Rich Habits Podcast - 54: Our Bitcoin Profit-Taking Strategies

Episode Date: March 4, 2024

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz share a few strategies related to investing into Bitcoin. Portfolio composition, volatility expectations, and profit taking. ---To listen to Public's new podcast, ⁠The Rundown, click here!⁠---⭐ Download our FREE Budgeting Template – click here⭐ Earn 5.1% on your savings with a High-Yield Cash Account – click here⭐ Trade stocks, options, music royalties and crypto on Public – click here⭐ Automatically buy stock where you shop with Grifin – click here⭐ Protect your family with term life insurance from Suriance – click here⭐ Use code “Spotify” for 15% off our 4-module video course – click here⭐ Optimize your portfolio with Seeking Alpha – click here---👤 Explore everything Austin does – click here👤 Explore everything Robert does – click here❓ Ask us questions for our Q&A episodes – @richhabitspodcast on Instagram📬 Inquire about working together – [e-mail]---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.

The ride that steals the spotlight every time it hits the road, that's the Volkswagen Tiguan. Its sleek exterior makes a first impression you can't ignore. Step inside to find available full leather seats and wood accents. Under the hood, the available 201 turbocharged horsepower engine gives it a fun to drive edge. The refined Tigwan, you deserve more style. Visit vw.ca to learn more. SuvW, German engineered for all. Hey everyone and welcome back to the rich habits podcast, a top five 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 advise some of the most well-known fintech companies around the world. show name might suggest every episode we talk about rich habits as they relate to business finance and mindset however we try and bring you two unique perspectives one from an industry veteran which is robert and the other myself someone who's still in the process of building wealth and figuring it all

out robert what are we talking about in today's episode in today's episode of the rich habits podcast we're going to be talking about the number one thing on everyone's mind and no it's not the presidential election. It is Bitcoin, Bitcoin, Bitcoin has officially breached 60K. So many people said Bitcoin was dead a year and a half ago. Crypto is a scam. We had all of those same, same sentiments rolling around. But we stayed tried and true to Bitcoin. And here we are again, heading into this bull market. And it is awesome. So as you know, we started encouraging our listeners to add Bitcoin to their portfolios last spring when it was half this price. So hopefully everyone took notes and took action because here we are again in a really great spot.

So as Bitcoin begins to take center stage again, we think this is a great opportunity to talk about where Bitcoin fits inside of our investment portfolios, the volatility that comes with the investment, as well as our own individual exit strategies. Yeah, for some people, right, Bitcoin is a forever hold. I think Robert is one of those people. For others, like me, it's a means to an end, right? I've got a goal of paying off my mortgage, hopefully one day, with Bitcoin and other cryptocurrency. And for you, listening right now, it might be something in between. So with that being said,

let's talk about portfolio allocation. Yeah, we always talk about how important it is to build your base, which to us means that first 50 to 100K invested in those longstanding index funds we all know in love. However, once that base is built, we believe it's equally as important to diversify your investments into other asset classes. Some of those asset classes might mean real estate, income focus covered call ETFs, and of course, Bitcoin. So today, we want to cover what that looks like as a percentage of your investable assets and how to execute on that. Fidelity states for their clients that they believe in allocation of 1 to 3% in Bitcoin is the right amount. And although I get that, I disagree somewhat for those of you that might be younger in your

financial journey or have a higher risk tolerance. So for me, I personally feel that people could safely have 5 to 7% to 7% just for Bitcoin and maybe have 10 to 12% of their overall investable capital in cryptocurrency. Yeah, Robert, I'm largely on the same page, right? I've always thought people should have between 5% and 15% of their net worth invested into Bitcoin or cryptocurrency. Obviously, not a bunch of these like random little coins. I'm not sure if you guys have seen that documentary. This is not financial advice. You can go check it out on YouTube. I think it's like two or three dollars to purchase it. But it's about the dogecoin millionaire, Robert. I think back in 2021, right, this guy racked up $180,000 of debt to go put it all into

