing. So you want to buy a business where the demand demand exists no matter what's happening in the economy. Second, simple operations. The best cash flowing businesses are not complicated. And I'm not saying you can't go in and give better processes and use AI and create better marketing and all those things, but you want a business that's easy to understand. And they provide a service. They charge for it. They keep the difference. That simple. And you just do your thing. And don't overcomplicate this. And third, existing cash flow. Don't a project, buy a business that's already making money, and figure out how to make it better.

Starting point is 00:20:34 We talk about value adding all the time, better processes, better marketing. That's what you're looking for. That's a much higher probability path to success than starting from zero. That's why I like to buy existing businesses. And as Austin alluded to, there are tens and tens of thousands of those businesses right now where the owner wants to retire and has no idea what to do with it. And that's your target. And for your example, Austin with Parrish Pizza, yes, we bought it.

Starting point is 00:21:01 We did partial owner financing on that store. The neighborhood is growing rapidly. And our goal here is to keep it stabilized, keep it making money, and then exit it at some point in the next one to two years. Because as the neighborhood gets more and more traffic, we get more and more customers. And we're really just fine-tuning all the processes and preparing the business for exit because there's going to be someone that's retiring. They love pizza. they came from New York, New Jersey, wherever they came from, and they're going to want to buy this business. So that's it. Buy it, build it, improve it, make it profitable. Keep it forever

Starting point is 00:21:35 if you want. Set it up for your children or exit it. I like that breakdown. And I'll add one last thing here, which is that margin of safety, especially when you go to buying it. Robert, you had a massive margin of safety. I know you, I'm not going to say you stole this, but I know how much you paid for it and you stole it. So when people go out and negotiate and think about buying their own businesses and things of that nature. Like just like investing in stocks, you want to invest, you want to buy at a price that makes sense to you. So if it underperforms your projections, you're still okay, right? You don't want to pay six, 10, 12 times annual profit for a small business. You got to be disciplined on that price, do your own due diligence and make sure the numbers work in your favor. Now, Robert, we've just

Starting point is 00:22:13 talked about like these cash flowing businesses. And if you're someone who has a cash flowing business right now, maybe you want to buy a business or maybe you have your own business. Maybe you're an entrepreneur, or something of that nature, you can agree with us that a high yield savings account is very important. I have a high yield savings account personally because I've realized that earning interest on my emergency fund is monumental because if I do not, my emergency fund will wither away to inflation now at 3 or 4% whatever it is. And the entire purpose is to make sure that once you have that emergency fund, it's actually earning a little bit of interest for you because we say it all the time. Make your money work as hard for you as you work to earn it. Yeah, Austin, the big problem for so

Starting point is 00:22:57 long has been that most businesses just don't have access to interest-bearing accounts, which means they're earning literally next to nothing on their idle cash. I have idle cash in businesses all across the country, and that's why it's so cool because Waldo, we just learned about Waldo recently, they fix that. Waldo helped small business owners, startups, non-profit, and enterprises do with the biggest companies in the world do with their idle cash, and that's using something called a high-yield treasury account. Waldo offers access to yields up to 5% alongside SIPC insurance coverage up to $75 million on your cash with no minimum deposit and no need to switch banks. So if you have a business and your cash is sitting in a checking account, earning literally nothing, smack yourself,

Starting point is 00:23:44 and say, I need to go open up an account on Waldo. Waldo.a.i is the website. and I need to start earning yield on my idle cash. So opening an account takes less than five minutes. Learn more at waldo.a.i slash rich habits or click the link in the show notes below and do what the big companies do with their cash. If you're in this business and you have you got something going on, you realize, wow, I can't open a high yield savings account for my business because this is just not how it works. You can now. It's called Waldo. Go to waldo.

Starting point is 00:24:13 com slash rich habits and go earn money on your business's idle cash. It's crazy to think when I look back that for decades, small business owners did not have a way to make money sitting on their capital in their business accounts. And then here we are in 2026. Waldo exists now. So we can make money on our money just like all the big companies do. And we don't have to just let it sit there. So it's amazing. I'm super excited about Waldo and so glad we found them.

