Rich Habits Podcast - 6: Top Three Reasons Why People Don't Become Rich

Episode Date: April 4, 2023

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz share three reasons why people stay poor: analysis paralysis, the lack of financial literacy, as well as the fear of losing money. This is probably one of our most actionable episodes yet, so listen closely! ---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. 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 and corporate finance a few years ago, I've built a seven-figure media business and invested into 26 different startups, ranging from pre-seed to series. see. Now, as the show name might suggest, every episode, we talk about rich habits as they relate to business, finance, and mindset. However, we try to bring you two unique perspectives along the way. One from an industry veteran, Robert, and the other myself, someone who's still in the process of building wealth and figuring it all out. So Robert, why don't we jump into things? What are we going to be talking about today, my man? Let's do it. In this episode, we're going to be

talking about the top three reasons most people don't become rich analysis paralysis lack of financial literacy and the fear of losing money this episode is going to be one of our most actionable ones yet laying out three more rich habits we believe all of you will benefit from so let's do this i'm excited let's jump into it so i heard analysis paralysis i heard lack of financial literacy and the fear of losing money. How does analysis paralysis kind of block someone from building wealth over time? Walk me through that. Yeah, I love this one. Just so many people have the money and the means, but they're just so fearful. And that analysis paralysis really just makes them freeze up and not take action. They feel overwhelmed, too many options, trying to make the most with their money, or they're just really

fearful because they don't have someone they can trust. And a lot of it, I believe, is just this situation in the financial markets where so many people, they get to a certain level financially, and they just don't know where they fit in. They don't know if they're ready for a financial advisor, a wealth manager. So they just kind of freeze and do nothing. As someone who has definitely communicated with a lot of people either on TikTok or my newsletter and even my close family and friends, a lot of people that I know are kind of on the too many options side of the bucket, right? They feel good about the amount of money they have, but they understand fractional shares. They understand you don't need tons and tons of money to

get started, but they think, wow, I'm seeing these guys on Reddit making millions of dollars, but they're the call options and they're put options where I see these people on this crazy podcast that I'm listening to of their, you know, the NFTs and the crypto stuff, like all these new investing fads and they get really overwhelmed from that perspective. And so if it's a family friend or anyone listening, right, I'm always encouraging people to just get started with what is tried and true and what has performed very well over the last 90 years, which is the S&P 500, right? That is the ticker symbol SPY or V-O-O, depending on what platform you like to use or, you know, what you're kind of into there.

But at the end of the day here, we really just want to encourage you all to not have to over-analyze, get too in your head, in your feelings about what should I be investing into. How do I outperform the market? What's the newest fad I should be thinking about and said, like, let's take a step back and let's just put on that dollar cost average hat that we always talk about and put money in the markets early and often. Yeah, it's really just all about getting started. And one of the things that I try to preach a lot is that it's not about timing the market. It's about time in the market. And that really rings true with people because they start to understand. Nobody can time the

market. If they could, Kathy Wood wouldn't be losing the other, you know, Michael sailors of the world wouldn't be losing. Everyone would be billionaires if we could all time the market and even the smartest, brightest minds with the best algorithms in the world can't. So it's really all about time in the market, not timing the market that is so critical for everyone. That's really powerful, Robert. I really like that one. And it kind of brings us into our next topic here of the lack of financial literacy, right? So a lot of us here, you know, we're listening to things we see on TikTok, both good and bad, but we're also maybe reading stuff on Facebook or reading stuff on Reddit or online forums or different, you know, ways that we are communicating on social media,

it's a lot, right? A lot of people say a lot of things. And I'm not here to judge someone for their decision versus someone else's, right? You're listening to our podcasts and our opinions. And so I want to respect everyone's opinion. But the lack of financial literacy is real. And I have a personal story. I'd be happy to share after this sort of segment is wrapped up a little bit.

But I want to hear from your perspective, Robert. What is the solution for that? What does it mean to really kind of have that lack? How can we help people listening to better understand how important financial literacy is and really how to take that first step? Yeah, this is a great one because it's a societal issue. It wasn't taught in schools, at least not for me and for you probably. So people don't have these courses in financial literacy through high school and college. And then also it's this kind of weird thing that parents don't, you know, show us and guide us along the way.