doge coin. He wrote it all the way up to $3 million in value, didn't sell a dime of it. Oh my God. And then wrote it all the way back down to like $180,000, $60,000, right? So we're not talking about these crazy random coins, at least myself. I'm talking about. about Bitcoin, right? I want to own Bitcoin. And the reason for this is something called asymmetric risk. So let's pretend you are one of those listeners that was able to dollar cost average into Bitcoin over the last year or so like we had planned for and talked about repeatedly. Perhaps your dollar cost average price is around the 30K range. The asymmetric risk here means that there's disproportionately more upside potential to that investment than downside in relation

to the next best thing. Now, when I talk about the next best thing, thing. When Robert talks about the next best thing, we're always talking about the stock market, right? That is our opportunity cost. If I invest into X, how does that return potential relate to what the stock market has done on average over history, right? 10%. So assuming that $30,000 purchase price, you would be up 100% now at $60,000 per coin in less than a year with moderately higher risk profile, assuming proper portfolio allocation. I guess all I'm trying to say here, Robert, is that we've seen Bitcoin go from 20,000 to 60,000 in a very short period of time. And before that, it went from like 4,000 to 65,000 back in 2020 and 2021.

And then even before that, in 2017 and 2018, it went from like 1,000 to 20,000. So there's definitely a pattern here of immense upside potential. And I want to have that exposure inside of my portfolio. Yeah, I love it. And before we take on the next portion of this, I just want to touch on the movie because I think all of our listeners should watch that movie. It is a great testament that everything you shouldn't do and all of what we speak about because it's just so crazy that he was able to take 180,000 of debt, turn it into $3 million. He should have at the very least taken $2 million off the table,

put it in traditional investments in his life would have been set. But instead he wrote it down and down and the diamond hands and all of that stuff. And it was just crazy to me. But it was a great movie to watch to tell people what not to do because you should, always be taking profits along the way and have a thesis that's not based in emotion. You know, we're always talking about diversity. We're always talking about taking profits. It's all about understanding what you want out of that investment as you're making the investment. So speaking of building and diversifying our portfolios, our friends at public recently launched their own podcast called The Rundown. So please check it out.

It's a new rich habit you can work into your daily routine listening to the rundown public's new financial podcast. Yeah, it's actually hilarious because it's hosted by my friend Zadadmani. He's a rock star content creator. And it's only five minutes long. You'll walk away getting caught up on which stocks are making the biggest moves, the economic stories that matter most in your portfolio. What's moving? What's up? What's down? I think they even talked about Robert Wendy's is now doing like surge prices, like how Uber has surge prices. Wendy's is now doing that with their cheeseburgers. I mean, it's just so funny, man. The stuff they talk about over there. So go check it out. wherever you listen to podcast, is going to be a link in the description below here on Spotify to go give

that a listen. Now, Robert, let's talk about volatility. I think what's important for any investor, especially if we think about the Dogecoin millionaire back in the day, right, he saw some big ups and some big downs. Every crypto investor, including Bitcoin owners, like ourselves, are going to see big ups and big downs over the next six, 12, 18 months with Bitcoin. So let's talk about volatility for a second. Yeah, I think volatility in Bitcoin and the crypto markets as a whole is the entire reason that adoption took so long to get these ETFs moving, to get, you know, legislation and get a blueprint for how we can move forward in blockchain and cryptocurrency. And I think that's one of the biggest reasons because traditional investors aren't used to that.

They're used to, you know, some volatility, maybe a 10% correction, a 5% correction. But the swings in Bitcoin are much more severe. And I think that is one of the biggest reasons it has taken so long to get where we are today. So we can't really talk about Bitcoin without talking about volatility. So what is volatility? Volatility simply means the ups and downs that come with a specific investment. Think percentage of gains and losses. Over the last eight years, we've experienced two bull markets with Bitcoin causing tremendous price action to the upside and the downside. And this is very, very important for everyone to understand because we saw Bitcoin peak at both 20K and 68K,

before falling 80% in value in only a few short months. And this is the volatility we're talking about and why everyone needs to understand to not invest with emotion and have a long-term thesis and understanding of this so you don't get broken down emotionally when you see these large swings of volatility. Yeah, right. This is why we always discuss before making any investment. One, it always comes with risk. We always have risk with any investment we make at all,