Starting point is 00:24:45 Robert, now let's bring it home here talking about the fourth strategy. We've talked about, okay, you got your $100,000, you've got it invested, index funds, ETFs, all the fun stuff. Let's diversify into different asset classes. Let's make some asymmetric bets with these pre-IPO companies in the Rich Habits Network. Let's perhaps buy or invest into a cash flowing asset, business, thing of that nature. But now this fourth strategy, which I think is the most important, and that is protecting what you've built.

Starting point is 00:25:11 This is what no one talks about when you go from $100,000 invested to a million-plus invested. And it's the most important because the reality is you've spent a lot of time, a lot of effort, a lot of focus and discipline getting to that $100,000, $500,000, a million dollar investment. But your one single unexpected event from it getting potentially wiped out. That could be a lawsuit, a medical emergency, a premature death when a family depends on your income. Like any of those things can undo progress that you've made in your portfolio and in your net worth over the course of years and decades. It could just unwind it all in a single unforeseen event. So having the right protection in place is paramount. I see entrepreneurs and business owners and seven-figure net worth get completely wiped out by a single lawsuit because they didn't have that proper asset protection in place.

Starting point is 00:26:07 You use the term willy-nilly. I see it all the time. I do one-on-one calls with people that have all these successful things, and I'm like, well, hey, do you have your holding company set up? Do you have your umbrella policy? Do you have any of these things, and they don't have any of it? Sometimes they have a lot of their net worth in personal businesses without LLCs and just no protection. And I've seen actual families lose everything because the primary breadrunner, let's say, passes away and has no life insurance. And the surviving spouse can't cover the mortgage or the bills or the kids' expenses.

Starting point is 00:26:40 This stuff is real and it's happening every day, even to smart people, because they never got around handling it. And I think the biggest reason, Austin, is so many people think when it comes to structure for building their net worth, that they wait until they get the net worth to $2 million, $5 million, $10 million. Then they start handling the structure. They start thinking about the will, the trust, all of these things that are so important that we've been talking about in the Rich Habits Network for years. and they just don't get around to it because they think that's a thing for older people that already have the money, that is absolutely incorrect. You want to start this stuff early and make sure you maintain it and grow it over the years so you have structure in every form of your financial life. So let's break this down into three specific things that I think everyone at the $100,000 plus stage should have in place. First and foremost, estate planning.

Starting point is 00:27:36 And I know you're 28 years old, you don't think you need a will. But if you have assets as you do now, you need a basic estate plan, a will, updated beneficiary designations on all your accounts, and ideally a conversation with an estate planning attorney. This doesn't cost a fortune. Basic estate planning can be done for a couple thousand dollars and ensures that if something does happen, even though you're younger, your assets go where you want them to go and not where the state decides they want them. to go because trust me, you don't want your assets ending up in probate court because many times it costs thousands of dollars and it ties everything up for 8, 10, 12, 15 months. You don't want that.

Starting point is 00:28:18 Yeah, the second thing here, and I think this is major. I recently did this. That's an umbrella policy. Single most underrated, underpriced, honestly, financial product in existence. An umbrella policy sits on top of your auto and homeowners insurance and provides an additional one, two, three, $5 million of liability coverage. It covers you if someone sues you for a car accident, a slip and fall on your property, defamation, right? Situations where the underlying insurance limits get exhausted. The cost is very cheap. A $1 million umbrella policy typically runs a couple hundred bucks. I have a $5 million umbrella policy. It costs me less than $1,000 a year to keep it. less than a thousand dollars and i have a five million dollar umbrella policy for liability like why if you're

Starting point is 00:29:06 listening right now and your net worth is 200 500 a million dollars why do you not have an umbrella policy for 500 bucks a year that's for two million dollars or something like you need to be thinking about this stuff you've spent years building it and you're one accident away from something bad happening and when you say oh it might not happen to me you could be right but it might happen to your wife or your husband or your child. I explicitly remember growing up, Robert, you know, I had a friend. They were very wealthy. Their parents were very wealthy, both doctors. And that friend got in a car accident at 16 years old. And the car that they crashed into was a woman who was pregnant and she lost the child. And they went and sued. And, you know, I don't know all the details there. Right. But like that could happen.