You know, if you think of my age category and my age group different from yours, this is where the age gap is great. 30 years ago when I was your age, my parents didn't teach me anything. They did not prepare me for the business world or the world after school at all. So I think it's just a societal issue because schools don't teach it. Parents don't pass it down. People get into the big world of business and making money and then they go, oh, what do I do now? And there is no middle ground of help for people, and that's why it's so confusing. So I think the solution really is, and a lot of people that follow you and I, they're trying to create the solution by following the right people.

I think books are very, very important if people were to follow and read some of the great books that are out there for financial literacy. But true, the truth is watching the podcasts, reading Twitter, following some of the really good blogs, all of that. really helps with financial literacy. At the end of the day, you just have to get rid of some of those time sucks where you're watching Netflix or maybe you're watching TikToks for the wrong reasons and not for educational reasons. So I think books and just anything you can learn to help yourself advance your financial literacy to be able to help yourself. So I'm a busy person. You're a busy person and I empathize with people listening that are, you know, working those seven, 10, 12 hour days trying to make ends meet.

And I don't know about you, but I don't really have all that much time in my day to be sitting down and reading a book. So something that I really want to encourage people to, you know, kind of take action and advantage of are e-books, audio books, right? There's a lot of people on YouTube who have done a really awesome job of summarizing some of the most popular finance books that if it's they can grow rich, if it's a little book of common sense, investing, if it's, I will teach you to be a millionaire, if it is rich dad, poor dad. A lot of people take pride in their abilities to create these, call it maybe 20 or 30 minute long YouTube videos, but they really break down those awesome topics. So if you don't have, you know, days or weeks to sit down and read a book, there's a ton of resources out there to just kind of take in from an audio or a passive perspective as you're

commuting to work or perhaps while you're at the grocery store shopping, you know, time that you can kind of really dial in and reflect on yourself here. And I named a couple books. And Robert, I want to do this for our audience. I didn't tell you about this before the episode. But, you know, we've got this, this Instagram account called Rich Habits Pod. We just made it. And for anyone listening right now, if you were the first person to find our Instagram,

we've yet to post on it, right? But if you're the first person to find that Instagram account and DM us your favorite financial literacy book, we're going to actually send you a few copies. of our favorite financial literacy books, right? We're going to send you thinking grow rich, and we're going to send you the little book of common sense investing. So if you are listening and you want a couple free books to think about and read through, go have a little scavenger hunt, little treasure hunt there for the Instagram account.

Yeah, and one of the biggest takeaways of that point that I want to kind of put out there is at the end of the day, it's really all about learning and making sure you dedicate the time to your financial journey. A lot of people don't do that. And it's really troublesome because they're spending so much time watching TikToks and watching TV and going to bars and all that. And it doesn't take a lot, but even a few hours a week to really dedicate towards your financial future is very important. And that's one of the messages you see me talk about all the time in my TikTok lives. And one of the biggest takeaways from that point is at the end of the day, you have to make sure your money is working as hard for you as you work to get it.

It's one of my favorite things to drill into people's heads because a lot of times people do the heavy lifting. They get the money in. They get it in their Roth or they get it in their 401k or in their savings account, but then they don't do anything with it. And it's really all about the velocity of their money to make sure that their money is working hard for them. And that's a key point for me. So let's now talk about making your money work for you or the lack thereof, right? This third point is the fear of losing money. Talk to me a little bit about the fear of losing money, perhaps why people might be fearful,

maybe a couple ideas on how to help people perhaps loosen up a little bit with their investing. Yeah, it's a troublesome spot because I deal with it every day with the clients that I talk to, the DMs and the people that I work with through, you know, asset management and, you know, everything we do. And it's really troublesome because so many people, it's remarkable. They just have all their money sitting in a savings account, making zero. Your money is parked. It's just dead money. And you have to have velocity of your money, but just the fear really takes over for people.