right, that's what investing is. And with that risk, we also have to understand how important it is to have an underlying thesis as to why we're making that investment, allowing us to take a motion out of the equation and ride the wave both up and down. Now, during the coming several months throughout 2024 and 2025, as Bitcoin and cryptocurrency as a whole continues to trend higher, you should prepare yourself for massive price swings, both to the upside and of course to the downside. I mean, Robert, I wouldn't be surprised if we saw a 10% swing in value in a single day now coming up. I think we even saw a couple of those last ball run. Yes, right now, Bitcoin is definitely overbought. And so with that, we could see one more pullback before the halving. I know the

having is inching near very, very quickly. We assume the having is going to be the 18th or the 20th of April. But we definitely could see another price swing. It could go down as low as maybe 38 to 42K. But who knows there's so much momentum now that we kind of have to look at throwing the technicals out the window i hate to say that but we kind of do because there's such a big hype cycle right now leading into the having and with the etf approvals and all of that so yeah it's a crazy time for this well speaking of crazy times let's talk about having an exit strategy right let's talk about we've got our money it's up it's down it's whatever how are we going to be approaching taking our profits and realizing these gains right turning numbers on

on a phone or computer screen into money in our bank account. Yeah, my strategy is a little bit different than the norm because of my very low dollar cost average price on Bitcoin. So moving forward into 24 and 25, I won't be taking any profits on Bitcoin until the 200K mark. And I know you get a little chuckle out of that, but that's just my thesis and where I'm at based on my overall profits in Bitcoin over the last decade, as well as where I believe Bitcoin is going to go.

So when I talk about taking profits, that means I'm selling 20% of my entire portfolio and letting the other 80% ride all the way back down and up over the next three to six years. So for me, I will have Bitcoin in my forever portfolio. And I believe ultimately we could see a 500K Bitcoin over the next several years or decade. Yeah, I'm on the complete opposite side of the fence there, Robert. I did my waiting and riding. I don't want to wait another 3, 6, 10, 12 years. I plan on doing something called a ladder sell approach, which means I'll be selling 10, 15, maybe 20% of my entire cryptocurrency portfolio, including Bitcoin, once Bitcoin hits very specific price targets I have for it.

So that first one is $100,000. Then again, at $120,000, then $150,000, so on and so forth. And I plan to be entirely out of my position, hopefully, right? I can't predict the price of Bitcoin, but hopefully it continues to go up. I ladder out of my position and I'm totally out around 160, 170, maybe 180. I really don't know where it's going to go. Now, to me, it's really important to have specific, I'm going to sell numbers locked in and ready because things are going to feel euphoric. I don't know who here listening was around in 2018 or 2021, 2022 when we had some crazy straight up into the right Bitcoin price action,

but it always feels like it can just keep going up. It just keeps going up. And you don't want to sell you want to make more money it just feels euphoric and by taking a motion out of the equation and giving yourself clear instructions and disciplined instructions to sell at this number at this number at this number you won't find yourself like i found myself you know in 21 and 22 when i didn't sell riding that wave all the way back down looking back and saying man if i really sold like i was supposed to or like i told myself i would i would be able to have so much more money in real estate so much more money in the stock market, so much more money in this or that. So I made that mistake. I encourage other people not to make the same mistakes I've made in the past. I will be selling my cryptocurrency. I will

hopefully be making seven figures from that. And I will be putting that into other investments that are going to pay me straight passive income if that is through covered call ETFs. If that is through dividend paying ETFs or real estate or investing into cash flowing businesses, I want to take magic internet money, put it into my bank account and turn it into real money in the actual world. Right. That is my plan. That's how I'm approaching this. And I encourage everyone to do the same thing. Well, that's what makes you a great investor. You have a thesis. You have a plan. You stick with the plan. And you're very, very good at it. Now, for me, there's a little more gambler inside of me. I can tell you a really funny story quickly. 2017, the euphoria was at an all-time high. I was at a cryptocurrency conference that was held in an exotic car dealership, which was really brilliant.