Starting point is 00:29:53 Right. Stuff like that happens. And if you don't have the right liability coverage in place to protect to yourself. If or when, God forbid, that stuff happens, like, you need to. And it's not just you. You could be careful. You're right. But your spouse might not be as careful and your children might not be as careful. I have a boat. I got the liability. The, what is it? The umbrella because of my boat. What if someone on my boat does something silly and they hurt themselves and now they want to sue me for something? No. Like, I just, you got to be protected, Robert. You got to be protected. This is so, so important. And I'm going to linger just for one more minute. I witnessed. I was there at a party, a birthday party, a very close family to me,

Starting point is 00:30:31 their very high net worth. A kid, I think he was 17 years old, offered the mother to load the water jug, one of the glass water jugs that goes in the stand, and he dropped it, tried to grab it as it broke, cut his hand wide open. They put a wrap around it. He left, they went and took him to an urgent center,

Starting point is 00:30:50 they sewed it up whatever. The family sued and won, and they got a tremendous amount of money out of it. When the kid did the offering, they didn't have the umbrella policy and it was just a simple little accident. So that is why this is critically important as you build your net worth, protect it.

Starting point is 00:31:07 It's not what you make, it's what you keep and that is so important along the way. I've had an umbrella policy for probably 25, 30 years now and you could say, well, you haven't used it that many times it's probably not worth it. Trust me, it's worth it. You'll sleep a lot better at night, especially if you have kids over at your house

Starting point is 00:31:25 or maybe you have a pool, whatever it is you want that protection. So let's get on to number three. If anyone depends on you for your income, you need term life insurance. Term life. Term, remember that. Not whole life, turn life.

Starting point is 00:31:41 A 20 to 30 year term policy that covers 10 to 15 times your annual income. If you make $100,000 a year and your spouse and kids depend on that income, a $1 million to $1.5 million term life policy ensures that if something happens to you, your family's financial life doesn't collapse along with you. And term life is shockingly affordable as well, especially when you're young and healthy. We're talking $30, $50 a month for a 30-year-old getting a million dollars in coverage.

Starting point is 00:32:12 So there's no excuse not to have this. Could not agree more. Term life insurance. Very important. I used suretion.com. Shout out Russ and Robin. They helped me get onboarded and all that stuff. insurance.com slash rich habits. They will, you can call them. Russell pick up. He'll say, hey, how's it going? Let me help you find a policy. They did some stuff. I'm now with prudential, but like they brokered it. They figured it all out. I had no idea what I was doing. I just know I needed coverage. So I've got a $2 million policy. And I spend, you know,

Starting point is 00:32:42 40, 50, 60 bucks a month on this. I mean, term life insurance, if anything happens to me, it's all figured out. So if you're listening right now and anybody depends on your income in your household, right? What happens here is you die. Your income goes away. Your beneficiary of this term life insurance policy gets the $1 million or $2 million. They then put it in the stock market and they do the 4% rule. So then they can begin to kind of supplement where your income disappeared. They're now able to supplement that. So again, that's sure.com slash rich habits. We'll have a link in the show notes below for it. Best people to do this. Best deal. We cannot recommend them more. Please do not put off the umbrella and do not put off that term.

Starting point is 00:33:25 They both are so important, Robert. So here's our rule of thumb for protection. If losing it would set you back more than five years financially, insure it or protect it legally. Your life, your liability, your assets, your estate plan, these are four corners of financial

Starting point is 00:33:40 protection and every single one of them should be in place before you start aggressively building beyond that $100,000. The people who build lasting generational wealth are not just good at growing money. They're good at protecting it and keeping it. 100%.

Starting point is 00:33:56 So let's bring it home. Let's bring it all together. You've hit your $100,000 invested. You've built the base, the foundation's solid. Now it's time to think bigger and move intentionally. Strategy one, diversify beyond the stock market. Bitcoin, precious metals, real estate, alternative assets. So your entire net worth is not in just U.S. large cap equities like Apple and Amazon, right?

