Rich Habits Podcast - 62: The Top 3 Wealth-Killers in America

Episode Date: April 29, 2024

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz debunk the top three wealth-killers in America. ---Save your seat at our FREE webinar all about Direct Indexing, ⁠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.

Amazon presents Laura versus Fruitflies. Swarming your fruit and terrorizing your kitchen, these little freaks multiply at a rate that would make a rabbit say, yo. Chill. But Laura shopped on Amazon and saved on cleaning spray, countertop wipes, and fly traps. Hey, fruit flies, your baby boom ends here. Save the Everyday with Amazon. Hey everyone and welcome back to the Rich Habits podcast, a top 10 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 lifetime revenues of over $300 million 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 I actively advise some of the most well-known fintech companies around the world. 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 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 going to be talking about in today's episode?

In this episode of the Rich Habits podcast, we're going to be dispelling three myths related to personal finance and building wealth. We see everyday people who are trying to figure it out on their own overcomplicating their portfolios with too many stocks, index funds, and random investments. You've heard me mention many, many times that I believe you can build a great investment strategy with five stocks, five index funds, and five cryptocurrencies. And I think in the beginning and middle stages of your financial journey, this is the best thing to do is to keep it simple. I couldn't agree more.

Building wealth shouldn't be a chore. It shouldn't be a roller coaster. It shouldn't be something you dread to do. If you're a listener of the show, you should know by now just how simple it is to find a plan that's right for you and to stick to it. Now, of course, it's not always up until the right. I think Robert says it's not always rainbows and unicorns. But that is investing in general, right? We do have some volatility.

But the strategy itself doesn't have to always change, right? The strategy can be very simple. So in this episode of the show, we're going to share with you how to avoid the three most. popular wealth-killing myths stopping you from reaching your financial goals. So, Robert, why don't you kick us off with the first wealth-killing myth? I want to kick us off by saying, I am so excited about this episode because so many people get these wrong because they believe in all the hype and the madness that's happening on the internet. So myth number one, you need to consistently add new stocks and ETFs to your portfolio to build wealth. This could not be fair.

further from the truth. Unfortunately, everyday people get clickbaited by headlines on CNBC or Wall Street Journal talking about a new stock, a new IPO, a new ETF or a new crypto, and then they get all caught up in the hype and they get so excited and then they start just buying these random things without a plan. And over time, these portfolios become bloated with 30, 40, and sometimes I even see 50 plus holdings inside of them, causing confusion, misalignment, and definitely underperformance. The worst part is advisors do this too. I've seen many portfolios over the last few years that are managed by professional financial advisors that are bloated with 10, 20, or even 30 ETFs and index funds. And this is definitely not the way to build wealth. You need to have a concise plan.

Stick with the plan. Now, yes, life can get in the way. Something happens health. Something happens with your job. Your finances get in disarray. But guess what? You should. never stray from the plan. You might have to make adjustments at how much you're putting in and what you're doing, but don't fall for this trap and get in yourself in a situation where you're invested in all kinds of things. You don't even know why and what they do and what the performance is. The key is to keep it simple and really define what you're trying to accomplish. I couldn't agree more, right? Because a lot of people, including myself, and I'm sure you fell for this trap too and you were an early investor, Robert, we see a new IPO, we see a new ETF,

We see a new idea, new something, a new headline. Oh, my gosh, need to buy the stock. Oh, I need to buy this. Oh, I need to buy that. That's going to be cool. And to your point, people buy things without knowing how they fit into their overarching plan and strategy. I am someone who owns a lot of things.

I've got several ETF, several single stocks. You know, I am someone who owns a lot of things. However, I do so with a purpose and I do so with a strategy. Now, the listeners right now, they don't need to be doing all these crazy things, especially if their investment portfolios total anywhere between zero to maybe a few hundred thousand dollars. If that is you, the only ETFs you need inside of your portfolio are V-O-O-Q-Q-Q-Q-G-T, V-T-I, and Mote, M-O-A-T. And if you do care about passive income as much as I and Robert do, feel free to throw in QQ-Q-I or SPYI as well. We do love our passive income. But you don't need to over-complicate things

with 20, 30, 40, 50 different types of investments, right? If you want to add some single stocks, maybe Amazon and Google would be a great idea. If you want to add some cryptocurrency, do it, right? Get yourself some Bitcoin and Ethereum. You don't need dozens of different things inside of this portfolio. You just need about five, maybe 10 total, and you are good to go. I do so many one-on-one calls every single week with people just helping them with their finances and educating them on what I would do and giving them some opinions.