The drinks were flowing. And I just remember, we were counting. down Ethereum to hit 1,000 that day, and Bitcoin was ripping. And they had all of the exotic cars with price stickers based on the current prices of Bitcoin of how many Bitcoin it would take to get one of those cars. I pined for hours at that event because I had owned an Aston Martin DB9 convertible and I sold it. And they had a newer one. It was a one year old model back then in 2017 and it was beautiful and I was like man for 2.6 bitcoin I can just walk out of here with this car and it would literally at that point would have costed me like $670 to own this hundred and some thousand dollar car but I didn't do it so I at least was strong in that aspect but I remember that

night I did sell 300 Ethereum at $1,000 so I did stick with the plan there but I love where you're at in your thought process and I think it's so great for our listeners because again If you stick with the plan, keep a motion out of it, you're going to be in a much better situation long run. Another strategy that's great for our listeners is selling your position based on incremental gains that you've predetermined. For example, when you get to a 20%, a 50%, a 100% return, whatever those numbers are for you that align with your risk tolerance and your thesis on that specific investment is another

way to do what we say, and that is take money off the top and take profits. and sell and have those incremental predetermined amounts based on gains. So that is another way to look at this and really give people a plan that they can stick. Amazon presents Jeff versus Taco Truck Salsa, whether it's Verde, Roja, or the orange one. For Jeff, trying any salsa is like playing Russian roulette with a flamethrower. Luckily, Jeff saved with Amazon and stocked up. on antacids, ginger tea, and milk. Habaniero, more like habanier, yes. Save the everyday with Amazon. 100% right. And something else, you know, speaking of gains and capital gains, let's talk about

taxes. I feel like a lot of people forget about that, right? So if you're selling your Bitcoin for a profit, if it's on public or Coinbase or Cash App or M1 Finance, wherever you're investing it, you need to set aside 20% of your long-term capital gain profits for taxes. And I up to 35% of your short-term capital gain profits for taxes. It's really important to understand the difference and to actually have this money ready when tax season comes. I think back to 2017, Bitcoin was up a bunch and people sold it and even 2021. And they're like, oh, nice, I got all this extra money. I'm going to go use it and then flip it into some NFTs or do this or that. And then they file their taxes in April. And it's like, oh, wait, I owe the IRS $60,000 in long-term capital gains.

Like, I don't have that kind of money. My NFTs are down. I can't, you know, now I've got to sell at losses. I mean, it's a terrible situation. Be disciplined. You know, pull that money to the side, 20%, up to 35%, whatever your number is, like go use a calculator, talk to professional, whatever you got to do, and park it in a high-yield savings account. Forget about it and let that money sit until Uncle Sam comes knocking and asking for it tax season the following year. Yeah, so many people forget, and it's shocking to me that, you know, when you're doing a buy and hold strategy and you have this thesis, it's great. But when you're buying and selling and trying to get in and get out and time the market all the time they forget, every time you sell it's a taxable event. And if they're not considering that

in the implications from a tax perspective, it's going to come back and bite them in the butt if they're not setting that money aside. So I always have to like spell that out to people to remember that, you know, you think you're timing the market, but you're forgetting that when you jump in and jump out and have all these panic buy and sells, it is a taxable event. You just need to be cognizant of that. I couldn't agree more, Robert. Well, everyone, please be careful with your Bitcoin, be responsible with your Bitcoin. We are excited to see Bitcoin is rocking and rolling, just like we had talked about over the last year now. Cheers to that. And we are eager to see where Bitcoin takes us over the coming 6, 12, 18 months. But please have a plan, have a strategy, and don't make the mistake that I made,

that Roberts made, that everyone's made in the past of thinking it's going to just keep going up, keep going up because you're going to find yourself in the red and say, dang, I wish I sold at this price or whatever, right? Even if, see, now this is what's so important to, Robert. And I want you to talk about this because I'm sure you've done this in the past responsibly speaking, which is like, hey, I bought something for X. I made a 3x or 2x or 50% return on it. I sold it because that was my discipline cell. And even though that it went up another however many percentages, I still locked in my gains. I still feel good about that. Right. So do you have any examples of that, Robert, actually before we flip to our next session? Yeah, I mean, you alluded to the movie

with the Dogecoin guy and that happens all the time. The number one thing, and I always equated to a casino. If there were speakers all throughout the casino with microphones, so you could hear what everyone is saying, I think the number one thing you would hear throughout all of those giant casinos is, I was, I was up 10K. Oh my God, I was up 20K. And the biggest problem with that is, is not knowing when to get out. And that's why this episode is so important. I've had so many instances, and it haunts me sometimes when I think that I sold 300 Ethereum at $1,000 apiece. My returns on that were in the thousands of percent because I believe my dollar cost

