Rich Habits Podcast - 41: Making & Investing Your First $100K

Episode Date: December 4, 2023

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz share their three best tips for making and investing your first $100K. As the great Charlie Munger once said, "it's a bitch, but you gotta do it." ---Be sure to check out Public's new ⁠High Yield Cash Account paying 5.1% APY.⁠ This is higher than anything else on the market and is FDIC insured up to $5M. ---Earn 5.1% APY using a Public HYCA, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here!⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Opt-in and share your email, ⁠⁠⁠⁠click here!⁠⁠⁠⁠Learn more about our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠4-module video course!⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Download our FREE Budget Template, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here!⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠To learn more about Robert: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://stan.store/RobertJCroak⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠To learn more about Austin: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://stan.store/austinhankwitz⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Contact: [e-mail] ---Hankwitz Group LLC has an existing business relationship with NEOS Investment Management LLC. The opinions expressed are those of the author, and the author owns several NEOS ETFs.

Hey everyone and welcome back to the Rich Habits podcast, a top three business podcast on Spotify. My name is Austin Hankwitz and I'm joined by my co-host Robert Croke. Robert is a seasoned entrepreneur in his 50s with more than 200 million in company exits under his belt and I'm an entrepreneur in my late 20s with a background in finance and economics. Since quitting my full-time job in corporate finance a few years ago, I've built a seven-figure media business and actively advised some of the most well-known fintech companies around the world. as the show name might suggest, every episode. We talk about rich habits as they relate to business, finance, and mindset.

However, we try and bring you two unique perspectives. One from an industry veteran, which is Robert and the other myself, someone who's still in the process of building wealth and figuring it all out. Now, Robert, before we jump into this episode, I just want to give a major shout out. We got our Spotify wrapped data back last week and oh my goodness. Robert, 38,000 people have us as their number one listened to podcast in 2023. That is absolutely incredible and insane. We are so, so, so grateful.

And 119,000 of you had us as a top five podcast you listened to in 2023. We are blown away and super, super grateful. I let Robert share his quick thoughts as well before we jump into the episode. So to think of that enough people to fill a major league sports stadiums, follow along and listen to us every single week is just incredible and it's a testament to our effort and the information we provide day in and day out to try and help all of our listeners achieve financial freedom. So it's been an incredible year personally and in business with Austin and we thank all of you each and every day. So with that being said, Robert, what are we

going to be talking about in today's episode? In today's episode of the Rich Habits podcast, we're going to get hyper-focused on making and investing the first 100K. So, as many of you know, the famous investor and Warren Buffett's partner, Charlie Munger, died last week. And we want to pay homage to him by sharing one of his most famous quotes, and that being, it's a bitch, but you got to do it. I don't care what you have to do if it means walking everywhere and not eating anything that wasn't purchased with a coupon, find a way to... get your hands on 100K. Now, that might seem a little extreme, but the point is spot on not only

coming from us, but one of the most famous and successful investors of the last 50 years. So let's get into it. Yep, definitely not saying to walk everywhere. That is, I agree, Robert, pretty extreme, but you are 100% correct. The first 100,000 is the hardest and the most important. Let's get into it. So number one, how to make money. It sounds easy, right? Most people never learned to optimize this, but instead they simply take what's given to them. You have to have the desire to grow your money at all times, and a big part of this is mindset and continually learning and growing your skill sets. For some of you, that might mean growing and honing in on your soft skills. This is often overlooked and many people get passed over for the better job, the bigger bonuses,

the raises, because they simply tow the line and don't keep up with the new ways. to improve on their skill sets, whether it be organizational, automation within their current career. And this is so, so very important to be that person at the job in the office that's always on top of what's happening, what's new, and how to optimize their role and their position within that company. Learn to be a better writer. Learn to be a better verbal communicator. Learn to be a better leader, more organized, more personable, right? These are all soft skills that even I'm trying to get better at because I know how important they're going to be for my future. All of these add up to creating a more valuable skill set. You hear me talk time and time again. Make yourself the most valuable person in the room because when you do that, you're not going to get overlooked for that promotion or that partnership or that new position.

You're just not because in your day-to-day life, you're continually reading and improving, which will help you grow on your entrepreneurial journey and in your daily life, but also in your career. So, so important. And I just really want to emphasize how important I think it's been for me to become a better writer over the last three years. Writing and being able to communicate your words in an email, in a blog post, in a newsletter, being able to write very well and for people to understand what you're saying and to get behind around your vision or your idea is super important. So if I could pick one of these, right? especially things I'm trying to work on.