and I'm shocked at how many people have these portfolios with 20, 30, 40 different items in there. And most of the time I'll be like, why do you have all these? I don't know. What do they all do? I don't know. They just don't know. And it really does just overcomplicate things. And then you end up leaving a lot of money on the table by not having a defined plan.

And that's why this episode is so exciting for me. So let's go into myth number two. You need to have thousands of dollars to start investing. This myth is really. ridiculous and absolutely my favorite to dispel. All these fake gurus love to preach to everyone, all this fear to make it sound like you need 50 or 100K to get started in investing. And that just couldn't be any further from the truth. The reason they say these things, honestly, is because they want you to buy their $12,000 mastermind or their $10,000 course. They want to create fear

so you need them to be able to create wealth. It is absolutely ridiculous. You do not need all of this money to get started. You just need to get started. Yeah, right. I mean, listen, forget these people. You can go open a Roth individual retirement account on Vanguard, Schwab, or Wealthfront, and deposit as little as $100 when you do that. The key to building wealth, even if you're just starting with $100, again, we've talked about this all the time. It's intentionality and discipline by intentionally finding and investing $100, $200, $500 per month in your budget to invest toward these index funds that we just mentioned and consistently doing that because your discipline, right? Intentionality and discipline, over 25 years, your Roth IRA balance

could climb to over $900,000 after accounting for inflation. And don't forget, if you're someone who makes more than $161,000 as a single or $240,000 as a married couple, there is optionality with the backdoor Roth IRA. I see a lot of people are like, oh, I'm self-employed, I can't investor. Oh, my employer doesn't have a 401k. I can't invest. Or owe this, oh, that, you know, excuse after excuse after excuse. If you're self-employed like I am, don't forget, you've got the solo 401k and the SEP IRA. You can learn more about that at carrymoney.com or vanguard.com. And if your employer does offer a 401k, that's great. Go check out what that means for you. If they don't, that's fine too. You still have the Roth IRA. And Robert, there's just countless

ways that people can begin investing. And unfortunately, You know, we see this all the time as the excuses come popping up. Oh, I don't have $1,000 or $10,000. Or, oh, I, you know, my 401k, it's not there. Oh, I'm self-employed. I drive for Uber. I can't invest. I don't have that. You know, all these different things, I promise you, there's a situation for everyone. I get that. But there's also a solution for every single person listening right now where you can build wealth, no matter where you live in the United States, no matter how much money you make, no matter how little money you make, no matter how you make the money, how often you're paid, right? There are so many different ways to approach. building wealth, the biggest mistake people make is not starting in the first place because they think they need all of this money to get started. You don't. Yeah, I remember about a year, year and a half ago, I did a TikTok that did like, I don't know, 8, 10 million views and people came for me. They're like, this is terrible advice. You can't build wealth with $100 or $200 a month.

You need real money and it's not going to work. This is just all of the bad information that's out there and it's just so ridiculous because as we illustrated above, $100, $300 a month is enough to build really meaningful money towards your future. And it's just really you have to understand this. And the key to building wealth really is just getting started, period. A lot of it is just mindset because we're conditioned to believe that we need a lot of money to start your wealth building journey and you don't. The key here is overcoming the mindset shift and getting started even if it is only $100 a month. Now, Robert, before we jump to myth number three,

I just want to really, really drill into these people's heads. Yes, if you want to be a billionaire, then yeah, you're going to have to go find a bunch of money and go crazy risky on something. That's cool. I don't want to be a billionaire. I'm not going to be a billionaire. Robert, I don't know if you're ever going to be a billionaire.

I don't want to say yes or no, but 99.999% of people listening right now are not going to be billionaires. Don't want to be billionaires. We want to have a happy life, couple kids, paid off house one day and retire, right? That's what we're going for.