average on those 300 Ethereum was like $42 each. So I look like a genius that day. We were sitting in the casino at the restaurant eating and I'm selling 300 Ethereum. But then when you look in the rear mirror and you see it just goes up and up and up and now we're at 3,100 and it could be 10 grand. You can't do that. You have to lock in these gains based on your thesis when you got into the investment. You know, when I bought my first Bitcoin at $7, you know, and I sold a bunch of it.

I think I sold my first hundred Bitcoin. I think it was at something like $400 or $700 or something like that. I look like an idiot now if you think about it. But no, not at all. Because no one could have ever seen this coming. And I was so early buying Bitcoin that I thought I was a genius. I'm sitting there going, yes, I turned a $7 investment into a $700 investment and I had a lot of it. So it really does come down to understanding that and sticking with it and taking the emotions out.

And that's what makes you, Austin, such a great investor because you go by the numbers. You don't look in the rearview mirror and I struggle with that sometimes or I'm like, man, if I just had all that Bitcoin back, but I can't do that because of the return. It always comes down to understanding and looking at your. ROI. If your return on investment meets or exceeds everything you desired for that investment, then you're crushing it. You can't look in the rearview mirror. It just won't help. I couldn't agree more, right? Take the magic internet money, lock in those profits, right? Take them from numbers on a computer screen to money in your bank account to then real estate, to index funds or, you know,

cash flowing businesses, right? Something tangible that you can feel and touch. They're no longer magic internet money. It is now something that is actually, you know, tangible. You're invested into it, right? That's where we all want to go. And that's what I think is really important for people to understand for this episode. So before we jump into the question and answer segment, let's take a moment to hear from this episode sponsor, Nios Investments. Neos offers ETFs that aim to offer monthly income while providing core portfolio exposure across equities to fixed income and cash alternatives like T-bills. Their ETFs may be particularly interesting for folks looking to generate passive income inside of their investment portfolio.

They even offer ETFs that offer exposure to the S&P 500 index or the NASDAQ 100 index while aiming to offer high monthly income beyond what investors would receive from plain exposure to the index. Their funds may serve as a compelling income-focused alternative or complement to many of the investments already in many investor portfolios. If you're looking to add passive-income-focused ETFs to your portfolio, consider learning more about Nios ETFs at NEOS. neos funds.com. As with all investments, investors should carefully consider their investment objectives,

risks, charges, and expenses of Nios exchange traded funds before investing. To obtain a prospectus containing this and other important information, please visit neosfunds.com and please read the prospectus carefully before you invest. NeoCtfs are distributed by Foreside Fund Services LLC, and investment in NeoCTFs involves risk, including possible loss of principle. Equity securities purchased by the funds may involve large price swings and the 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. Now, Robert, I talked about this a little bit earlier, but, man, I can't wait for the day when I get

to transfer my Bitcoin profits and cryptocurrency profits into SPYI and QQQI and these other incredible ETFs that Neos funds offers because I will be making passive income every month, like so much of it. It's going to be great. I'm going to be able to pay my mortgage. I'm going to be able to live my life. Heck, even maybe potentially retire early because of these ETFs. I'm so, so excited to be the guy who can say, yeah, I turn my Bitcoin money into covered-quality ETFs that now pay me X amount of thousands per month. It's going to be awesome. Yeah, I love it. And now that we know you're not a boat person, I don't have to worry about you buying a bigger yacht than me from your Bitcoin profit. So I like that part. So yeah, I remember you were all excited saying we were going to do

the rich habits podcast from a yacht once we get into this bull market well we're here you know and it's like now the question is how big is this bull market and hopefully everyone following along the rich habits podcast in our community is really just taking notes and taking action because the next 18 months theoretically should be the best 18 months in my lifetime and certainly yours to build wealth so it's very very exciting and i'm so glad we have this platform and these tens and tens and of thousands of listeners so we can give them just a little bit of a nudge every single week in the right direction to make sure that they're doing all the right things to build their own personal wealth. I love it. So our first question and our question and answer segment comes from Mark.