Starting point is 00:34:18 Strategy number two, make some of those asymmetric bets. 2 to 5% of your portfolio into high conviction pre-IPO opportunities inside the rich habits network where your downside is capped but the upside can be life-changing. Strategy three, invest in some cash flowing businesses. Put your capital to work in real operations that pay you every single month. Think laundromats, service businesses, anything with some recurring demand in simple operations. And then strategy number four, most important here, protect what you've built, have an estate plan, get an umbrella.

Starting point is 00:34:51 policy, get some term life insurance from assurance.com. These cost nothing relative to what they protect. The first 100,000 was all about discipline. The next phase is all about strategy. You've proven you can save and invest. Now prove you can think like an owner, diversify like an institution, and protect like someone who plans to be wealthy for decades, not just for the moment. The base is built. Now, we want you to go build the empire. I love that, Rob. Robert, what a wonderful, wonderful episode. So, Austin, before we go into our Q&A, Cap Gemini just released the 13th edition

Starting point is 00:35:29 of its World Wealth Report this month, and according to the report, the wealth of high net worth individuals grew almost 9% last year, the strongest pace in five years. The rich got richer, but buried in that report is an actual rich habit. Cap Gemini surveyed 6,500 wealthy investors,

Starting point is 00:35:48 and nearly half of them named the same priority, fractional ownership of real assets, something we talked about in this episode. Not just more index funds, but share 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 now. They're opening a market that's shown to move independently of equity for 30 years. That kind of independence is really hard to find right now, and that's why we love Masterworks. With Masterworks, you can invest in shares of museum quality, post-war and contemporary artworks featuring Banksy, Bosquiat and Picasso, without spending millions of dollars. Over 70,000 members have invested more than $1.2 billion

Starting point is 00:36:28 across over 500 artworks. And across 29 exits to date, investors have seen net annualized returns like 16.5, 17.6, and 17.8%, not including those unsold. And Austin, the art market's been making major headlines all year. Over 2.5,000, billion dollars worth of artwork sold at auction in May, more than twice the amount of 2025's May auction season. And the UBS art market report says the global art market returned to growth in 2025 with the one to five million dollar range growing over 40% since 2024. So the wealthy are literally telling their wealth managers they want fractional access to real assets. Masterworks already built it. And as longtime partners, our listeners,

Starting point is 00:37:16 can skip the wait list at masterworks. dot art slash rich habits. That's masterworks. Dot art slash rich habits. Links in the show notes below. Investing involves risk. Past performance is not indicative of future returns. See important regulation.

Starting point is 00:37:31 A disclosures at masterworks.com slash CD. Masterworks is great. I use them. Roberts use them. We've had their CEO in the show. Like Masterworks is an awesome platform, which is why you recommended it earlier in this episode. If you can find another cool way to invest in art,

Starting point is 00:37:46 let us know. I have no idea. They are the best. They're the ones. Like, it's, it's so cool. So shout out Masterworks. Thank you for supporting the show. We think they're great. Robert, let's jump to our questions. Our first question here is coming from Chase on Instagram. Chase says, Hi, Austin and Robert, my new question is I'm dealing with a 1099 job. As a 1099 worker, I don't have consistent flow of income as it depends on my sales. How should I budget if I don't know exactly how much money I can expect to earn each month? Is there a rule of thumb or a strategy that you recommend? I'm 20 years old, going to college, working full time in the summer and part time during the school year. I want to start investing toward my future, but as I'm starting this 1099 job, my income is just very inconsistent, so I feel hesitant to invest because I want to make sure I can pay my bills first. Chase, great question. You're totally right. There is a sort of strategy around this. We talk about having that emergency fund of three to six months of expenses, but that's for people who are, you know, they have a lot of visibility into their monthly income. Maybe they're on salary and they know they make $6,000, $10, $12,000 a month. And that, I mean, there's no reason they're going to get laid off. So that income just is very consistent.

