Rich Habits Podcast - 89: Our Favorite Tax-Saving Strategies for 2024

Episode Date: November 4, 2024

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz share their six favorite tax-saving strategies for 2024!This episode is no fluff, just straight up tax-saving strategies and how to implement them. We were also joined by Steve Latham of DonateStock, the easiest way for anyone to make their first stock-based donation to a non-profit of their choosing. We hope you implement at least one of these tax-saving strategies before the end of the year!---⭐️ Check out NEOS Investments' new ETF, ⁠BTCI⁠ -- an income-focused ETF specifically for investors looking for exposure to Bitcoin. ---🎨 Skip the waitlist and invest in blue-chip art for the very first time by signing up for Masterworks: ⁠⁠masterworks.art/richhabits⁠Invest in shares in great masterpieces from artists like Pablo Picasso, Banksy, Warhol, and more.Masterworks affiliated issuers have now conducted more than 420 offerings of securities, representing over $1.02 billion in Art Investments, as of June 30, 2024.See important Masterworks disclosures: ⁠⁠masterworks.com/cd⁠---⭐ 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⭐ Get a $35 bonus when you start saving & investing with Acorns – ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠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.

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 the 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. 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, one from an industry veteran, which is Robert, and then the other myself, someone who's still in the process of building wealth and figuring it all out.

So, Robert, what are we going to be talking about in today's episode? I'm so excited about today's episode, but I'm a little upset that you had to lead us in with Top 10 Business Podcast. everyone share the episodes you've got to keep us in the top five we need your help we put all this work in all this value to make all of you become financially free so help us stay in the top five and we would love to see you there okay so in today's episode after my mini rant of the rich habits podcast we're going to be sharing six of our favorite tax saving strategies for 2024 and i know six might sound a lot, but we will rapid fire and get through these because they're very important and we want all of you to take advantage of them. So considering we only have two months left in the year, we're

hoping some of these strategies can serve as some last minute ideas for you all, allowing you to save thousands of dollars, if not tens of thousands of dollars on your tax bill come April of next year. And if you're anything like me come October. Robert, this episode is going to be so much fun, right? these tax strategies will help lower your tax bill if you're a W-2 employee, if you're a side hustler, if you're a full-time entrepreneur, somewhere in the middle. These are tons of ideas that anyone can implement that are really going to move the needle for you. So let's start with our first strategy. Number one, tax loss harvesting.

This is a strategy we've talked about ad nauseum in the past, specifically when we spoke to the CEO of freck.com about the automation of it. But simply put, this is a tax strategy that involves selling your stock at a loss to offset capital gains that are realized from other investments. Here's how it works. So let's say that like me, you've been dollar cost averaging into Bitcoin since the beginning of 2023, and now you're up big on your investment. Let's pretend you sold that Bitcoin for a $20,000 capital gain and you realize that profit, you sold it. You now have $20,000 more in this account than you started with. You can offset some of that $20,000 profit with losses that you also incurred during the same

calendar year. So for example, I know super micro computer stock is getting crushed right now because of all the fraud going on. It's down 75% since the recent all-time highs. So if you got caught in the crossfire of that, you could sell your SMCI stock for a, for example, potential loss of let's say like $5,000, which means you can use that $5,000 loss that you incurred over here to offset a $20,000 gain that you incurred over there. right so you made 20,000 with bitcoin, you lost 5,000 with SMCI, and when you kind of 20,000 minus 5,000, you really now only owe taxes on the 15. Now, what's really important about this is the timing, right? This only happens during the same calendar year. So if you sold your SMCI stock January 2nd of next year, you wouldn't be able to use that loss to offset the gain incurred in

2024. So make sure you have those timings figured out for the same calendar year. And a quick pro tip that I want to add to this, and that was a a great breakdown is that if you don't have capital gains to offset, you can still sell up to $3,000 of your losing stock and use those losses to offset your straight up taxable income. So that's a little pro tip that a lot of people don't know about that I wanted to get in there, but that is a great breakdown. So let's go into number two, and that is health savings accounts and they are triple tax advantage. And this is essentially a savings account you create, but the money you spend out of it has to be specifically used on medical expenses.