Mark says, hey guys, I really like your philosophy of spending time in the market rather than trying to time the market. I'm 40 years old and I started investing about five years ago. How long should I hold on to my stocks? Is selling my stocks ever part of the plan or is the idea to hold on to them forever throughout retirement. How long should I spend time in the market? Robert, I'm going to take a stab at this one first. So when I think about investing, Mark, at least retirement investing for me, right, with a Roth IRA or a 401k, whatever that's going on for you there. But when I think about retirement investing, I'm thinking about, okay, I want to have a lot of money in retirement. Why do I want money in this retirement account? So when it's invested conservatively and responsibly into the

stock market, I could earn a four, five, or six percent annual return and live off of the interest. Right. Robert, we talked about the four percent rule, right, the Trinity study, which was essentially how to kind of craft a retirement portfolio that will yield you about a four percent annual return for at least 30 years allowing you to never run out of money in retirement. That's sort of my goal, right? I want to have all of this money invested up until retirement. And then as I begin to think a bit more conservatively in retirement, I'm going to aim for that 4, 5, 6% return, allowing me to, you know, generate enough income off of my retirement portfolio to retire, to say, okay, cool, I just made $80,000 this year from my retirement portfolio. I'm going to go spend that in retirement,

however I want to do it. So to answer your question mark, I want to be invested throughout retirement. So for me, that's going to be most of my life. I plan to pass my stocks and my retirement accounts down to my children and hopefully they'll continue to invest it as well. I love this question mark. And for me, it's a little bit different, very much same, but a little bit different. So how I look at it is, when do you sell a stock? Sometimes it could be never. You might hold a stock for five years, 10 years, 20 years. It really depends. I think one of the biggest hindrances and it was me as well in my early years of investing, let's call it 30 years ago, is that I always felt I had to get in and get out, get those hits, make that money. And I just don't agree with that

anymore. For me, I'm more of a buy and hold guy now. If I love meta and Amazon and Tesla and Google and Microsoft and these companies that just print money year in and year out and they're the big, big tech leaders or whatever sector it's in, I don't find a need to be looking at what is my time horizon to sell that specific stock. So for me, in this buy and hold strategy, it really is all about time in the market and not timing the market. And once everyone listening, learning, learns that, they will be able to sit back and have a little more ease in their investing because if you believe in your thesis and you believe in the company and everything is moving the way it should and up into the right over time, then I don't think it's necessary to really always be

worried about when you're selling an individual stock. So great question. That's my thoughts on it. And I think it's just better to just, you know, make good choices and have a solid plan and stick with it. So Robert, talk to Mark now a little bit about index funds, right? Obviously, buying and selling stocks is, you know, there's a different strategy for that than there is the S&P 500. So what would you tell Mark and other listeners right now that are trying to figure out how long do I hold my index funds for? Yeah, for me, it's similar to Bitcoin. VOO is a forever hold. I'm just, there's no reason to sell it. I'm going to bet on America. Over time, I think the last 60 or 70 years, it's averaged like 11% a year. And so that's the difference of those baskets we talk about in that diversification.

Do I have accounts that I look at as kind of my high risk accounts? Absolutely. But I also have an account over here that's my big retirement account that does not get touched. I don't play around with high risk investments in that account. And I stick to the basics. You know, the SPYI can be in there along with VOO. I've got QQQ in there. I've got Moat, M-O-A-T. These are those tried and true, boring, yawn you to sleep investments, but I know that over time I'm going to be very, very safe and I'm going to make sure that I have those for life because they're always just the favorites. They perform well. And I know they're safe investments for the long term with a low cost of management. And so for me, that's how I handle the index fund side of things.

