Rich Habits Podcast - 96: Building Generational Wealth in Your 40s & 50s
Episode Date: December 23, 2024In this week's episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz share their three best tips to building generational wealth in your 40s and 50s. ---🔥 Start direct indexing t...he S&P 500 or countless other index funds and automatically tax-loss harvest your holdings with Frec! Sign up here: frec.com---🔥 Check out what Robert is personally invested into with Blossom! Sign up here: https://blossomsocialapp.page.link/richhabitspodcast---🚀 Sign up for the Rich Habits Network so you don't miss out on the next big investment opportunity, 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 – christian@witz.vc---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.
Transcript
Discussion (0)
Hey everyone and welcome back to the rich habits podcast, a top five business podcast on Spotify.
My name is Austin Hankwitz and I'm joined by my co-host Robert Croke.
Robert is a seasoned entrepreneur in his 50s with 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 actively advise some of the most well-known fintech companies around the world.
As the show name might suggest, every episode, we talk about rich habits as they relate to business, finance, and mindset.
However, we try and bring you two unique perspectives, one from an industry veteran, which is Robert, and the other myself,
someone who's still in the process of building wealth and figuring it all out.
So, Robert, what are we going to be talking about in today's episode?
Well, first and foremost, I think I want to address that we need to change the opening the line to you're just figuring it all out.
I'd say you pretty much have it figured out. You're crushing it. You're a great co-host and you've really taught me a lot over these last couple of years. So we're definitely going to make that. Our New Year's resolution is changing our opening statement because I think you've come so, so far just since I've known you and it's time to upgrade that line. But in today's episode of the Rich Habits podcast, we're going to be sharing with everyone our three best tips to build generational wealth in your 40s and 50s. So many people,
feel, especially in their 40s and 50s, that wealth has passed them by, and we're here to tell
you it has not and lay out all the blueprint for you to succeed with money as your hair starts
to gray like mine, and it's go time to figure all those things out, and we are here to lay it out for
you. Specifically, we're going to address three of the most important things you need to do in
order to get back on track financially and set you and your family up for financial freedom and
retirement. Most of you listening still have 20 or more years of investing ahead of you, which means
there's so much you can still do and accomplish before retirement. Let's figure out how to catch up
and build wealth in our 40s and 50s, Robert. And when it comes to building generational wealth in
your 40s and 50s, if you feel like you're behind in your retirement savings, you either have an
income problem or you have a spending problem. So let's first address the income problem. So number one is
increasing your household income and we're going to walk you through it start to finish so many of you
might feel like you're scraping by financially and you're either spending too much or you're making too
little and luckily for us we can fix both of these problems the first step to take when evaluating
your monthly household income is to audit that honest budget you always hear us talking about how much
all in is being deposited to your bank account and how much of that are you used to
spending every single month. So once that's done, our goal is to find 15 to 25% of that household
income in your monthly budget and begin setting that aside for investing. Now, I'm sure that
some of you listening right now saying I don't have 15 to 25% of my income to save, which means
it's time to increase your take home pay and we're going to walk you through it. I think just that right
there is the solution, right? Finding that margin in your budget, because that is how we build wealth.
We find margin and we invest said margin. To your point, you either have that income problem or you have
a spending problem. Assuming you've audited this monthly, honest budget that we've all created,
and you've realized that you might have an income problem, it's time to fix that. Well, good news for
us, it's 2025, which means there are countless ways to increase your monthly income. Now, of course,
some of the most obvious ways include side hustles, which we've actually published.
published countless episodes about, one of which is called side hustles for busy people.