Think prescription meds, medicines, co-pays, and other medical expenses. Now, a few things to remember that are very important here is you can only contribute to an HSA if you're participating in a high deductible health plan. There are specific limits on what qualifies is that. So make sure you do the research there, but most people do qualify. Next, you can only contribute $4,150 per year towards this account in the year of 2024 as an individual and $8,300 as a family. Now, the cool thing is this $4,150 contribution is tax deductible, which means if your effective tax rate is 25%, like me, you're immediately saving $1,37 on your taxes for literally saving money for those inevitable health expenses. I love this plan, and it's just there's so many advantages to it. Now, let's talk about that triple tax advantage.

So Robert just laid out the first tax advantage, which means that you contribute this, you know, $4,150 into the account. You get to write that off your taxable income. So that's number one. The second way is once this money is in your HSA, you can now invest those contributions into the S&P 500, having it grow tax-free over time, right? So let's say you're my age. You don't really have that many medical expenses.

I don't have any prescriptions. I don't really spend that much on medical, but I could still be investing this $4,000 a year, and the markets are up 55, 65% over the last two years, Robert. I mean, that's call it $3,000 so far of profits that I would have realized in this HSA. That 3,000 of profits are tax-free. And they stay tax-free, assuming I spend those profits on medical expenses. So that is the three ways that the HSA is triple tax advantage, the contributions, the growth, and the spending are all tax-adventus.

Now, here's the best part, Robert. For people that are below the age of 65, they have to spend these profits and the contributions into this HSA on those medical expenses. But over the age of 65, this turns into essentially a traditional IRA. You can take the money out and spend it any which way you want. You do have to pay the taxes on those withdrawals like you do with another traditional IRA. So the HSA, if used correctly, triple tax advantage. It's one of our favorites. I love it. Yeah. And I don't think it's talked about enough. That's why I'm so excited about this episode. You know, we've been preaching to the mountaintops. It's not what you make. It's what you keep. And these strategies are exactly those little hacks that we talk about to our audience to really help them keep more of their money and pay their share of taxes, but do it the right way.

Now, our third point is one that is kind of new to me, maybe not new to Robert, but it's a really interesting one. And that is donating your stock. Joining us to help break down this topic is Steve Latham, the CEO of, Donate Stock.com. It's a really, really interesting tax-saving strategy. So let's jump in and see what he has to say. Super, super excited that Steve is joining us for this section of the episode. So let's just jump right in, Steve. First and foremost, what is stock gifting and how does it impact someone's taxable income? It is, as it sounds, it's donating your appreciated shares directly to a nonprofit organization. It could be charity, a hospital, school, community organization,

community foundation. Any 501c3, if you donate your appreciated stock, there's significant tax benefits. and you have more impact by giving a larger pre-tax gift. And so just we're on the same page. You keep saying appreciated stock. So let's say, for example, I took $10,000. Two years ago, I bought Nvidia stock with it, and now it's worth $200,000, right? So my cost basis of cash out of pocket is $10,000,

but it's now worth $200,000 in my brokerage account. You're saying I could take that $200,000 value of stock, gift it to a nonprofit 501c3 organization, and write off that $200,000 against my taxable. income? Yeah, it's effectively allows you to donate that stock. So if you've gone it for more than 12 months, you can deduct or itemize your deduction the full of $200,000 in that case. That $190,000 gain, if you would sold the stock and then give the cash, you're going to get hit with the capital gains tax. Depending on where you live and how much money you make, that can be anywhere from 18.8 to 35%. So it also

reduces the amount that you can then deduct. So you would, if that let's say, let's round up $200,000 and say it's at 25% tax, 50K would come off the top to capital gains. Instead of paying that in taxes, you can gift that directly to the nonprofit the entire amount. They're tax exempt, so they don't pay tax on it. So they get a larger pre-tax gift. You avoid the capital gains tax and then you get to write off the full fair market value of today's value, regardless of what you paid for it. So let's break down the tax benefits of this gifting. You know, who does this?