Starting point is 00:38:55 If that's the case and you're listening right now and that's you, three, four, maybe. maybe five months of monthly expenses is in your emergency fund and you're good to go, right? Shouldn't take you more than three, four, five months to go find another job in case something happened to you. Now, if you're like myself or Robert, or maybe you work in sales or maybe you're a real estate agent, something of that nature, and you have lumpy income, what we like to think of is six, maybe even more months of expenses depending on just how lumpy that income can be. So for example, if I were in your shoes, I would say, okay, I would lay out a piece of paper and I would have my budget in front of me and I'd say okay cool I've got my honest budget now

Starting point is 00:39:30 I want you to divide your budget between essential spending and non-essential spending essential spending essential spending is stuff that you have to buy to survive your rent gas in your car insurance groceries right like things that you need and if your essential spending is I don't know $2,500 a month okay great you now know that you need at least $2,500 a month to survive your Netflix subscription, eating pizza on the weekends in college, buying beer at the bar, and like all that's your clothes, your shoes, all that, that's not essential spending, right? You don't need those things to survive. So as you think about it as a 1099 worker having lumpy income, you would say, okay, I need to go figure out now, one, am I going to have this $2,500?

Starting point is 00:40:16 If yes, cool, I get to survive this month. Everything above that now goes to that non-essential. But maybe for months that you are below the $2,500, that's when you tap into that emergency fund. Well, how much do I have in my emergency fund? It totally depends on how often you think you'll need to tap into it. Obviously, I have this lumpy spending, like, or lumpy income, rather. So if I were you, I'd really consider to have a beefier emergency fund than not, especially if you're only working part-time and you have this bigger number you need to hit. But if I was someone that was even out of college, whatever's going on, that's how I would think about it, right? Essential spending. How much do I need? And then if I'm going to hit that great, if not, I need to tap into the emergency fund, if I'm way above

Starting point is 00:40:55 it, then I need to use the surplus to fill back up the emergency fund. But Robert, I want you specifically to answer Chase's question around like having inconsistent income like this, how does Chase know what should get invested and what should not get invested? Because from my perspective, I'd say, if it's over that essential spending, then yeah, go invest it. But if it's below that essential spending and you're tapping in, like you shouldn't be investing if you can't pay your rent, you know? Yeah, I really like your breakdown. And I think it's really, really good. In one kind of psychological mindset hack that I've used for decades is I try not to look at it when you have that lumpy income as a dollar amount. I try to look at it as a percentage. So if you have one month where

Starting point is 00:41:37 you make $2,500 and I want to have 10% go to investing, you know, after I've got that emergency fund built, then I know that 10% is $250. But maybe the next month, because I sold cars, it was very lumpy. It was up and down. And the next month, you might only make $17.50. But if you can still do that 10% and do $175, then you're taking the thought process out of it so you don't go, oh, I had a down month. I'm not going to invest. Even though your essential spending might only be $1,200 a month, you want to make sure it's spoken for. And I think a good practice is by doing it as a percentage of whatever the income is, get the essential stuff, the emergency fund set up, and whatever's left over, try to work from a percentage. because you don't have that regular income

Starting point is 00:42:26 where you can define it every single month based on dollars. Our next question comes from Danielle. Daniel says, Dear Austin and Robert, my husband turned me on to your show last year, and I've been hooked since I'm a 53-year-old ER nurse. I love it.

Starting point is 00:42:39 This is a late career starting for me here about seven years ago, at which time I began contributing to a 403B account, which my company does not match. I allocate 10%. I have just over $200,000 in this account, as well as a pension of about $47,000,000, due to your show, a new Roth account contribution of 5% as well as a bridge account with $25,000.

Starting point is 00:43:00 Let's go. Good job. That's great. Emergency fund is set up to my husband's 51 medical sales rep with a 401k of $300,000. Question. We purchased a second home two years ago and now we're renting out our previous home, which we now have 10 years left on the mortgage at a 2% interest rate. However, since we're so far behind in retirement, we're mulling over the idea of selling this previous home, profiting $400,000 and investing it into the stock market into our retirement accounts, or continuing to rent it out for the next 10 years, and then once the mortgage is paid off, we'll bring in $3,500 to $4,500 per month in that retirement phase of our lives. We do not have a property management company, but the house will need a new HVAC system soon. Should we keep the house or should we sell the house? Robert, what's your take?