Maybe they invested 10 years ago or they hired a broker that did a bad job in 2009 and they lost money. So then they just have this overwhelming fear of losing so they do nothing. And what I always try to point out to people is you're losing anyway, so you might as well take some risk. Because at the end of the day, if your money is sitting in a savings account making zero and in, inflation is 7 or 8 percent. You're already losing because you're not keeping up with inflation and the cost of living increases. So for me, it's really all about educating people to make sure they understand they have to have velocity with their money or they're losing anyway. So taking some mitigated risks is important if you want to grow your money. And at the end of the day,

you and I both know the S&P 500, even if you did nothing else but put your money in VOO, you would still probably make 8 to 10% a year, which is better than sitting doing nothing. People need to say and really reflect on, is it going to be lost to inflation or is it going to be lost to perhaps the ebbs and flows of the stock market? Or am I going to bet on the last 90 years of America capitalism here? Exactly. And see this 11 or 12% compounded annual returns that we've seen over the last, you know, several, several decades, right? So at the end of the day, And I empathize with those people listening who are saying, well, you know, I had my retirement and I timed it wrong in 2009 and I had to, you know, go back to work. Right. That's the story of my dad. I empathize without 100%. And people too who perhaps were, you know, excited to retire in 2022, but the market had a different story for them.

And I totally understand that. I empathize with that 100%. But I really also just want to encourage you that, you know, this is a long game. This is not a I'm in. I'm in. out. It kind of goes back to what Robert was saying, right? It's all about time in the market, not time in the market. And if you're able to sort of switch that mentality to abundance, to there's always going to be more money, there's always going to be money I can earn and invest in compound interest will always be able to do its thing. That's all you need to know. That's all you need to believe and get excited about on an annualized basis. Yeah, I agree totally. And it's just really all about education and kind of trying to ease people's fears because at the end of the day, all lost money. I've made bad investments, you've made bad investments, but you have to believe in

the system and you have to understand the fact that park money is dead money. And if your money doesn't have velocity, you're not going to be able to have the retirement that you want. And it's just so critical to make sure that you really learn those rich habits, hence the name of the podcast, to be able to set yourself up to make sure that you have good earnings on your money over time so you can retire comfortably and build the wealth that you've always desired. And I think that's just critical and it comes with good habits and making sure that you stay on top of things. And, you know, something that had really helped me understand and kind of reflect in a positive manner against some of my investments losing money a couple years ago when I was really

beginning to invest heavier sums was I would instead of just looking at the numbers on a screen going up and down on a daily or, you know, weekly or even monthly basis, instead, I would begin to say, okay, wait, the companies I'm invested into, for example, are Apple or Microsoft or Home Depot. And I would go to the Home Depot store and say, wow, look at all these people here. Sure, their stock price might be down a couple bucks, but the company's still a thing. There's no reason to get, you know, really sad or destroyed about it. These are physical, tangible assets you're investing into, and we know where they're going to be going in the next several years. So, you know, that to me was just a little trick that I had learned to

help me kind of ground myself and like, you know, these are not just numbers on a screen. These are real businesses with real customers and real profits. Everything's going to be okay. And kind of just to rewind here for a second, I forgot to mention my little story there at the end of the segment of the financial literacy. So I didn't mean to kind of interrupt you, but you've mentioned I wasn't taught financial literacy in school. Weirdly enough, I was Tennessee. I, not a lot of people know this, but in 2013, Tennessee had the highest bankruptcy in the country per capita. And Dave Ramsey saw that headline and he went to a couple high schools around the state of Tennessee. He said, I want to teach my seven baby steps to high school juniors. And I want them to know

all that personal finance. And I want them to understand economics. My class in 2014 or whatever it was was the first class of students to go through his his sort of seven baby step kind of teachings there. And it was just it was eye-opening, right? It changed my life. It completely changed my perspective on money. It completely changed my relationship with money. And because of Dave Ramsey's baby steps, I probably wouldn't be as excited to talk about money today. It's kind of weird. But yeah, I was one of the lucky ones that was actually talking about financial literacy in high school. How weird is that? That is very weird and awesome at the same time, even though it is Dave Ramsey. So yeah, I disagree with him a lot, but that's okay. No, so to go back to your stock point,