What are the benefits to them? Because to me, it sounds a little bit confusing. If I made $190,000 on Navidia and I had a $10,000 cost basis, do I want to give it all away? Am I donating all of it to avoid taxes? Am I doing a portion of it just to offset my earnings for the year? Walk us through and the listeners through this so they understand that part of it of the tax benefits. Well, it starts with how much you're allowed to deduct. So the IRS allows you to deduct about 30% of your adjusted gross income as an odd cash deduction.

So if you, let's say your income for the year, you had a great year, let's say you made $200,000, you could in theory donate up to $60,000 in stock and deduct that from your gross income, taxable income. So you want to start there with how much to give. Then the question is, how much invidia do you own? If you own $200,000 is probably in a reasonable amount. If that's all you own, you may not want to give all that away. You know, it's not all or nothing.

Of course, you can donate as little or as much as you want. There's no real minimum. But it really boils down to how much do you want to donate in the aggregate to. to qualify for your AGI. But then secondly, how much of your stock you want to give away? If you want to harvest some gains now and take some off the top and reduce your concentration, stockgifting is an amazing tool for that because you can do it in a tax-free way. Otherwise, if you sell the stock, you're going to get hit with some pretty big taxes,

especially if you own Nvidia, Lili, Meta, some of these other high flyers in the last recent few years. It's been a really amazing time to be in the market. It's great for investors. And it's great for nonprofits that are out there introducing this to their donors to saying, hey, why don't you share your gains with us, align your financial objectives with your philanthropic objectives. You save more when you give in a smarter way. I love it. And I talk about it all the time. It's not what you make. It's what you keep. And I think donate stock.com really kind

of fits right in that thesis for me and what I preach on my side of the world here. And so walk our listeners through the platform. How did you get here? What was the cause of creation of it? And why aren't everybody doing this and making it easier for people to? to be able to donate and utilize these tax strategies? It's the million dollar question, the billion dollar question, really, because stock companies have been around for decades. It's been very intelligently aggressively used by the wealthiest households, often with the help of their financial advisors.

But it's generally stayed one of the best kept secrets in personal finance because most people just are not aware of the benefits. When someone told me 15 years ago, a friend of mine who's an advisor told me about it, I thought, wow, wait, why am I writing checks when I own stock that's appreciated? That's kind of stupid. And then I went to the process of making a stock gift. It took me about three days, several hours. It was such a hassle.

It just wasn't worth the effort. And so I was like, okay, I get it that's beneficial. It's just too much of a hassle. Can't be bothered. 2020, I was thinking about, you know, it was during the pandemic and, you know, everyone was thinking, how can we help the world? And I thought about my experiences back in stocklifting back in those 15 years prior to that or whatever it was, 12, 13 years prior.

And I realized no one has solved a problem. It still was a very archaic, painstaking process. So that was really the inspiration to start doing it. stock.com initially kind of as just a project and then it evolved actually into a commercial entity and something now that we're really excited about to the mission of transforming charitable giving over time. Given that two-thirds of Americans now own stock, if you've been in the market more than a few years, five years, 10 years, you're sitting on significant gains. It's just, it's something that should be in everybody's arsenal as ways that they're, you know, giving

smarter, saving on taxes, it leaves you more money to invest, more money to enjoy your life. You can give generously without hitting your pocketbook too hard. So it's a great way. It's a great tool for everybody. So we're trying to, one, make people aware to make it easy. And that's really the two kind of primary objectives of donate stock. That's so cool, man. I'm just kind of looking at the website right now.

And it says, you know, five simple steps, right? Do you guys do all the back end work as it relates to donating? It seems like the donor like myself or Robert in this instance would just have to go in, find a nonprofit we like and then send them the stock. Talk a little bit just real quick now as we wrap things up about what if you If someone is looking to donate to a 501c3 that might not yet be listed on the side or, you know, is a very well-known nonprofit. Can someone still donate to a lesser-known nonprofit organization in their maybe a local small community?