And if you want to achieve that, it's a lot simpler than you might think, right? You don't need the crazy thousands. You don't need the crazy business idea, the crazy big investment. You just have to play it simple, play it consistent and discipline. That's all you need.

That's it. That is so, so it. Okay, so let's jump into myth number three. I was never taught personal finance in school and I did not grow up around money, so I'll never be able to learn how to build wealth. This one is a huge one and really revolves around mindset and fear. So many people shy away from learning because they feel wealth is not for them because they didn't study it or they didn't grow up around it.

Well, guess what? I grew up in a very poor neighborhood from a broken home, all of the above. I had no guidance. I had no help financially and I made it. So trust me, if I can make it, anyone listening here. can make it. And it's just really sad that we're in 2024 and financial literacy is still not taught in schools nationwide. Now, I know there's some schools that teach a little bit here and there, but I learned all about the Civil War and the Pythagorean theorem. And guess what? These things

really do come in handy in my daily life, right? Like, why do we need to learn all that? We should be teaching about health. We should be teaching financial literacy. We should be teaching about etiquette. Those are the things that I think would be much more important to be taught in grade in high school than civil war stuff that never is going to really benefit us in our daily lives. I really like that we're dispelling this myth, right? The I was never taught personal finance. I didn't grow up around money. I'll never be able to learn or build wealth. You know, I was someone who studied this. I studied personal finance in high school. I was able to get a degree in finance and economics and college. And I really, really enjoy learning and talking about these things. But I can

100% attest to the fact that I've learned more about personal finance and investing post college than in college, right? You don't need a degree. You don't need rich parents or fancy textbooks or two hour long lectures at a university. You can learn 99% of my degree by just reading some of the favorite books that we talk about. Millionaire next door. Think and grow rich. The little book of common sense investing. Barbarians at the gate. You can stay up to date on all things investing by not only following along with the Rich Habits podcast, but maybe getting a Wall Street Journal subscription, start reading the stories that are posted over there.

If it's in the markets or the economy or the business, whatever section you want to read, tuning in to CNBC once a week. Maybe this is an opportunity for you to kind of get an update on what happened to the markets that week. Just don't listen to Jim Kramer. Sorry, Jim. But also immersing yourself in this sort of financial literacy information

that is just endless on the internet that is all over the place taught by the right people, including Robert and myself, when we've got some other people that we'd be happy to recommend and point your way to. But doing this instead of watching the Netflix, instead of watching the sports and sports gambling, your money away, or instead of doing these things that, don't get me wrong, it feels good in the moment,

and everyone should feel good and be happy with how they spend their free time. But we're not telling you to give up your free time. We're just telling you to use maybe 30 minutes, an hour a week to learn a little bit more about something that I think is going to be very, very valuable for your future. and that is personal finance and investing. Yeah, I always go back to a story. I lost one of my dear friends maybe, it was probably 15 or 20 years ago. And it was because one night we were out having a couple drinks, having a good time.

And we got into an argument about where I was at financially versus where he was at financial. And he was so, so pissed at me because I was crushing it. And I said to him, I said, you spend every waking hour on fantasy football. You know every stat for every baseball player. You study all this stuff. You put all that time and energy into these things. They don't pay you. They don't improve the quality of your life.

And I'm not saying people shouldn't have hobbies, but I took all of the same time he did. And I did that with research and study and learning finance and being able to educate myself on how to do real estate and all the other things I've done over the last 30 years. So it's really just about prioritizing your time to help you achieve your goals. And a lot of people don't do that.

And that's just so important to understand the difference of the people that are successful and achieve their financial goals, it is meaningful. It's normally not by accident. One of my favorite quotes, Robert, is people don't win the Super Bowl on accident. We don't win financially on accident. We don't retire with dignity on accident. It took intentionality and discipline. And it doesn't take a lot of money.