It's a really great episode. Go listen to it. It's awesome. But when it comes to career enhancement
and progress in your own professional fields, consider doing the following, getting a specific
certification in your field that could help you maybe negotiate a raise. This could be a free
certification. I know that MIT and Stanford and Harvard have all of these free classes online
for people as it relates to computer science, as it relates to HR, as it relates to everything
in between. Go see what could happen if you got those certifications, took those classes, and then
went back to your employer and said, hey, I think I might now qualify for this raise or this
new position or this new title in the company. Also, job hopping to another field that would
allow you to make another 15 to 20% more is another solution to this. I mean, at the end of the day,
everyone, unfortunately, and I was in this situation myself, Robert, is I felt like I had so much
loyalty to the company I was working for that even if someone was waving a 15 or 25% pay raise in my
face, I'd be like, no, I like what I'm doing here, you know, I'm secure. I don't want to take on any
risk like that. And I don't blame you if you're a risk-averse person. But I think at the end of
the day, if there's a way that you can say, okay, I work for ABC company making $82,000 a year,
but if I went to go work for XYZ company in the same city, maybe even the same,
building complex, I can now go make $94,000 a year? I mean, that's a pay bump that's meaningful,
right? That's that 10, 12, 15% we're talking about. And the number three here is laying out a clear
path to rising in your career, which sometimes means going back to school. Now, Robert, I never liked
school. I wasn't really good at school, but going back to school to maybe get that executive MBA,
going get that, you know, a master's degree of whatever you need to do at an affordable price,
lay out a strategy that says, okay, I'm 43 years old, I'm 47 years old, I'm going to be working for the next 20 years.
Right now, I'm a senior manager, but I want to get up and become a director.
I want to be a VP. I want to be a senior VP by the time I'm in my 50s.
What do I have to do to get there? Do I need the MBA?
If not, then that's great. How can I, you know, ladder all around and climb the corporate ladder?
Do I need certifications? If I do need those, I need to go find schools that offer them.
Maybe, Robert, and I know my company did this, they will pay for you to go back.
to school, assuming you work at the company for like three or four more years after that. So there's a
bunch of different ways that people can grow in their long careers, the professional careers here
still in their 40s and 50s that allow them to, you know, increase the household income by 15, 20, 30%
over the next couple of years, which will have a meaningful impact on your ability to build wealth
for retirement. Yeah, and I'm all about loyalty as a business owner. I want people to be loyal to me,
but you also have to make sure that that loyalty does not get in the way of your financial freedom.
So many people are loyal to a company by at fault to where they're loyal to them for 10, 15, 20 years
where their upside potential economically isn't there in their, you know, bonus package or maybe equity or stock sharing or whatever may be there.
So you have to always be aware of that like you said, you know, always be moving up, whether it's with your company,
or moving on to another company,
because loyalty only gets you so far,
especially with some bosses.
There are some business owners out there
that just do not care about company culture,
and that is a problem.
So make sure you understand the upside potential,
but also if you believe you deserve more money,
before you go take another job for that 10 or 15% raise,
it's always good if you like your current position
to give your current boss,
a wake-up call. Go into the office, either written in an email or a letter, sit down, ask for 10
minutes, give them the letter and say, hey, I've had a great run here. I need to make more money.
I'm giving you a chance. I have another offer right now. If you can beat that offer or match that
offer, I would love to stay. If not, no arm, no file, because I once lost a key person over
$3 an hour. And this was back 12 years ago. And I did the math for him.
after it was too late and he already took the job. And I said, your commute here is like eight
minutes a day. Your new commute is 30 minutes each way. I said so between the gas, the wear and tear,
all of the other things, the tolls, you're not really getting a raise and I wish you'd have
given me another chance. And so just make sure you think all of that through when you're going
through this phase of your career because you have to make sure that you're progressing in your
financial journey and not letting someone else do it for you that owns the company and not sharing it
with you. So I want to make sure everyone understands that. Something I thought that was really beneficial.
And Robert, you kind of touched on it here where if you have that positive relationship with your
manager, like for example, when I worked at this old company, I had a wonderful relationship with
my manager. I give him all the kudos, all the praise. He's a wonderful human being and a wonderful
manager. And at one point, I said, hey, can we carve out like an hour of your time so that we can
sit down and like go through, hey, I'm this 22, 23 year old right now as an analyst, but I want to
become a senior analyst. I want to become a manager. I want to become a director. What things do I
need to accomplish over the next 18 to 24 months that will allow me to deserve that title? And we
laid out what those things look like. I accomplished all of those things and I was on track to
become that next title, but I quit my job to go do this instead. But what I'm trying to get out
here is if you are well in your career and you're feeling good about where you
and you know that you can move up a little bit and that's going to really give you the pay bump we're talking about.