Be a better writer, be a better verbal communicator in public speaker, and I do got to get a little bit more organized with my day-to-day life. But with that being said, now, let's talk about point number two, which is how to eat an elephant, and that is one bite at a time. So now that you're prepped on how to make more money, it's important for us to lay out the groundwork of how to eat the elephant of $100,000. And that is one bite at a time. I know when you hear Robert saying, get yourself $100K, no matter what it takes,

you might feel overwhelmed, and that is entirely natural. But I want to help you understand how achievable this amount of money really is in a relatively short period of time in your life. $5,000 per year for the next 10 years. So by investing $450 per month into the stock market from age 20 to 30 or 30 to 40 or 40 to 50 or whatever other 10 year time horizon you're at, you will have $100,000 in your brokerage account. So, Austin, $450 per month is a lot of money, especially with interest rates. and inflation out of control. So let's break it down for the listeners on what we would do

and how we would achieve getting this first 100K invested, made, earned, however you have to to get yourself on that wealth-building journey. Let's break it down. Simply put, there's two sides of the equation, right? There's the saving side. You can save your way there,

and there's the earning side. You can earn your way there. Personally, I would consider doing both. Now, starting from the savings side of the perspective, there are credit cards like the American Express Blue Cash Preferred that give you 6% cash back on your groceries. You probably spend $500 or $600 a month on groceries, do it on this credit card, and that's $432 per year in cashback.

There you go. There's one whole month. I already figured out for you because you just switched your credit card spending. Like, it's that simple, right? Now, maybe you're on AT&T or a Verizon, you know, cell phone plan. Have you thought about switching to visible wireless? My dad just did this and now he's saving $120 a month on his cell phone bill. So we're saving our way to that $450 per month.

It's so important to be really cognizant of what you're spending and how often you're spending it. Not only because you need to be tracking those things, but because you can optimize those things. Sometimes looking from within is one of the best things you can do to find that money to help yourself on that investment journey. And I do it all the time. And I think people need to do a better job of really looking and finding those untapped places where they can get that extra money. like a subscription service that they never use and never open up. So now let's talk about earning extra money. And this is something you can do with actually not working too hard at all.

I implemented a rule over a decade ago that if I have an asset that's in my possession around the house, in the garage, in the warehouse that I haven't used for a year, I immediately take pictures, posted on Facebook Marketplace, offer up, and I get rid of it. You'd be shocked at how easy it is to find that $450 a month laying around your house right in front of you. Do you know how many people have their college books still laying around that are like $30 a piece that they could easily sell probably in a day or two if they just took the time to list them? Or some clothes they bought last year that they don't wear, some shoes, maybe there's that tripod stand or that exercise bike or whatever it is. These are just ways to find that money.

that you already have within your possession and get it towards that investment journey for that $450 a month you need to get to that first 100K. Here's another one of my favorites, delivering groceries. If you're someone who doesn't mind going to the grocery store and shopping for other people, you can use Instacar and earn hundreds of dollars every month

to go to that financial goal. You could even pop in the Rich Habits podcast in your ears while you do it to pass the time. That's why I love this episode, because it's so much about mindset shifts. Getting people to understand. Let's say you have that nine to five job right now, and then you've got the kids on the weekend,

you've got to attend to for the sports and such. You still have the ability to make time, to find a side hustle, to make that $100, $300 a week that gets you away. So you just have to find the time, get rid of some of those time sucks where you cut down on maybe your Netflix, maybe you watch a little less football, stop watching Thursday night football, do the side hustle

on Thursdays, or give up some of that NFL football on weekends and do the side hustle on Sundays. Whatever it is, there's always a way to be able to get that side hustle to get that $450 a month working for you to get to that first 100K. And another great one that I don't see anyone talking about yet, and it's so weird, is earning affiliate commissions on TikTok shops. If you're someone who's pretty good on camera, you're creative, and you don't mind filming stuff and talking about products, you can start affiliating right now today on products you might already own and enjoy. And people out there right now are crushing it, even with small

followings because they're affiliating trending products that they already use. I love this one as a side hustle because I've talked to so many people that are doing it and really doing well with it. I know for us, our silly band shop is, rushing it every single day on TikTok shops. But affiliating other people's products is a great, great side hustle that you can do while walking down the street at your home, riding your bike. Hell, if you're at work and you have a job that doesn't keep you busy, you can make money while you're already making money.