though, it's really interesting that people will love a company, and then when the stock goes down, they go, oh, I got to sell the stock. And it's an interesting thing in the market that so many people buy high and sell low instead of buy low and sell high. And it's this weird, like I remember from a book, a long time ago with Peter Lynch, one of the most prolific stock guys. in history. And he just always said to just ignore, ignore the stock price and look at the business. And like you said about going into Home Depot, he said, if you're not sure, go to the store, go to the mall. And if the traffic is there and everything is there, generally the stock will recover. And why this is kind of ironic and funny right now in the market we're in is I remember

like three months ago on one of my lives and in one of my videos, someone asked me my three favorite stocks. And this was like three, four months ago. And I told them like, NVIDIA and I said LSI and another stock and all the trolls came out and they're like NVIDIA, LOL, it's down 67% blah, blah, blah. And now Nvidia is the darling of the stock market right now because I looked at the fundamentals and where NVIDIA is going with AI, with chip development, with gaming and everything else. And I stuck with it and I dollar cost average and just kept buying even though it's down 40%, 50%, 60%, and now I look like a genius. So at the end of the day, guys, the message for that is really just understanding. If you love a company and you want to

buy individual stocks, do your research, but also look at the fundamentals of the business more so than what the day-to-day stock price is, because this is all a long game, and it really goes back to what we discussed earlier. It's time in the market, not timing the market. I couldn't have said it better myself, Robert. So let's give our listeners a quick recap of the episode. We talked about analysis paralysis, right? Don't feel too many overwhelming decisions who just jump in. It's okay.

The water's fine. It's only three feet deep. We're having fun. Put on your floaties if you need to, right? Early and often. Early and often. Start investing in the S&P 500 VOO is our favorite ticker for that. The second thing we talked about is the lack of financial literacy.

And that's understandable, right? a lot of us weren't taught about that in school, and our parents certainly didn't teach us either. A couple solutions are, you know, read some books, watch some book videos or audio books on YouTube or audible or whatever, you're kind of getting that stuff. And don't forget our little treasure hunt that we had for you. And then third one here is the fear of losing money, right? So a lot of people don't become rich because they get overwhelmed with these options. They were never taught how to be rich and they get really scared about losing money in the first place.

I get it. It's understandable to lose money. You work really hard for it. but now it's time to put all that hard work to action, right? You got the money, work just as hard to invest it, make sure it's invested into the right places and the right things, and it's okay to watch the ebbs and flows of the market because over the long run, right, the S&P 500 always goes up.

Capitalism is a thing. Trust us. That is right. And yes, definitely. And one of the closing things I'll say, if you were to get 100 billionaires in a room, I bet 50% of them would say if they did it all over again, Once they got their money, they would just put it all in the S&P 500 and forget about it because we live in a society of comparison-based analysis.

We're on TikTok, we're on Instagram, you know, we're watching the news and everyone is comparing their lives to the outtakes of everyone else's lives. And it just gets overwhelming and confusing. And that's what causes analysis, paralysis, and all of this fear. So if people were to just really look at the facts and look at the math over the last 50, 60, 70 years, It's not that difficult to build wealth if you follow rich habits. God, does anyone else just love listening to this man talk? I feel like I learned something every single time we film an episode, Robert. That was a gem.

That's going to be a clip on this new Instagram account we've got. That was a good thing. Let's go. I love it. Yes, you got me fired up. Let's do it. Good stuff. Thanks, everyone for hanging out with us on this episode of the Rich Habits podcast.

We've already seen a ton of five-star reviews on our podcast. We really truly appreciate them. So if you haven't yet given us a review, give us an honest opinion, right? We want to know what you guys are thinking. We want to, you know, shape this podcast into exactly what provides you all value. So give us a review. Let us know what you think. And be sure to follow both Robert and I on Instagram and TikTok.

We'll have both of those links in the show description below. And we will see you on the next episode of the Rich Habits podcast coming out next Monday. See you then.