Sit down with your manager or your, you know, direct superior and say, hey, what can I accomplish
over the next 18, 24, 36 months that will allow me to move up in my role to become the VP,
become the SVP, whatever it might be. And unfortunately, sometimes those roles only come up when
existing employees leave the company. If you are deserving of a new title like a VP or a senior
vice president or director or whatever it is, and you deserve that.
that title, go find that title at a different company, right? Because, Robert, to your point,
I mean, sometimes these people stay around loyalty to a fault for a long time. And they are the
directors and the VPs and the senior vice presidents and they'll be there for 20 years. So you're
next in line now for 20 years. Go stand up for yourself and go make that new career move that's
going to put real meat and potatoes on your dinner table every single night. And I'm going to go one more
time with this because this is incredible. And this is why I love these episodes of just nothing is
scripted, we're just riffing and going through our thoughts of how these things can be better for
everyone. Elizabeth did this to me last week. She brought up one of our key employees that works in the
social media in the marketing department. She said, hey, I feel like he's been looked over. I feel like
he deserves more. He's really crushing it for us. I know you don't work with him directly so you don't
see it on a daily or a weekly basis. And I was like, wow. I said, okay, we need to do this. And we gave him a
and a bonus on the spot. And I literally texted him in that moment telling him and giving his praise
without any prompting from him. And it's just so true that we don't realize sometimes our manager or
our boss or our regional manager, we may not even be getting looked over because it's intentional.
They just might be so busy that we get lost in the shuffle. And so I think this is a great
conversation for everyone because sometimes you can find that money you need.
right in front of you and you just have to ask for it.
So let's round this point out with kind of another part of this
is there are just countless ways in your 40s and 50s
to make that extra 500 to $1,000 a month.
And so don't just sit on the sidelines at 44 years old
and say, okay, this is what I'll be doing.
This is what I'll be making for the next 20 years.
Do the market research, figure out what's next for you
and build a clear plan to execute
because we live in one of the greatest
periods of human history to be able to build these side hustles and build these niche jobs to be
able to make extra money to put towards your financial freedom. Couldn't have said it better myself.
All right. So let's get into talking point number two, putting your money to work. You followed step
one. You're finally ready to put this new money to work, but it's not just the new money. It's your
existing money that isn't working properly for you. So let's dig into that and what that means.
really are two things to consider when it comes to making your money work as hard for you as you
work to earn it. Earning interest and paying interest. We all know what it means to pay interest. We're
talking about debt. And if you're in your 40s and 50s and struggling to get rid of high interest
credit card debt, pause everything else you're working on and investing toward or saving for it and
get out of this high interest debt. Hear me clearly. You will never build wealth by paying 30,
percent interest on credit cards or 60 percent interest on a title loan debt. And like we always say,
you can't out-invest high-interest debt. And this is a great, great illustration of that. And we
recommend trying the debt avalanche method when it comes to paying off the debt. So be sure to check
that out via Google, do your research, and implement that strategy. When it comes now to earning the
interest, do not overcomplicate it. Robert, so many people make the mistake.
of trying to find that perfect investment strategy so they can get the extra half a percent or
the extra 1 or 2 percent in their portfolio.
When in actuality, if they just got the ETFs and index funds we talk about, they'll be just
fine over the long term.
There are three places you want to continually be earning your interest in a high-yield
savings account, in a retirement account, and in your bridge account.
The high-yield savings account's pretty straightforward.
That's essentially your emergency fund.
But make sure your savings is earning something.
There's T-bills, there's high-yield savings, high-yield cash-exam.
account, all these different things that you can do, but just make sure that your emergency fund is
earning you money. It's not just sitting in cash and withering away. Your retirement account is also
pretty straightforward. You've probably heard of something called a 401k. Just make sure that you're
not making the mistake of letting the funds remain invested in these underperforming target date
funds or mutual funds or whatever. I just helped my friend Hunter. It was so funny, Robert, we were
watching the Tennessee Vanderbilt football game on a bar on Saturday. He goes, hey man, can you just
look at my 401k? And I was like, yeah, do I'd be happy.
to. And he shows it to me. It's like $30,000. It was up 2% this year. Two percent in 2024.
And I was like, hey, man, I don't mean to be the bare bad news, but like, you got to fix this.
So I educated him. He's like, what's wrong? I'm investing my 401k. So I educated him as though
what's going on, the differences and everything. So he's on the right track now. But he's not the
only one. I guarantee you, some people listening right now are going to look at their 401k's year to
date in their 40s and 50s where they still have 20 more years ahead of them. And it's going to say,
5, 6, 7%.