Absolutely. So we actually have 1.5 million nonprofit pages on our site. So if they're a 501C3 in good standing with the IRS, we have a page for them. You can actually donate to them. Even if we don't know them, we'll actually process the gift. We'll sell the stock. We'll let the donor know your stock is received. It was sold.

Here's your receipt. And then we send the cash to the nonprofit. So even if we don't know them, we can still. still get the cash to them. And that's actually how probably half of our 23, 2,400 customers, non-profits actually come to us because someone made a gift to them. And that's how we got started. That's so cool, man. Congratulations on building out this platform. And to our listeners, and there's a ton of you who are sitting on perhaps hundreds of thousands of dollars of capital gains. Maybe that's in a tax advantage account or not. But if you want to consider lowering your tax bill

and making a nice charitable donation, find a nonprofit, a 501 that you align with and maybe do that through DonateSock.com. Yeah. If I could give a couple of data points too. It might be of interest to the audience. So one, it doesn't have to be a big gift. The average gift is about 5,000, but it ranges everywhere from $200 to several million really depends on, you know, who you are, where you are, what you have. Historically, 80-plus percent of donors have been Gen X and older, but we're seeing more and more younger donors who they may not have the net dollars saved as maybe their parents do, but they're sharing their gains. It's a great way to say, I got lucky, I bought this stock. It's up 10x. I'm going to give some of that to

you. And it's a very fun, easy, benevolent way to unlock generosity. 60% of stock gifts will take place in December. That's when people do their tax planning and their tax loss harvesting, which you guys have covered. And all the other tax advantage strategies take place there, stock gifting should be part of your arsenal. Very cool, Steve. And yeah, I mean, right, it's early November now as people listen to this. So shot clock is there, right? You got two good months. If you want to make a cool donation, check out DonateStock.com. And can't wait to have you back, Steve, to talk more about this maybe in 2025. Thanks, Austin. Thanks, thanks for Robert. Thanks, Steve. That conversation was super insightful, Robert. I feel like every time we bring guests

onto the show, not only do I get to learn something, but I get to now take what I learn and implement it myself into my own tax saving strategy. So I was super pumped about that. Yeah, and I think it goes along really well with everything that we do here in the Rich Habits podcast and the Rich Habits Network is uncovering those nuggets, as we say, of just new ways to not only make more money and make more gains and invest better, but also be in. able to have really good tax strategy. So I'm really excited for people to read up and listen on this because I learned a bunch myself and as a high net worth guy, I can really utilize these as well as possible. So I'm really excited about it. So now let's jump into strategy number four,

maxing out your retirement contributions. So if you're a W-2 employee, which means you get a paycheck, you work nine to five, right, you're on salary. We all know that contributing to your 401k at work is a tax deduction against your earned income, right? We've all known that. We've been doing that for a while. And if that's something you want to do, be our guest. But if you're an entrepreneur like Robert or myself, then knowing how to take advantage of the special retirement accounts only provided to entrepreneurs is a really smart thing to do. So you can actually contribute up to $69,000 to a solo 401k in the calendar year of 2024 as an entrepreneur and at a 25% effective tax rate that I pay, that is $17,250 in tax savings. Literally, I paid $86,000 in taxes back on 2023's income. And so if I wanted to,

theoretically now, I could contribute the $69,000 and $2,024 to this account. And that $17,250 would offset against that $86, right? Bringing that $86 down to like $70,000, right? That's a lot of tax savings, if you ask me. And the best part is this is money that you're investing. It's not money you're spending on a depreciating asset like a car or, you know, something crazy like that. This is money being invested into the stock market. And same goes for the SEP IRA, but there are some other stipulations that surround that. So be sure to consult with a professional when it comes to these sort of retirement accounts. So I want to get yourself in trouble here by contributing too much to this account or not enough this one or whatever's going on with your income. So definitely consult a professional. My professionals are over