What a great question, Mark. And even better answer by Robert. Now our next question comes from Nathan. Nathan says, hey guys, I'm a big fan of the show. It's helped me have a general roadmap to take control my finances, and I really appreciate that. I've got about $13,000 in student loans at an average fixed interest rate at 4.7%. However, I'm currently in a repayment plan that has my interest in payments paused. My question is, how should I handle this? I know some investments can outperform this debt by percentages. Should I be paying off this debt or should I be investing? So, yeah, like, let's be Real, right? You could go find something better than 4.7%. Like, sure, of course, there's something out there. But in my opinion, you know, 4.7%, 5%. Like, you're getting into high interest debt territory, you know, especially once you start to get up to that. And you said the average, right? Average means you've got more than one student loan, maybe some loans are 7 or 8%. Other loans are probably 2 or 3%. So you said average of 4.7. I get scared whenever interest rates are benchmark plus 1. So benchmark right now is call it 4.5%. So you put, one percentage point on top of that, call it five and a half percent. If any of those interest rates on

your loans are over that five to five and a half percent range, it's like, let's get rid of them, right? I'm doing the same thing myself with my mortgage. My mortgage interest rate is six and a half percent. I don't want that. That's high. So I'm trying to pay it off, right? So what I'm trying to say to you here, Nathan, is I can understand trying to keep the debt around, invest some money, get some of that. I think you should do that. We answered a question like this actually on last Thursday's episode, which was someone was saying, how do I, you know, save for a house and invest? You know, it's not black and white. You can do both. You can pay off debt and invest at the same time. And I think you should do that for sure here, Nathan, especially as you sort of are paused on interest accruing and payments being paused here as well. So what I would do is the avalanche method. I'd figure out of the maybe seven or eight different student loans you have at these varied interest rates. Which interest rate is highest, right? Is that six, seven, eight, nine, ten percent? Focus on paying that one off first. While you also focus on. investing toward your Roth IRA into the index funds we talk about. So maybe it's a couple hundred bucks a month into an index fund inside of your Roth IRA. And maybe it's also a couple hundred dollars a

month toward the high interest student loan debt first. And then you just kind of keep doing that until either you want to get really excited about paying off the student loans or maybe a little bit more toward investing. But there's no like perfect approach to it. Everyone's situation is different. But something Robert and I really believe in is that this stuff isn't as black and white as people like maybe Dave Ramsey might assume it is. Yeah, I think you nailed that. And I don't really have much to add to it. It's just always understanding that in our lifetimes and in our investment journeys, everyone's path is different. It's not a one size fits all. And life gets in the way. The perfect laid plans can be sabotaged overnight with an unexpected problem. So just cut yourself some slack

and always understand that, you know, follow the math and look for the positive arbitrage in the for yourself, that is always the most important part in your wealth-building journey. But, Robert, something we did talk about on Thursday's episode was making sure you don't keep student loans around for 30 years, right? This isn't a pet. Definitely not. Is not a mortgage? We've been seeing that for a long time and yes, you definitely don't want to do that. My fear was student loans and that's why you and I are always on the opposite sides of the fence is we just never know what the government's going to do because they know it's egregious. So, you know, I don't want to tell somebody pay that student loan off and then three months later I get yelled at because the government, you know, forgives it.

So I'm always on that fence. If it's below what we would consider that benchmark plus 1%, then I'm okay with making the minimum payments. But anything that's remotely looked at is high interest debt, then you want to chunk it down and get rid of it. 100%. Right. I'm right there with you. I had student loans out of college. I was keeping them around for a little bit thinking that, I mean, you know, we had, I think at the time like Elizabeth Warren and, like, you know, Bernie Sanders were running for president. They're trying to figure out all the student loan stuff. I was like, whoa, maybe I'll get my loans forgiven. Like, this is so cool. And then I quickly realized it was a fool's errand trying to depend on the government to give me anything, right? So I was like, I'm just going to pay these loans off. So that was the approach I took.

But, you know, again, everyone's different. And I think at the end of the day, like, as long as you have a plan to be out of high interest debt, including your student loans over the next two, three, five, six years, depending on how big the loan is, that's a great plan. And if you can invest during that debt payoff process, that's also a great plan. And never be afraid, honestly, I know people right now that are clients that are in their 50s, late 40s, mid 50s that have student loan debt. Never be afraid when you're facing high interest debt, whether it's credit cards or student loans, to go back to the well and try to get something taken off. You can call these credit card companies. You can get a transfer balance credit card to get rid of the high interest one