When in actuality, it should say 22, 25, 27%.
Because you want to be benchmarking and tracking the S&P 500.
You want to own the ETFs and index funds that we talk about, V-O-O-V-G-T, V-T, V-I, and
QQQQ, real simple, 1, 2, 3, 4.
Now, finally, the bridge account.
This is your normal, taxable brokerage account that's inside of public.com.
It's going to be a way for you to access your investment portfolio before the age of
$59.5.5. Without paying penalties and fees. We suggest having the same ETFs and the same
index funds in that account as well because that's what American capitalism is. So a quick pro tip
also on that note is that I see so many people all the time that just have way too much money
sitting in their checking or savings account and you don't need to have $60,000 or $90,000 in your
checking or savings account. We talk about this all the time. You need two, three, four months worth of
your monthly expenses put away, which could be $25,000 or $30,000 for your family and everything
else needs to be active. We always tell you to make sure your money is working hard for you as
you work to get it. And this is a great illustration to make sure that you don't have your money
sitting idly by in your account while you're leaving so much money on the table by not investing it.
So you have to do these things. You have to get out of debt. You have to start investing.
and you have to start living on less than what you make because no one is going to do it for you.
And I promise you at the end, no one is going to save you.
You have all these friends and family and cousins and uncles, but guess what?
If you want to find out how close you are, go try to borrow money or tell them you're moving.
And you'll find out how close you are with those people because they will be gone in a second.
And that's why you have to listen and follow along to everything we discuss in the Rich Habits podcast.
and the Rich Habits Network to make sure you take care of yourself
and set yourself up for financial freedom.
I love it, Robert.
Let's get into talking point number three,
and that is estate planning.
Now it's time to look forward to the future
for both you and your family.
We're going to go rapid fire on some of our favorite estate planning
strategies and structures
that'll ensure your family is set up for life
because it's all about at this phase of life.
It's about structure and particularly,
protecting the money you've saved and invested over the years and putting yourself in a good place
to make sure that Uncle Sam doesn't come get it all. And we're going to go through that right now.
So my first point here, Robert, is the 529 plan. We've talked about the 529 plan a few times.
And essentially why it's so important is you're in their 40s and 50s. You likely have children.
And those children are probably thinking about going to college or higher education. And so by going to a vanguard, for example, opening up a 529 plan,
I think the minimum is now only $2,000.
It was $3,000 when I opened mine a couple years ago now.
But by opening up this $529 plan, contributing money to it, that $3,000 and consistently
contributing $150 a month between, let's say, age zero, right, when they're born up until age 18,
that total contribution is not going to be more than $15,000, but it's going to grow over
the next 18 years to be $95,000.
So two things are now going to happen.
Either one, if your kid decides to go to college, they don't have to take on all the student loan debt, which is going to save them financially in the future.
That's cool.
Two, if they don't decide to go to college, maybe they want to start a business or go to trade school or whatever else, you can use some of this money to pay for those certifications and the tuition for that.
But more importantly, when they turn 18 years old, you can take up to $35,000 of this $95,000, move it into the kid's Roth IRA, deposit it right then and then and there, invest it in the S&P.
500 and by the time your child is from 18 to 65, that 35,000 that was just deposited on their
birthday will be worth over $1.3 million tax-free. That is how you take $3,000 and $150 a month
for, let's call it, two decades, and turn it into generational wealth for your children.
Tax-free million dollars in retirement. The 529 plan is undefeated. I'm already doing this for kids
I don't even have yet. It is such a great idea. Make yourself the beneficiary like I have and just
rock and roll on this plan. I love it. And the 529 plan I've learned a lot about in the last two
years from you. And it just really highlights there's so many tools out there. And that's what's
so cool about what we get to do every day is laying out these plans not just from experience,
but also educating through our financial musings and learnings over the years. So it's really cool
to learn all these ins and outs like we did with Anker Nagpal, just really figuring out all the
best tools to help people retire comfortably and with the right structure. Couldn't agree more.
Now, the next point I want to make, too, talking about sort of legacy here, right? You want your
children to be set up when you eventually are older and you pass away, making sure that they retire
millionaires when you're long gone with a 529 plan. Legacy also includes term life insurance.
God forbid anything happened to you or your spouse or whoever is making the money for your household
here. But if you are the breadwinner, and let's say you're making 100,000, 100,000.