It doesn't take a lot of, you know, people I think listening right now are like, man, $100,000 invested is a lot of money. You're right. It is a lot of money. I'm right there with you. But it doesn't have to happen in two years. It doesn't have to happen in three, four, five years. The average person invests their first, once they get intentional about it, their first $100,000, Robert, after eight years. It takes them eight years, which is great. I mean, I get it. We're all trying to start from somewhere. But what's important about this is after that eight year period of time, the money is now big enough working compound on itself meaningfully, right? So the next 100 only takes them five years. And the next

100 only takes them two years. And now because of compound interest, they're still invested in the same amount of money every month. But now that 100,000 is growing by, gosh, 50,000, 75,000, just every single year because of compound interest. So, you know, we're not trying to tell people to give up on, you know, whatever makes them happy or excited. We're just telling you that if you have not yet sat down to think about what am I doing to win the Super Bowl of my retirement today, what are the habits, the rich habits I'm implementing today to win the Super Bowl later. And you don't know the answer to that? Maybe it's a good idea to sit down and start writing out some strategies. Yeah. I mean, this is, this is a crazy episode. And I just love this because just so many memories

and thoughts go through my head of all the mistakes I made earlier on. I was very fortunate that I came from a poor family and I'm like, I'm not going to grow up and be poor. I'm going to be very, very wealthy. So I had that drive and that need in my soul every single day. And I was a lot. I'm I woke up. So the hustle never stopped for me and then I was able to turn the hustle into meaningful businesses and investing. That has been the key for me is that intentionality you spoke of and just being consistent. You know, you have to be on top of this at all times. I see people even every day right now with all the tools we have and people that follow us and they still have all this money sitting in a savings account earning nothing. Or they have their weekends free or their nights free, but they're

complaining they're not making enough money, but they don't start another business or a side hustle. It all comes down to consistency and intentionality, and you two will find yourself wealthy and financially free with dignity for retirement. That being said, Robert, let's take a moment to hear from this episode's sponsor. Yes, speaking of ETFs, Austin, let's take a moment to talk about some of the funds we personally like a lot. This episode of the Rich Habits podcast is brought to you by Nios Investments. Nios offers ETFs that aim to offer monthly income while providing core portfolio exposure across equities, fixed income, and cash alternatives like T-bills.

You know we love our T-bills. Their ETSs may be particularly interesting for folks looking to generate passive income inside of their investment portfolio. They even offer ETFs that provide 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 those indexes. Their funds may serve as a compelling income-focused alternative or complement to many of the investments already in many investor portfolios. So if you're looking to add passive income-focused ETFs to your portfolio, consider learning more about Nios's ETFs at NiosFunds.com.

And 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 NOS. Neosfunds.com, and please read that prospectus carefully before you invest. Yes, Neos ETFs are distributed by Foreside Fund Services LLC. An investment in Neos ETFs involves risks, including possible loss of principle. The equity securities purchased by the fund 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. You know, Robert, it's so exciting for me, though, because we,

We take pride in identifying new strategies and ideas to introduce to you all before anyone else, right? Like, we are always on top of it. And our listeners are the first people to know once we've flushed something out that we like it and we're doing it. And we started talking about SPYI like last summer, right? I mean, it was a nothing burger back then. They had maybe 50, 100 million in AEM.

Now they've got over $1.2 billion in assets under management, which just goes to show how well of a product and how great of a product this has become, not just for retail, but for financial advisors as well. All these professional advisors, like, wait a second, this ETF is awesome. We need to be putting our clients money in that. And QQQI, you know, this just launched in, what was it, February, Robert, and now they're over $120 million in assets under management in just two months because people realize this is an awesome way to generate passive income in my portfolio with SPYI. Let me take that same strategy, copy paste it, onto QQQQQI, and which is the NASDAQ, right, did like 56% last year and continues to crush it year over year.

So it just makes a ton of sense. And I just, I just want to brag on us is all, Robert. I think we do a pretty good job of finding cool ideas to share with our listeners. And being the first to, you know, do that, right? We've got the direct indexing webinar coming up. No one's talking about direct indexing and how much money people can save by doing it in a tax-efficient way there with that tax loss harvesting. So, man, we're just, we're on top of it. Yeah.