at carry.com, C-A-R-R-Y.com. I pay to be one of their VIP clients, and it's only a couple hundred dollars a year, but Caroline sits down with me, you know, once a quarter virtually, and we get to go through all the strategies and the planning there. So carry.com is a really cool resource for people wanting to learn about these entrepreneur-specific retirement accounts. I love this breakdown, and I think it's very important because you're always talking to the audience and reminding them that we like active management. We like to see people keeping an eye on the ball. And I think tax strategies are part of that in your personal growth towards financial freedom. And I love this. And there's just so many ways to do this. You know, there's the SEP IRA, there's

the solo 401k. There's just so many different ways. And just make sure you study up again, like Austin said, so you make the right contributions, you get it right. And you really take advantage of these plans because they are there for the taking. They're there for you to use and maximize you. You're your tax, you know, deductions each and every year. So I'm really excited about that. And let's go on to our next point. And it's one of my favorites. And I think it's overlooked too much. And that is point number five, the home office deduction. You can work from home on your job or your site hustle. And you might as well act like it. And so many people don't do that. So if you're someone who does work from home, you can write off a portion of your at home expenses that directly tie to your

day-to-day work. Think about the expenses that go into maintaining your home office. And a simplified way to do this is to calculate the square footage of your home office and multiply that by $5. And that is the amount of money you can deduct from your taxable income for that home office expense. So what you would do is you could take up to 300 square feet and that would cap you at a $1,500 per year deduction. However, if you want to drill into the details, just make sure you consult with a professional. Take a look at what you can do with other expenses, a portion of your internet, office equipment expenses, memorializing that side hustle into an LLC and migrating your cell phone over to the LLC and having a business account so you can write off the portion of

the cell phone bill as well. So just always keep an eye on these home office expenses because they can really add up to $10,000, $15,000 a year. If you play it right and you know what you can legally deduct based on your current situation. And back to this idea of like being capped with the simplified calculation of $1,500 a year. One, if you have a side hustle and you're just kind of doing it from home or you work from home, like that's probably the best way to go about it, just super simple cut and dry. But again, if you have the autonomy to hire a professional CPA that can come in and really help you navigate this, right? To Robert's point, you could write off thousands, if not more than $10,000, depending on how large or what kind of operation you have going on. But even if it's just the $1,500,

I mean, again, at this effective tax rate of 25%. I mean, that's nearly $400 of tax savings. I can think of a ton of different things. I can go spend $400 on to go build my business, to go enjoy a vacation, like whatever's going on. Heck, invest it in the Roth IRA, right? Just make sure that you're taking advantage of these specific tax saving strategies, no matter where you are as a W2 employee, a side hustler, or a full-time entrepreneur like Robert and myself. Yeah, I think that's a great point to make, Austin.

and I think one of the top things that I'd like to get out there as a message is so many people that are new to money in building wealth. Maybe it's their first company. They've got their side hustle, their W-2 job. They always look at the IRS as the devil, the bad guy. And actually, that's just not the case. The reason wealthy people and the ultra-rich don't mind and actually enjoy the IRS rules is because they are there for us to use them to our advantage because they want us investing our money. It is the playbook for you to use. So don't look at the IRS and the tax man as a bad thing.

Look at it as a playbook for you to build wealth within the framework. I love that perspective, Robert. In speaking of playbooks, I think this is the easiest play that anyone can do to save on taxes and the entire tax-saving playbook out there, which is to adjust your federal withholdings at your employer. Here's what's going on, right? Let's say that you are on salary. You're making $80, $90, $100, $120,000 a year. Well, every single time you get that paycheck, that direct deposit to your checking account,

your employer withholds some of your taxes, right, on your behalf so that whenever the taxman comes knocking, they just have that to give to the federal government. Now, the mistake some people make is they allow their employer to withhold too much money during every single pay cycle, which means if you're someone who's getting a $1,000, $2,000, $3,000 refund check in April every single year. Too much of your money is being withheld in these accounts. So here's how to solve that. You go to your HR department.