$120,000 a year and in your 40s or your 50s here. And something happened to you, you now need
a pile of cash to be invested in the S&P 500 to then have four, five, six percent pulled off
of it every single year that your family can live off of, right? So you want to take 10 to 15
times your annual income. So in this example, let's call it $1 to $1.5 million. Out as a term life
insurance policy, you'll pay probably $40 a month for it, get a 15, 20 year term. And if something
happens to you, your survivors will now get this $1.5 million that they can put in the S&P
500 and make 10% a year off of, call it $120,000, $150,000. And now they're not scrambling,
figuring out funeral costs. They're not scrambling because they don't have to say,
do we have to sell the house because we can't afford the mortgage because our mom's dead, right?
Like, there are all these things that happen upon death that I think people don't really think
about. And having a term life insurance policy worth $1 to $2 million is going to allow your
heirs, your children, the survivors, the ability to just grieve your passing versus having to now
be stressed out about money. Yeah, that is so true. I've been down that road already with my mom's
passing and some other things like that. And that's for a whole other episode. But I love that.
And I think it's a great strategy for everyone to consider. And then I would say the next one that
is really, really important for someone like me and everyone listening that owns businesses is
having your business and your real estate ownership structures in order. So many people that I deal with
on a weekly basis, they'll have their home and their properties in their personal name and they
don't have their business in an LLC structured properly. And I think this is one of the biggest
mistakes people make when building their financial freedom over years and years is they never
take the time to get their business structure in order. And what I mean by that is having that LL
for every business and make sure that it's operated properly so it's legally operated in a way that lawyers
and other people can't penetrate the corporate veil on those LLCs. Then the next step is understanding
having that holding company that has total ownership of all these LLCs and that after that the next
really important step in structure is having that revocable trust that owns all of the holding company
in which then holds all of the assets in the LLCs.
In my world, that's called layering,
and you want to have that layering,
so then you are protected from an inside attack or an outside attack,
but also later on, if something were to happen to you,
then you can structurally have everything protected
and out of probate,
so then that way your children or your heirs,
whoever it is left to,
don't have to go through the rigorous nonsense
of a year or two years of prebate.
probate and all the money it will cost out of your assets to be able to pass it along properly
to them. And I think that is such an important thing that so many people lack on. And I deal with
it a lot of helping people structure their entire portfolio and all of their assets to make
sure they're protected later on. So that leads us into talking point number four, which is the
revocable trust versus the will and what does that mean? And the basic essence of this,
is the revocable trust is how you structure and protect your assets while you're living,
and the will is the designation once you pass.
And there are a lot of pros and cons to the revocable trust over the will,
and the most important one I've already covered,
and that is the fact that by having the revocable trust for all of your assets,
you will not have your errors suffer by going through probate court
and figuring out who gets what and what is left after all of the court fees and everything.
that it takes to go through probate court. So that would be the number one most important thing for me,
but then also with the trust, it keeps all of your business private. And this is a very important
thing for wealthier people because you don't want the public in your business. Because remember,
if you go through probate, that is public knowledge, it'll be in the papers. Everyone will know exactly
what's going on. So those are two very important parts of the revocable trust versus the will.
Right there with you, Robert, just want to reiterate a revocable trust allows you control over your assets during your lifetime with provisions for after your death, whereas a will controls assets only after you die.
And trusts can manage your affairs if you're incapacitated, whereas wills do not.
So revocable trust, way to go.
I mean, that is just right there with you.
And then speaking of incapacitated, power of attorney, if you don't have a power of attorney, probably a good idea to check that one out.
I'm my dad's power of attorney.
I can sign on his behalf with different things.
he's 79 years old at this point.
So if we're at the hospital, something happens, he can't respond, right?
I'm right there with him and can do all those things on his behalf.
But definitely have a power of attorney, have that person in your life that you trust.
If it's a spouse, if it's a child, if it's someone in your family, have them as that power
of attorney.
So if something happens to you where you cannot make those decisions, you are not in a state
of mind to make real big, lifelong decisions that you know that that person's going to make
the right choice for you versus, to Robert's point, you know, something being thrown around
and probate.
What if they would have thought this or thought that, right?
It's just get that out. Do the power of attorney and have one for sure.