Starting point is 00:43:52 This is a tough one. They've done a good job getting where they're at. Yes, it would be nice right now to have the $400,000 invested if they sell the house. But here's the things that want to make me say, I think they should keep it for a while longer. Number one, it is not a great housing market right now. So you're not going to get top dollar for the house because interest rates are so high. and people are sitting on the sidelines. So you might be able to sell it if it's an area that's hot and it's growing or whatever.

Starting point is 00:44:23 But my indications of doing real estate every day like I do is that I would probably wait from selling until a better market condition for buyers because then you might find yourself in a bidding war to get this house in which then you make more money and you're in a better position. The second part of this of why I'm leaning towards taking the house, 2% interest on your mortgage and only 10 years left. So if you kept this house for 10 more years, you've got really low mortgage rate, you've got the capital appreciation, you've got the current rental plus the rental increase. I don't know where the home is, so I can't figure out and calculate what the rental increases are for that home every year. Let's assume it's a general area in Ohio or Indiana or somewhere, and maybe it's 5% a year. So you've got capital appreciation plus the 5% plus the low interest rate, really making it favorably. for you that by keeping it, you might make more from the property than you would putting it in the stock market, especially because this will be a taxable event if you sell the house.

Starting point is 00:45:29 That's my take. I wouldn't worry too much about the HVAC system. I assume that's going to be $5,000, $7,000 to put a new system in. So that's not a big deal to worry about. But that would be my take, given the information we have. I like that take, Robert. You know, I'm looking at the math here, $572,000 invested using the exact number she shared. So it's called 575. She's 53. Her husband is 51. She's contributing 10% of her salary every year. I'm sure he's contributing as well. This money is going to double every seven years. Like you all shouldn't feel weird like you're struggling with this idea of being so far behind in your retire. You're not far behind in your retirement. You're going to retire at 65 with probably one and a half to two and a half million dollars,

Starting point is 00:46:14 depending on how aggressive you get and what the stock market does. One and a half to two million, two and a half million is a great amount of money to retire off of, especially if the house you're living in right now doesn't have a mortgage. So that's not like the big question to ask is like, do you plan to retire? You mentioned the second home two years ago. Do you plan to pay off that second home when you retire? Because let's say you don't and you have a mortgage of $3,000. Okay, well, now it's $36,000 a year of portfolio income you have to come up with.

Starting point is 00:46:44 You have a $2 million portfolio. You're making $80,000 a year on it with the 4% rule. So now call it $40,000 of that $80,000 is already allocated to this mortgage. You know, think utilities and property taxes, all that stuff, insurance. So now you can only live off of $3,500 a month. Like that's not that much live off of in retirement. So that's interesting. But on the flip side, let's say that, you know, when you do want to retire and call it 12, 15 years from now,

Starting point is 00:47:10 this home that's paid off in 10 years, this first home, the previous home that you're running out and making $3,500 a month on, maybe you use that cash flow from that to pay for your existing mortgage or you sell it when market is much better like what Robert was alluding to and you sell it and you profit 450,500, 600,000, use that money to pay off your existing mortgage and now you've got a big old buttload of cash in your nest egg here and you have no mortgage. So like there's a couple ways you can kind of put this together where you do retire with a massive seven-figure nest egg and very low living expenses in retirement. And I want to add one more thing to this.

Starting point is 00:47:46 I did some math and some research while Austin was giving a great answer. And the median retirement savings for couples between 45 and 54 is right around $115,000 to $200,000 in retirement combined income for that household. You guys are way ahead of that. So you've got to lose that mindset that you're behind. Yes, you're kicking yourself because you didn't do more sooner, but you're still ahead of. of the masses, and you're in great shape because you do have the equity in this property, and that property could go on to make you money for decades to come. So I just wanted to add that. Yeah. Don't be average or median, because average and median is broke here in America.