And it just comes down to the fact for me, I think it's more. that sense of urgency and frustration. And that's why I ended up stepping in front of the camera and doing what I do and how we met is because I was so tired of seeing bad information produced on the internet that I felt like people just weren't careful of educating people on real information from real, you know, stories, from real experience because they felt that it could be a cash grab. And for us, I think because it's so authentic and we love sharing the stories and our knowledge with others that is just so meaningful to everyone listening that follows along in our private

communities and the rich habits community. So for me, I love it every day because I feel like as we build our wealth and we share it in real time with others, it's just so beneficial because so many people are just lost out there suffering from analysis, paralysis, and don't know what to do because they haven't been given real truthful guidance. And that's the main driving force for me every single day. You know, I think there's two people that are listening right now. And as you listen to this episode, I want you to kind of figure out which one you are. On one side of the equation, they're just getting started. They've never invested into the Roth IRA.

They've never invested any money before. They're really excited to start investing for the first time, no matter how old they might be. And then on the other side is they have been investing. They have been doing things, but they've been doing it in the wrong way by, you know, allocating toward some underperforming funds or target date funds or, you know, whatever that might be. And because they're listening to the podcast, they finally took the initiative to go print out their two, five, 10 year performance of their 401k and said, wait a second, I'm not doing the best. Or look at their financial advisor and say, hey, let me see what my returns are in relation to

the S&P 500. And they say, wait a second, this isn't great. Right. So I think, you know, those two types of people are listening. And it's so fun being able to kind of cater our content to both of them because I certainly was one of those, you know, people, someone who had never started investing before, trying to figure out what's going on. And, you know, I started getting more money. I was like, wait a second, how do I need to do this? So it's just cool to take our own experiences our authentic selves like you were sort of describing there, Robert, and sharing that with our audience. Yeah, I love it. And I am so blessed to have you as a partner in this Rich Habits podcast and be able to do this every day and just keep growing our community because I just

want to give people the best information they can absolutely find on the internet to help them figuring it all out. And that's part of what we do is giving them the tools to speed up the process. because no longer do people have to figure it out on their own for 10 or 20 years to see if they got it right? They can just follow podcasts like us and really speed it up and get to that better part of the finish line by the learning curves that we share so they don't have to lose the millions of dollars I've lost over the years making those mistakes because with our 30 year age gap, I think it's fantastic because back when I was coming up, I didn't have these tools. We didn't have the internet. We didn't have, you know, financial models and things and all this stuff to really be able to figure things out. And so now that's why I love sharing my stories because it just helps so many people along

the way and it's the best feeling ever. With that being said, Robert, let's jump into the Q&A section of the show. As a reminder, if you have a question to ask us, email us that question, rich habitspodcast at gmail.com or DM us the question on Instagram at Rich Habits Podcast. Our first question comes from Curtis M. Curtis says, hey, fellas, I love the show, especially when you talk about real estate. However, I haven't heard you all talk about real estate syndications. Where do they fit inside of a well-diversified portfolio?

Robert, I've never participated in a real estate syndication outside of like Fundrise. So maybe do you want to one define what a real estate syndication is, mention any like tax stuff or any of that stuff? And then two, share your own experience if it's been organizing syndications, participating in them. I'm sure you've got some experience to share. Yeah, it's great. Curtis, great question. And yes, let's break it down right now. So syndications are great, especially for people just getting started in real estate. I see so many people when they want to get started, they jump right in and go buy a fourplex or a duplex. They have no idea what they're doing. They take on this big construction process and this flip. And they generally lose money on these projects. Even though there's all the tools out there, there is so many unforeseen situations that happen when doing real estate. That's why syndications. and REITs are great when getting started. But let's talk about a syndication. One of the benefits are professional management.

So instead of having you deal with it, you're putting your money in the hands of a team that has the experience, the knowledge, and the processes to hopefully make it much more profitable. Number two, you have the advantage of lower investments barrier entries because you can get into a lot of syndications for just a little bit of money versus having to put up 50,000, 100,000 or more

and your own credit. because again, you're pooling that money. That's what the syndication is. It is a bunch of investors syndicating their money to buy a larger property that you wouldn't have access to without that syndication. Number three, the income. We talk about passive income all the time. Syndications can be great to create passive income for yourself because you're not the one dealing with the broken pipes. You're not dealing with the tenants. You are just getting your cash flow monthly or quarterly from the syndication. So let's talk about the bad. Don't really have any real bad, but let's give you a few warnings. Number one, understand the fee structure of the syndication

you're looking at before you invest. Some syndications are better than others, and you might be getting charged high fees, where they're not as concerned about the bottom line for their investors as maybe themselves. So keep an eye on that. Number two, check their track record. Make sure you see past performance of some of their exits so you know where you're at on the or the income that they're producing. And then number three is just really ask a round of other people that have joined that syndication because you'll get a lot of really down-to-earth real feedback on that to help you understand.