and then try to find a side hustle to chunk that one away and get that one paid off. Don't just sit back and succumb to this and end up being in your 40s and 50s and have all this debt. Try to find a way out of it as quickly as you can. So that positive arbitrage is working in your favor while you're building well. So our final question comes from Alejandra. She says, hey guys, my name is Alejandra and I love listening to your podcast. I'm a huge fan and you both have inspired me so much in investing toward my future. I'm 24 years old. Oh my gosh, 24 and she's investing. This is wonderful. I make about $80,000 a year. Holy crap, even better. You go, Alejandra. And I opened up a Roth IRA with Vanguard a few months ago. I want to invest into some of the ETFs you all talk about, but Vanguard

doesn't do fractional shares with ETFs that are not their own. I want to invest in things like QQQ, SCHD, and Mote, but they have minimum investments and I'd have to purchase a full share. I don't feel comfortable putting the full amount into these ETFs all in one day. Do you all recommend a different platform I could use that offers fractional investing inside of Roth IRAs. Yes. So I use M1 finance for my Roth IRA and just my general retirement investing. Why I like it a lot is because not only do they have like fractional share investing, but they do something called pies and slices. So essentially they can say, okay, think about it like a pizza, right? You have your whole pizza and call it that's your portfolio and your pizzas cut into four different slices. You can change

the percentage of how big or small those slices are and you then choose what that's slice is invested into. So you can have it be into four slices with one whole slice being 50% inside of VOO for the S&P 500 or 50% inside of QQQ if you want the NASDAQ, right? But you can change those percentages. And what's cool about that too is if you, let's say invest maybe $100 one month, it will automatically invest 50% of that 100 into one of those. And then the other percentage allocation equally or however you have it done there into the next sort of asset. So it's really cool, really easy. it's really simple. Again, that's M1 finance. I don't really have a referral code or anything, but go check them out. Robert, do you have any perspective on that? Yeah, I mean, just don't worry

about the platform. There's plenty of places you can buy fractional shares of QQQ and Mote and all of that. So just find a platform that works for you in your investment thesis and the amounts that you're willing to invest right now because the important part is you're going to invest and you're thinking about investing in these items. And I think that's the key. Don't worry about the platform. All of the top platforms have different offerings, but also really good UX for the customer. So I wouldn't worry about it. Look at Schwab.

You can look at some of the others that offer these fractional items. And that's just basically it. Find what works for you and the dollar amounts you're looking to invest. Oh yeah. Robert, actually, Robin Hood, I think does retirement accounts now too.

And they give you like a match. Like they match your contributions, which is pretty cool. Interesting. We'll have to dig into that and cover that. Yeah, it's pretty cool. I think it's up to 3%. I know it's definitely 1%.

Okay. Oh, and this is what's also really important for you, Alejandra. As you are looking for a new platform, you do not want to sell all of your stocks, withdraw the money to your bank account, deposit the money back into the next platform and then go buy the stocks. That's not what we're doing. We are transferring them.

Just like you can transfer money from your savings account to a checking account inside of your bank, right? Or send mail to someone, right? That's exactly what's happening here. You are going to send your existing stocks from Vanguard over. into the same account, Roth IRA, on a different platform. That's all that's going to happen. You're going to send them right on over.

There's always instructions on Vanguard's website or Robin Hood or M1, whoever you choose is going to be instructions on their website. But don't make the mistake of selling and then taking the money out. That's a taxable event. Do not do that. Yes. Okay. Well, thank you all for joining us this week on the Rich Habits podcast.

We are so thankful each and every week for all of you that follow along. Give us those five-star reviews and keep us at the top of the charts. We are so excited for 2024. Make sure you're checking out our monthly challenges, joining the email list. We have a lot of great stuff happening. And we'll see you next time. Yeah, this was a great episode, Robert. I feel like we really got to dig deep into Bitcoin, some investing strategies, answer some

good questions. If you guys have any questions to ask us, don't forget, we're on Instagram at Rich Habits Podcast. You can email us a question at Rich Habitspodcast at gmail.com. You can even comment a question inside of the public app on our own posts over there, which are awesome. So there's a bunch of ways of get in touch with us, just like Alejandra, Nathan, and Mark did for these. And yeah, what a great episode, Robert.

Can't wait for the next one. Thanks, everyone. And have a great start to your week.