So I love that one. Yeah, and I think too, if you are a new affiliate to TikTok shop, I believe sometimes it give you like gift cards. So it's like they'll give you like a $20 gift card to buy something on the shop. have it be sent to your house so you can make content about it to start earning income from it. Like literally, it's free to try this stuff. And I know another one is like sometimes they have like 30, 40 or 50% off coupons. So like once you've made your first money affiliating, like then they'll send you a coupon or like 50% off your next product.

Maybe it's like a really popular one I've seen. It's a face massager and you wear it kind of like a mask or something. I've seen so many people to talk about this thing. And it tells you how much how much these people are earning per unit sold. It's like $7, $8, $10, $12, $18 per year. I mean, I'm not saying you're going to sell 1,000 units a month, but like 10 units a month, that's 200 bucks, right? I mean, like, just make some content and give it a try, right?

People just need to get in the right mindset that if they want it, they can get it. There are so many ways we live in the most incredible time in history to be able to make money on your own terms. And so whenever anyone comes into my DMs or messages me, yes, the struggle is real. inflation is high, cost of living is high, gas is high, groceries are high, but guess what? Nobody's going to come save you. And the goal here, and what we want everyone to understand, especially with this episode, get your mindset right and go out and fix it. You can do it. There's so many ways to do it. I mean, I even saw a guy earn $1,200 in three days by affiliating

his favorite chocolate bar. It's insane. The money is all around you. And that's a lot. That's why we love all of you that follow along the Rich Habits podcast because we're always trying to help lighten the mood, lighten the load so all of you can figure out what works for you, your family situation to get you into a good place financial. So we've talked about the 100K goal. We've talked about sort of eating the elephant one bite at a time. What's point number three, Robert? Point number three is the good one, where to start.

You've already figured it out, you're on that journey and you're ready to get moving. This is really exciting because this is going to lay the groundwork to get you to that 100K in the most straightforward way possible. This is a tried and true strategy that everyone can implement and take advantage of. And we believe one of the best strategies to get you where you want to go on your financial journey. Drum roll please. The Roth individual retirement account. This is the secret account that's going to make the 65-year-old you very, very happy. because every single dollar of your future fortune is going to be enjoyed tax-free in retirement

because of this account. It's super simple and straightforward, and we believe everyone should have a Roth IRA the day they turn 18 years old. And don't panic if you're 35 or 45 or however old you are, you're fine. It's not too late to start. Go open it up. You're not too late to the game. If you're in your 50s, maybe, don't worry about converting any accounts or rolling things over.

We don't want a big taxable event for you before retirement. So just keep doing what you're doing. I'm sure it's going to be fine anyway. But Robert, walk us through why the Roth IRA is so important and how it's going to help people go from no idea where to start. I got an elephant staring at me to, man, that was the best meal I ever had. And now that the account is open and you've got the Roth IRA set up, the fun part really begins from there.

And here's what we believe people should be investing in in order to it easily achieve our 100K goal. And that's the basket of index funds that will, always talk about. For example, V-O-O, the S&P 500 index, is up 20% this year. That's right, why all the naysayers are saying we're in a recession and be afraid and the sky is falling. The S&P 500 is up 20% QQQ that we also talk about all the time and we love. And that is up 47% this year. The total stock market index VTI, we talk about that one all the time, is also up 19% this year. So there is money to be made if you know where to look. And that's why we love the Roth IRA and getting yourself set up with this basket of index funds as soon as possible. It's really simple,

right? Like think about just the compound interest that you'll be able to earn once you have this $100,000 invested. The NASDAQ, it's up 47%. Newsflash, 40% on your $100,000 is $40,000. 20% on your $100,000 is $20,000. Think about this. How many hours do you have to work at your job to earn $20, $30, $40,000? By having this $100,000 goal achieved, you are earning that every year. Passively, you're not doing a single thing for it. It's invested and you're just doing your thing, right?