So to wrap it all up, I think syndications are great, especially if you're first getting started. You have a lower barrier to entry, passive income, and can be a great way to get you up and running in the real estate sector. Where would you rank a syndication on like? call it one, two, three. One could be syndication. Two could be a reet. And three could be, you know, like a fund rise or like doing something like that. Like where would a syndication lies? Like one, do you find, how do you find a syndication? I mean, we know where to go for reits and

fundraise, but how do you find a syndication? And then also, too, like should someone choose a syndication over a reet or over a fund rise alternative? Like, where would you kind of say, like point people in that direction? For me, I would say if you're just getting started, I would start with a reet like Fundrise. Just because it's simple, you don't need to understand the management fees or any of that stuff. It's great to look, but it's just a lot simpler to get started. I think you can start on Fundrise with like $10 or $100. I think that's step number one. Step number two would be financial education. Learn more about what you're doing in real estate and what your goals are going to be for the long term. Step number three would be then test that first syndication. There are so many good ones that are out there.

And it's really good, too, if you can find one that's localized. That way you can go to their office. You can meet the team. You can sit in on investor meetings and really get to know them so you have that comfort level. And then after that, when you're maybe a couple years, two, three years down the road, then you might be ready to do your first project on your own because you've learned along the way. So that's the chain of command I would implement if I were just getting started. And then to answer Curtis's question directly, where do they fit inside of a well-diversified portfolio?

I would say as a weighting percent, maybe 10 percent, 15 percent, as how it fits in a well-diversified portfolio, I would say 100 percent absolutely reits and syndication should be part of everyone's portfolio as they build it. But, and here's the big but, I don't think you should be doing reits or syndication until you have that first 100K saved and invested in the traditional stuff that we talk about every single day because there is more risk in a syndication. There is less liquidity in a syndication. Let's say you put $10,000 in and you're super excited, but you might not be able to touch that $10,000 other than the dividends you'd receive for many, many years.

You don't know because you don't know how long it's going to take for the maturation rate of that syndication. So that's another factor. So many people get into real estate and don't realize how illiquid it can be. And so just keep that in mind that when you're doing any type of real estate unless it's a fix and flip, and that's even questionable in markets like this, that you need to make sure you don't need the money right away, whereas in the VOOs, the ETFs we talk about or the public.com when we talk about

treasury bills and such, those are all liquid. So you're going to make really good gains, but still have access to your money if you were to need it. So just keep those factors in mind as well. It's a great breakdown, Robert. Our next question comes from Sean M. Sean says, Hey, Robert Nosson, I really enjoy listening to your Q&A episodes every Thursday. Oh, thanks, Sean. Here's my question. I'm 30 years old and I have $21,000 in a rollover IRA from when I was in the armed services. However, I want to convert this account into a Roth individual retirement account, but I'll be hit with $4,500 in taxes. Should I pay the taxes now or keep contributing to this account with pre-tax dollars? Robert, we get these questions a lot and generally speaking, I mean,

this guy's 30 years old, he's got the next 30 years to invest, right? We normally say if you're on the younger side, like Sean is here, to just roll over the account now, do the Roth IRA and contribute toward the Roth IRA because we don't know what tax brackets are going to be like in 30, 40, 50 years, right? I have no idea how people are going to be taxed, right? And so what's cool about the Roth IRA is we get to know today what that tax is looking like versus, let's say, for example, Sean was contributing pre-tax dollars to his rollover IRA. He had a million dollars. in it, he wants to take out $100,000, $200,000. Tax brackets might be 50, 60%. We just saw what happened in Canada, right? So it's like, we have no idea versus I know what I'll be taxed on today, which is