You go to whoever you can talk to about your payroll at your employer and say, hey, I want to bring my withholdings down by $100 a month, $200 a month, $300 a month, depending on how much of a refund you got during the prior year. Now, if you get a $2,000 refund and everything stays the same during the calendar, year of 2024 as it did for 2023 and you got a 2000 refund in 23 and now you're trying to figure out 24 well that means your employer is probably

still withholding that extra 2,000 from you. You deserve that money, right? This isn't a loan you want to give to anybody. You're not giving this loan to the government every year. You need to take that 2000 and invest it in the markets. Markets are up 25% this year, Robert. Imagine if someone had invested that money instead of letting it sit idle

with the government. So go talk to your payroll advisor. Go talk to the person in the Human Resources Department about a your withholdings every single pay period, allowing you to really utilize more of your hard-earned money. With tens of thousands of people each and every week following along and listening to these episodes and hopefully taking notes and taking action, it's just game-changing these little nuggets. It gives me goosebumps because you think about every single week we're putting value out there of things that most people may not know because they haven't experienced it yet. So I just love episodes like this because I feel like on the other end of this, episode as we end this year, so many people are going to have all of these tools to do things

with their money they've never done before. And it just really, really excites me. And I'm so glad to be here. I'm right there with you, Robert. And I hope that this episode was helpful for people that are trying to figure out, trying to scramble a little bit, right? I think Steve mentioned that 60% of stock donations happen in the month of December. Right? That's people saying, hey, how do I bring down my taxable income this year? I've got to go make a donation. So, you know, these people that are listening right now, you're not out of time. There's two more months where you can say, okay, do I do some tax loss harvesting. I've not contributed yet to my HSA. Let me do some of that. Maybe I want to beef up the 401K contributions. Maybe I want to try this federal withholding thing.

You know, there's a bunch of different things you can do to really change the outcome in April of 2025. You just got to take notes and take action. So with that being said, Robert, let's take a moment to hear from this episode sponsor. This episode of the Rich Habits podcast is brought to you by Neos Investments. They just launched a new edition. to their high-income ETF lineup that provides exposure to the 2000 small-cap stocks that make up the Russell 2000 index while aiming to provide tax-efficient monthly income to their investors. Their ETFs may be especially interesting for folks looking to generate passive income inside of their investment portfolio. As you've probably heard us mentioned recently, small-cap stocks have historically performed well when rate cuts begin after a period of high-interest rates. If you're looking to add passive income-focused ETFs to your portfolio,

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The equity securities purchased by the fund may include large price swings and the potential for loss. Past performance is no guarantee of future results. And don't forget, Nios just came out with BTCI, which is an awesome ETF that gives you straight up exposure to Bitcoin while also providing what now seems to be a 27% yield on your investment with that monthly payout, right? That distribution is paying just about $1.12 per share right now per month. And at $50 a share, which is where it's at at time of recording, it's about 27% yield, which is nuts. And now with Bitcoin at the $72, $73,000 range, and we continue to be bullish and

think it's going to go, you know, March toward $100,000 over the next 9 to 12 months, this BTCI, ETF is probably a good idea to learn more about. All right, Robert, let's now jump into our first question. Our first question comes from Farah D. Farah says, hi Austin and Robert. I just found out I'm getting laid off from work in the coming two months. I've been thinking about becoming a stay-at-home mom, and this would actually give me the opportunity to stay at home for at least a year with my three children. While I won't be working, I do have an extra $50,000 that I'd like to use in some way or another to earn passive income. This money would be in addition to my emergency funds. Please let me know if I should invested in ETFs because I'm no expert in investing and I do not plan to be a day trader.

Thank you off for the advice and for all of the wonderful episodes of the podcast you have published so far. So Robert, what I'm hearing here is that Farah is getting laid off but she knows it's coming. She wants to use this as an opportunity to stay at home, be a stay-at-home mom, which I love that idea. It's a really, really cool opportunity there. Hopefully her partner is able to supply a little bit of money for the household on a monthly basis while she stays at home with the kiddos. In my opinion, assuming she has the emergency fund already figured out, and that's let's call it three to six months of expenses, she could use this money as a way to beef up the emergency fund, right? Because we're not really too sure what's going on in the future when it comes to employment.