That is why it's so important to hit this 100K goal. That's why we made this episode. We want to put a fire under your butt to get excited about once you hit this $100,000 dollar goal, everything gets easier with investing. Everything gets easier about retirement and enjoying it and having a prosperous retirement. Yes, this is what we always talk about. It's time in the market and not trying to time the market. You have to let compound interest do its job. That is why we're always telling you guys to not try to get in and out of the markets and try to be the hero and figure out when you should get in and when you should because everyone thinks they can do it.

You can't time the market. No one can. That is why you have to be consistent. Follow these strategies. Follow these things that we preach all of the time. And trust me, it's a lot easier than you think if you follow along. So before we jump into our question and answer section, let's take a moment to hear from this episode sponsor. This episode of the Rich Habits podcast is brought to you by Nios investments. Neos currently offers three unique exchange traded funds, SPY, B-N-D-I and C-S-H-I. All three aim to offer their investors monthly passive income with tax efficiency in buy. Their management team are pioneers in the options-based ETF space with decades of combined experience creating and managing ETFs that pursue

income as the outcome. And during uncertain economic times, EOS ETS can also be thought of as a way to turn market volatility into opportunity. While giving exposure to the S&P 500, U.S. aggregate bond ETFs or T-bills, the NEOS team uses unique option strategies with a goal of increasing monthly income for their investors. So if you're looking to add tax-efficient, monthly passive income to your portfolio, you can learn more about Nios ETS by visiting NiosF Funds.com. As with all investments, investors should carefully consider their investment objectives, risks, charges, and expenses of NEOS exchange-traded funds before investing.

To obtain a prospectus or summary prospectus containing this and other important information, please visit NEOSFunds.com. Please read the prospectus carefully before you invest. NEOS ETFs are distributed by Foreside Fund Services LLC. An investment in NEOS ETFs involves risk, including possible loss of principle. The equity securities purchased by the funds may involve large price swings and potential for loss. A fund's income may decline when yields fall. Fixed income securities will decline in value because of an increase in interest rates.

The funds may use derivative instruments to seek income, which involves risk from or possibly greater than the risk associated with investing directly in securities and other traditional investment. God, don't you love a good disclosure? But at the end of the day, y'all, we really want to hammer home how important we think it is to have a little bit of SPY, BNDI, CSI in your portfolios. SPYI is the largest dividend focused ETF or even investment that I have right now in my portfolio. I know it's Roberts as well.

We love the SPYEF. It's tax efficiency. It's passive income. It's got all the goodies wrapped up in this beautiful ETF that's like 50 bucks per share. So go check that out. Go learn more about Nios Funds. Go to NiosFunds.com. All the good stuff.

And major shout out to them for always being such great supporters of the podcast. Now, let's jump into some Q&A. We got some questions here. first one coming from Sarah, Robert. Sarah says, I've been listening to your podcast for a while now, and you all have mentioned the backdoor Roth IRA a couple of times, but I'm just a little confused on what's going on. I make too much money to contribute to a regular Roth IRA. Can you explain this to me? So, Sarah, here's how this works, right? We just talked about how important it is to have the Roth IRA as your investment account and your investment vehicle going into sort of eating this elephant of $100,000

because we want everyone to have tax-free retirement money. If you make, more than a certain amount per year, you have to do something called a backdoor Roth IRA, which is the exact same thing, but the way you go about investing the money is a little bit different. So a backdoor Roth IRA means this. You're going to open up a traditional IRA and a traditional IRA, right? Just make that very clear. You're going to deposit up to $7,000 in 2024 into that traditional IRA. Once that money is deposited, do not invest it, do not do anything, convert the traditional IRA to a Roth IRA inside of your broker and then begin investing the money while also making sure to fill out a very specific form for the IRS to let them know that you made the conversion.

I forget the name of the form, but it's it's right there in the broker. Just go check that out and file it for your accountant. But that's all it works. Traditional deposit money into traditional, convert to Roth IRA, then invest the money once it's a Roth IRA. Okay. So for the income limits, I looked it up just so we're online because they did change a little bit going into 2024. So it's 161,000 if you're single and 240,000 in 2024 if you're married. So they're getting

up there. Really, really great strategy. Great question. Sarah, thank you so much. And it's really timely too, right? We just talked about how the Roth IRA is going to be this solution to hit this 100K. So if you find yourself as someone as a single that might make over 160 or as a married couple that makes over 240, this is how you're going to achieve that $100,000 of tax-free retirement money, just like someone else would that makes a little bit less money than you. So really good question, Sarah. I love that. Good job. I mean, I really like that breakdown.