Starting point is 00:48:29 You listen to the Rich Habits podcast, so that's not what you're doing. Our final question comes from Tyler on Instagram. Tyler says, hey, Rich Habits team, huge fan of the Q&A segment, and I listen every day. Thank you for all your great insights. They've helped me build wealth over the years. My wife and I, ages 20, 25 and 26, have $100,000 invested and I graduate with my master's in statistics next spring, and my wife will transition to be a stay-at-home mom very soon. My dad is a big fan of the Die-Wit-Zero strategy and is gifting us $100,000 strictly for a home purchase. T-bills are okay temporarily, but strictly no stock investing is allowed with this money. We're open to house hacking or

Starting point is 00:49:08 other ideas but have zero real estate experience. So my question is, to maximize our wealth building while simultaneously staying safe, should we put a large percent down to minimize our mortgage, or a small percent down to maximize the property we can buy? Robert? Yeah, my take here is, obviously, your father is a Bill Perkins fan. I don't agree with the die with zero formula, especially if you have kids, but that's okay. In this instance, I would not buy the house based on the amount you're being given. I would buy a house that is within your means, and I I would put more money down given that you're getting that $100,000, but I wouldn't use all $100,000. Here's why.

Starting point is 00:49:52 So many people buy too much house. They have to furnish the house. They have to do all these things. And then they don't have any money left over for if the roof happens. If a water heater goes bad or something else happens in the first couple of years, then you're putting it on credit cards. You're taking out of your emergency fund, whatever it may be. So for me, I probably use 60. or 70,000 of it as my down payment and closing cost for the house. I wouldn't buy too much house

Starting point is 00:50:20 in the beginning because you guys are young. You can always get another house later, a better house down the road. And then I would probably keep $20,000 or $40,000 of that money if your father will allow it in a sinking fund, high yield savings account. So you have a backup plan in case anything happens. Yeah. I think if I were in your shoes, I would buy as little house as I can with as much down payment as I can while simultaneously being cognizant that I will probably need $5,000, $15,000 for repairs or maintenance or things like that. You mentioned you have no real estate experience. Like something's going to pop up and you're going to be like, I have no idea what's going on. I'm just going to hire a plumber, right? I have no idea what's going on. I need to do something

Starting point is 00:51:04 or something's going to happen. So if I were in your shoes, I'd say, cool. Let me go see if I could buy a $350,000 house. Put $80,000 to $85,000 down on that. Barrow, call it, you know, 250-ish or less, have a monthly mortgage payment of $2,500,000, $2,500 now at interest rates at 7%, right? But like, figure out a low mortgage payment and then have $5,000,000, set aside with your dad's permission for when things happen around the house, as they will. You've got a little bit of a buffer between you and a leaky roof or something that will inevitably happen. I love that take, Austin. What a great episode. I hope people love it as much. much as we loved putting it together because we just always want to give people as much good value

Starting point is 00:51:50 as we can within the podcast and the Rich Habits Network, of course. And I just had so much fun filming this. So did I. Please, Rich Habits Network, go check it out. We talked about the pre-IPO deals, but we're being serious. The Rich Habits Network is the coolest way to get access to some of these pre-IPO companies before they go public. I mentioned SpaceX four times before the IPO. We mentioned this BCI company we're investing in right now. We just closed another pre-IPO investment a week or two ago. So like we're doing fun stuff at least once a month over in there. Definitely go check it out. Plus you get eight hours of video coursework and access to Robert and I every Tuesday night in our weekly live stream. And we host office hours on Fridays where we're just kind of like

Starting point is 00:52:32 hanging out and chatting with you all as friends. Like it's just whatever you want to do. Just join us, hang out seven day free trial. You get to test all of it out for seven days, completely for free. And if you don't like it, then you just quit the trial and you come back to listening to these episodes and there's no hard feelings. So go check out the Rich Habits Network. Google Rich Habits Network. Click the link in the show notes below, whatever you got to do. And as always, thank you all so much for supporting the show. We'll see you on Thursday for our Q&A episode.

Rich Habits Podcast - 182: You’ve Invested Your First $100K, What’s Next?

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