But if she does want to take on a little bit of risk, I'm not mad at the idea of allocating some of it to the passive income ETF SPY. As we know, I've got $100,000 of my own money sitting in SPYI, and it pays me just over $1,000 a month. So Farah theoretically could be making between $450 and $550 a month by putting this inside of there. With that being said, though, that does absolutely come with risk. The stock market goes up, it goes down. I think SPYI came down about 1% today. We had a little bit of a sell-off. So just be prepared to see that when you invest your money.

So Farah, I like the idea of earning a little bit, but just be careful. Yeah, I agree with you. I was thinking the same thing, SPYQQQI, QQI, but fair, just be careful because the timing of your question and this theory of what to do with this money while you're laid off is a little funky because we're going into the election and we don't know what's going to happen. We assume some further volatility in the markets in the coming weeks or months, but I do like the fact of having it somewhat active. You could look at a high-yield savings account. We really like the one on public.com. They have a great high-yield cash account.

also the SPYI and QQQI I like as well. But again, I wouldn't put it all in. Because at the end of the day, the last thing you want to do, because it's so short term, is have the downturn if we had one in the market, wipe out some of that $50,000. Because if you were asking us this question over a five or 10 year span, we'd be great.

But when it's only a year, it's tough because you're trying to time the market. So just be careful. Spread it around a little bit. Look at those funds. look at high yield cash accounts and keep it safe and liquid and you'll do just fine. And speaking to public.com, Robert, you know what? You totally remind me their bond account right now. I think it's paying like 6.5% or something.

That could be a cool way to earn some passive income as well, Farah. So head over to public. Check out what they've got to offer. We highly recommend their platform. It's so, so easy. And we're wishing you all the best staying home with the kids. Now before we jump into our final question, Robert, I've got something interesting to share. Bank of America just released a new report that says over,

80% of multimillionaire respondents aged 43 and younger invest in or are looking to invest in fine artwork as a portion of their portfolios. Yeah, that definitely makes sense to us because we diversify with art ourselves. We both have been using Masterworks' art investing platform to diversify for what? Like almost five years now. Yeah, that's right. Both Robert and I invests with Masterworks and even interviewed the founder and CEO, the company Scott Lynn, on the show a couple months ago.

Now they've hit over 950,000 users and a billion dollars in capital raised because with Masterworks, you don't need to be an art expert or spend millions. You just jump in and get started. Exactly. And the fact that Masterworks has successfully exited 23 paintings to date with each returning a profit doesn't hurt either. Listeners can learn more at Masterworks. Dot art front slash rich habits, which is also shown in the show notes of this episode. Again, that's masterworks. Dot art forward slash rich habits.

Masterworks. Dot art forward slash rich habits. And as with all investments, past performance is not indicative of future returns. Investing involves risk. Important regulation aid disclosures can be found at masterworks.com slash CD. All right, let's jump into the final question. Now our next question comes from Keith. Keith says,

Hello, guys. My name's Keith. My wife and I have been investing with Edward Jones for the past few years, as well as our 401Ks. Since listening to the podcast and after doing a little bit of my own research, I've started a Vanguard account and I'm investing now on my own, mostly in the S&P 500 with V-O-O. Here's my question. Should we transfer all of the funds in our Edward Jones account into now my own Vanguard account to manage on my own and continue investing in the S&P 500 to avoid the fees that come with Edward Jones? What do you guys think?

Thanks. Robert, I'll let you answer this question. Keith, I think it's a great question. have to ask yourself a few things. What are your risk tolerance levels? You need to understand that first so you can put together a plan that works for you and your wife because you want to have a plan before you make this move. Number two, yes, I like where your head's at. Edward Jones fees are high. I think last I checked, they're like 1.3% for anything under $500,000. So that's a pretty hefty toll to take on your gains. But you also have to understand you have to be willing to put in the time

and the knowledge to be able to manage it on your own. A lot of people think you can just set it and forget it. We don't recommend that. I like the fact that you're starting out with the S&P 500. I would also look at the NASDAQ, possibly look at some bond strategies. You could look at some small cap, but just make sure that you understand