that Rothai rates. It's after tax dollars. I know what I'm going to be taxed on today. So when I do want to take out that $100,000 or $200,000 in retirement, I won't have to worry about paying any sort of taxes on the money. So, Sean, I would roll it over. I'd pay the $4,500 in taxes to do that roll over, and then know that all the money that you are going to be taking out in retirement, all those profits are tax-free. Yeah, I never like to kick the can down the road when it comes to taxes because we have no control over it and we don't know what it is. I like to choose my battles based on information and knowing where I stand on something

because so many people want to kick the can down the road and then they end up giving away way too much money because it's an unforeseen number 10, 20, 30 years from now. And just so we're on the same page, too, Robert, about what I was saying with the new laws in Canada. I don't have the exact numbers in front of me, but I saw that I think over 60% of capital gains, right, profits made, which is exactly what would this, you know, roll over IRA would be. 60% of those capital gains in Canada would go toward taxes. So you'd only keep like 35 or 40% of your money. I'm not saying that's going to happen in the U.S., but, I mean, our neighbors are doing it. So who knows what could happen here.

But I'm right there with you, Robert, knowing for certain what I'm going to, to be, you know, given in retirement and what I will or will not be taxed at in retirement, I think is really important, which brings us to our next question here by Robert F. Robert says, I'm 50 years old and I've been investing toward my Roth IRA for years. I'm taxed at the top bracket and have been warned by my financial advisor not to contribute to my Roth IRA, but instead a traditional IRA because I'll be able to write the contributions off of my taxes. Now, considering the fact that I'm being taxed at the highest rate right now and will likely be taxed at a lower rate in retirement.

This does make sense to me. But Robert, Austin, what do you guys think? You know, this is a good question. And, I mean, you're right. Math is math. In a vacuum. This is 100% correct. The problem is we don't live in a vacuum.

The problem is, you know, tax brackets change and laws get passed, and things happen that are out of our control. And so, I mean, this guy's 50 years old, Robert, which means that he will probably want to start enjoying this money over the next 10, 15, 20 years. That's a long time for stuff to happen, a long time for things to change for this guy's portfolio. That might mean, you know, he's taxed at the top bracket right now, which let's call it 35 or 40%. But maybe whenever he is in his retirement, there might be a law that gets passed that that gets taxed at this 60% too. I don't know.

So Robert F, I'm not a financial advisor and I don't know your whole financial picture. So if your financial advisor is telling you not to contribute to the Roth and instead do the traditional, do what you got to do, my man. you know, in a perfect world, he is correct. But I, on the other hand, I'm 27, 28 years old in a couple weeks. I don't know what's going to happen in 40 years when I have to take out my own money for retirement. I don't know what those tax brackets are going to be like. So I'm paying my taxes now versus in the future. But again, you're 50. You've got the financial advisor working for you here. And if he's telling you to do that, go right ahead, man. I love it, Austin. These are great questions. And you definitely crush these IRA questions. And it's just such a great episode where

we can just really break it down and continue to do so to help everyone figure it out on their financial journeys because so many people don't have the guidance. They don't have that key group of people to go over these things with. And I enjoy the education process that we provide each and every day. And it is just such a blessing that we get to do this for a living. And also, don't forget, May 8th, 4 p.m. Eastern Standard Time is our next webinar for direct index. We're so excited to break this down. Nobody's talking about it. And again, we get to break down some really cool stuff for all of you. And there is a link in the show notes below and it's completely free. We're so excited. So go and register now. And we're really excited because the month of May is

Mental Health Awareness Month. And as you all know, we are not just talking about business and finance, but we also talk about mindset, as you heard in this episode. So the next four episodes of the Rich Habits podcast, we're going to try and lean a little bit more into that mindset side of the equation because at the end of the day, mindset's everything, right? I mean, behavior and mindset, I think is 80% of the equation and financial head knowledge is only 20%, right? It's cool to know these things, but unless you're actually implementing them and you can really have that mindset to do it, it's going to be really hard. So stay tuned for those episodes. We're really, really excited to lean into mindset during the month of May. With that being said, everyone, thanks so much for hanging out

with us on this episode of the Rich Habits podcast and have a great start to your week.