Especially if you're in a family where there is some wealth to be considered and there are multiple
siblings. You want to make sure that power of attorney is in the hands of the most responsible
person that is going to do what's right for everyone in the consideration of what's happening
and not just for themselves. This is very, very important for the future. So if you're in your
40s or 50s, we promise it's not too late. You might start to have some gray hair like Robert here,
but that's okay. Gray looks good on you, Robert. You got your agent like fine wine, as I like to say.
But at the end of the day, you're still young. You have so much time ahead of you to grow in your career,
get your money right, start investing, grow your retirement accounts, earn interest, not pay it, right?
There's so many cool things you can still do throughout your life to not only build wealth,
but keep it and pass it on for generations to come. If it's the 529 plan, making sure you have these
trusts in place, there's so many things to consider. And we hope this episode inspired you
and can really guide you now to building generational wealth in your 40s and 50s.
Well, this is a great episode because it really takes notion to our 30-year age gap.
You know, you're in your late 20s and I'm, you know, in my late 50s,
but there's so many things that can happen in that 30-year age difference.
And it's so cool being able to now teach people in their teens, 20s, 30s, 40s, 50s,
and on up and show them the way of what is necessary important.
so you can live a life of financial freedom and not have the fear going into retirement by not having
all of your ducks in a row like we try to teach each and every week.
Right there with you, Robert.
Now, before we jump into our question and answer section of the episode, I think it's time for our
monthly update on the FREC portfolio.
I'm sure you all remember, but we had Mo from FREC.com come on the podcast to talk about direct
indexing and how you can do it and use FREC as a way to automatically tax.
tax loss harvest while tracking the S&P 500's performance.
Now, Robert, we invested $20,000 of our own money on FREC back on June 6th.
Since then, our $20,000 has increased to $22,551 because we're tracking the S&P 500.
But more importantly, we've automatically tax loss harvested $1,06.89, which means we didn't
do anything.
And now we can ride off $1,000 of losses against.
our investment portfolio. We're still tracking, right? We're up. If you include this actual tax
loss, we're actually up 18 and a half percent, which is outperforming the S&P, which is pretty
cool. It's just so fun, Robert, because we have these tools at our disposal and we're able to show
people in real time, right? It's like, hey, you jump in the water first and you tell me if it's
hot or cold and I'll jump in after you, right? That's what we're here to do, Robert. So we jumped in
first. We threw 20 grand out of it. We're now up to 22,0551, and we've tax loss harvested over
$1,000. Yeah, I love it that we get to introduce all of these cool ETFs and stocks and
crypto's and funds and different investment strategies. And we do it quite a bit when you really
think back over the two-year history of the Rich Habits podcast. We've introduced a lot of really
cool stuff. And then all of these people out there by the thousands and tens of thousands of
people, they get the benefit of us digging deep and really flushing out these investment opportunities
and presenting it to them.
And so it's so cool when we see these investment opportunities like FREC,
and then they actually do really well.
So it's been a fun ride, and FREC has been great so far,
and I'm really excited to see what it does in a couple more years.
So if you want to go sign up for FREC, head over to FREC.com.
That's FREC.com, and you can go start direct indexing the S&P 500,
the Russell 2000, the NASDAQ, and all the other cool strategies they have automatically.
tax loss harvest, maybe you too can tax loss harvest $1,000. This is pretty easy stuff here.
All right, Robert, let's jump into our first question coming from Scott P. Scott says,
I'm trying to consolidate some of my cryptocurrency investments because I just have too many of them
without a significant amount in any of them. I've been doing really well with Bitcoin on Coinbase,
an ETHA, which is the I-Share's Ethereum ETF, hasn't performed that well over the last couple
months with my brokerage account. Now, after the episode introducing BTCI, I'm very interested in that
ETF. Do you all have a preference or a recommendation on one, what I should keep my crypto inside of,
if that's a Bitcoin ETF, Bitcoin on Coinbase, whatever else? And then two, do I choose the
ETF or do I choose the actual asset? And then also, what about the fees? There's trading fees on
Coinbase and I don't like paying $100 every time I trade with size. Robert, I'll let you kick this one off.