before you migrate all that money away that you're going to need to do the heavy lifting on your own, which I think you're probably fully capable of since you are following along the Rich Habits podcast, hopefully you've joined the Rich Habits Network, which will give you some further help and knowledge base. But I love this. There's nothing wrong with having a financial advisor

as long as they're earning your keep. If they're going to charge you 1, 1.3% in fees, they better be beating benchmarks by more than 1.3%, which I don't know that Edward Jones does. So just keep that in mind. I love where your heads at. And you can definitely test the waters and maybe pull half of the money

and see how you do. and if you outperform them, then you've answered your own question. I'm right there with you, Robert. You know, Keith, if you are someone who doesn't like to pay, let's call it $2, 3, 4, $5,000 a year for someone to just buy the S&P 500 on your behalf, I'm all for you taking that and, you know, diversifying it into the index funds and ETFs that we talk about. The biggest thing to consider here is what type of accounts does Edward Jones have?

Are they managing your IRAs, right? Your old 401Ks that you're. rolled over, right? What are they managing for you? And just make sure that once you take over that management yourself, you continue to have a well-diversified long-term view on investing, right? You want to have the S&P 500. You want to have the NASDAQ. You want to have these big, awesome funds and index funds and ETFs we've talked about a lot here on the show, allowing you to trend higher overtime and retire very wealthy one day. Now, our last question comes from Jay. Jay says, hey, guys, I love what you're doing on the show. I've got $6,500 in credit card.

debt and it's the only debt I have. My truck is paid off. So here's my question. Do I sell my truck and use that money to pay off my credit card debt and then use what's left to purchase another truck? Or should I keep my truck and just pay off the credit card debt over time? Jay, I'll shoot you straight, man. No need to sell the truck. $6,500 in credit card debt. It's manageable, right? That's money that you should not have in credit card debt. So like, shame on you. But it's all good. It's manageable. Go find that extra income, the side hustle work overtime. Do what you can. can over the next three, four, five, six months to really attack this credit card debt. Stop going out to eat. There's no vacations. Like, don't go travel this wintertime. I want you to

lean in on the budget a little bit and really attack this credit card debt. I think you can do it probably in three months depending on what your extra side income and side hustles can look like. But again, no reason to sell a truck, Jay. I agree. I would have hired Jay today and said, use your truck, go pick up a big landscape trailer, come to my job site because my dumpster didn't show up and I'll pay you $300 to get all the debris out of the job site and out to the dump and you could have walked away with $250 for two hours work. So get the side hustle, pay off the debt, keep the truck because trucks are a great, great asset to have as long as you're not buying an $80,000 truck that you're never going to use it for what it's there for. And I think Austin is spot on.

$6,500 is easy to contend with, easy to get rid of and get yourself to a cash flow positive situation without the high interest debt. So Jay, don't sell the truck. But I will say, Jay, if you have a Robin Hood account or a public account and you got $7,000 in crypto or, you know, $4,000 in the S&P 500 or whatever single stocks you got going on because it looked young in your Instagram photo, sell that, right? That's something you absolutely should get rid of because you're not going to make that call it 30% in the markets like you're paying right now an interest on this debt. So sell that, you know, bridge account money you might have lingering around. Use that money to pay off the credit card debt.

Maybe you can be debt free tomorrow. Who knows? I love it. Well, thank you all for stopping by the Rich Habits podcast each and every week. We appreciate all the five-star reviews. Share it with a friend. You all have to have a friend, a cousin or an uncle that's always in high-interest debt or they're not working towards financial freedom.

Share the podcast with them, help them out. It could be the greatest present you ever give them. And for those of you that have not joined the Rich Habits Network yet, you have to check it out. I think our best work is in the Rich Habits Network. We're crushing it there with everyone that follows along in the community. So we'd love to have you join. And don't forget this episode was all about tax saving strategies for the year. Go implement them.

Go save on your taxes. No one likes to pay extra money to Uncle Sam. and if you know a neighbor, a friend, a cousin, an uncle, an aunt, whatever, your parents, send them this episode so they also now know how to bring down their tax bill, especially with DonateStock.com. Thanks, everyone, and have a great start to your week.