So our next question comes from Mike T. Mike says my employer recently got rid of our 401Ks at 6% match and is actually forcing us all to now invest our retirement inside of some fixed index annuity plan. What should I be doing here? Robert, what do you think about this? I just don't like it at all. It's really a shame you use the word forced, so I was hopeful that there was another option.

So I guess you'd have to really look at what is the best strategy for you? Do you just not participate at all? Can you not? Or do you give up participation on their side? You have to look at it with these fixed index annuity plans. You just have high penalties with the IRS if you take any money out early. You have high fees in these plans. And there's just so many kind of detrimental portions of using these plans.

Because one thing to look at is that they really cap your earnings on the upside. And there's no guarantee of the cap because a lot of times they'll tell you it's 7 or 8 percent. And that's just a lie. So you really lose out on the upside when we're in these years and years of bull runs. And you're not really mitigating your risk that much on the downside. So it's a big no for me. I would see what you can do to not use it. But for me, I don't recommend those to anyone.

And I would prefer you didn't use it either. I think the important part Robert mentioned here was that cap. Sometimes these fixed annuity plans are capped at like 8% returns. Let's just use round numbers. Say it's 10%. Well, the S&P 500 went up 20% this year. The NASDAQ is up 47% this year. So by being inside of this fixed annuity plan, you're capping your total gains at 10%. When in actuality, if you were just invested into the markets, you would be up 20% or 30 or 40% right. So sure, I understand like, you know, it feels good of not saying the the downs of the stock market. So it kind of stays flat.

But you're also really missing out on those ups. And to me, that just doesn't really make sense. But I guess it really depends on where you are in your retirement journey, your age, your risk tolerance, stuff like that. But I just, I don't like this either. And so, you know, what you should consider also doing maybe is instead of, especially if there is no match, maybe just putting money into a traditional online brokerage account, maxing out your Roth IRA, making sure you don't have any high interest

debt, things like that. Let's go on to Jeff H. My wife and I are working on paying off our high interest credit card debt. Good job. We want to see that. Once we tackle this debt, we want to begin investing in the S&P 500. However, we notice shares of VOO, the index fund, ETF you talk about, is $421 per share. Are we supposed to save up and buy one share at a time when we have this money? This is a great question. We have to talk people through this all of the time. So, Austin, break it down for them as far as what fractional buying means. and where to do it. Yeah. So there are brokerages, Jeff. You might be on Vanguard because there are brokerages like Vanguard that make you have to purchase the whole share at a time.

So you do have to save up and spend the 421 and like you actually have to buy that. But that is so 2008. So 2010, right? Welcome to 2023 where we have fractional share investing, which means the broker allows you to invest dollar wise, not share wise. Right? So they can say, hey, I have $100 to invest. I want to go invest it to VOO, go do it for me. And there are brokers out there

that do that, right? For me, I use M1 Finance. They're my Roth IRA broker of choice. And they're who I use and it's super easy. I think Schwab is also fractional. I think Adelity is fractional. I really think Vanguard's only one that's stuck in the past here, Jeff. But fractional investing is the solution to your question, Jeff. You don't have to save up $400. Because think about it, right? What if it takes you four months to save up $400? That's four months that you're not in the markets moving up and down and eventually up and to the right. So by staying invested with defractional shares, that's how you're going to be able to solve this problem and probably have more money in retirement if you fractionally invest versus wholly share invest. Love it. All right,

what a great episode. This was a lot of fun. I really love when we delve into these kind of structural mindset episodes because so many people get stuck in their own head and they can't get out of their own way. And that's why I love talking about mindset, analysis, paralysis, and really helping lay the groundwork for people so they can realize how easy all of this really is when they get out of the scarity cap mode and just take action and do the things that execute on the things we talk about. I couldn't agree more, Robert. I am so, so pleased to have seen so many tens of thousands of you listening and rating and giving us all the good vibes in 2020. I am so excited about where the podcast is going to be headed in 2024.

And I'm eager to see what our Spotify wrapped data looks like in 2024 and compare it to this year. So everyone, thank you so much for listening to this episode of The Rich Habits podcast. Don't forget to leave it a five-star review, share it with your friends, do whatever you got to do to get the word out there and have a great rest of your week.