Scott, it's a great question. And one of the big things I want to talk about right here is you mentioned you don't have a lot in any of them. I see this all the time where someone will have a crypto portfolio with 30 different assets, but they have an average of $180 in each one. And the problem is, is that you're shooting darts at too many targets. And when some of them do hit, you're not going to have enough money in each one of those cryptos to really make a difference for you financially. So in my opinion,
opinion starting out, let's say you have under $50,000 in crypto, I would say you'd be better suited
to have 8, 10, or 12 cryptos all together and really focus in on having three of the best of breed
in each sector. And I have no problem with that being on Coinbase or Crypto.com or public
com, but you just don't want to have it spread all over the place if you can help it.
Now, if you prefer to have the ETFs, like we said, BTCI, that is fine as well.
In my opinion, though, if you really want to get the most bang for your buck, a major portion of your crypto should be in the actual underlying assets rather than the ETFs.
And then as you build the portfolio, then you could look to the BTCIs of the world to gain some extra income and also lower your volatility.
but I definitely would really try to focus it in, maybe get it all on Coinbase or public,
and then just really add money to it and dollar cost average into that eight or 10 that you believe in the most
and you've done your research on that you think give you the most bang for the buck in this bull run.
I'm right there with you, Robert.
I think at the end of the day, I've got now, because I've added a couple,
I've taken some advice from you and some friends, and I've got one, two, three, four, five, six, seven, eight, nine cryptocurrencies.
in my portfolio with the new four or five I've added, I've got a cumulative of like 10 or 15,000
in them. So it's not too crazy. They're kind of those moonshot crazy ideas that I've seen
you talk about and others online where the bulk of my portfolio is in the Bitcoins, the Ethereums,
the chain links, things like that. So I'm right there with you. Scott, if you want to have the
ETFs in your portfolio, I think it's a great idea. I actually just bought some ether myself today.
We highly recommend the I shares ether Ethereum ETF. I think there's a couple others out there,
but I know the ice shows one is legit.
And to your point before, about BTCI, I'm right there with you.
We love BTCI.
We had the Nios crew on the Rich Habits podcast a couple episodes ago.
To talk about BTCI's 27% distribution yield, that is so much money getting paid out every single month.
You're making passive income with it while also tracking Bitcoin.
So two thumbs up from us.
And we're going to see more and more incredible ETFs in the coming months.
And so I think there's just always going to be this influx of,
new tools to offset volatility, but then also provide income. So I'm right there with Austin. I agree.
And I think you're on the right track. And BTCI is great as well. And just keep an eye on it.
Make sure you understand your thesis. And also make sure to take profits along the way.
Our next question comes from Key S. He says we're looking to put some single family rental
properties into LLCs. One is in Alabama and the others in Ohio. We got a quote from
a firm for $6,000 to do this for us. It includes a Wyoming LLC parent company that provides
asset protection and privacy, as well as creating two LLCs, one in Alabama and one in Ohio,
to hold the investment properties within. The firm advised that the Wyoming LLC would not
require filing any tax returns, and since we live in California, it would also avoid an $800
franchise tax. Personally, we don't hold a lot of cash in our accounts, but we do have our bridge accounts
and we have assets well over $100,000.
However, I'm wondering if this is just overkill for our situation,
or is this something that we should do considering our wealth?
Robert, we were just talking about this stuff.
Do you think that it's time for him to kind of begin to structure some of these things together,
considering he's got a couple hundred thousand dollars, maybe not yet?
What's your perspective?
Yeah, I always think that structure is important because I, too,
have been the victim of inside attacks, charge orders,
and all of the other things that come into play as to why business structure is so important over the
years. So I think it is time to do it. Is $6,000 a little steep? I think so. If I use my attorney for doing
all this, they generally charge me, I think, $6 or $700 per LLC, and that includes the subscription
agreement, the operating agreement, the EIN, and everything. So I would maybe take another go-round at this
and look around and see if you can find somebody more reasonable to do it.
Because $6,000 does sound a little high for me.
I think you should be able to get it done for $3,000 or $4,000,
which then I think it's definitely worth the money.
Because at the end of the day,
we want to make sure you have absolute protection on your assets
because the more money you make and the more wealth you build,
you're going to find people are going to come after you.
So it's really good to add that protection early
to make sure that they can't do what's called penetrating the corporate
veil and coming after your personal assets. So let's linger on that for a second. So everyone understands
why Key is thinking about spending $6,000 for this, right? So if you are someone who owns a rental
property, right, like Key does in Alabama and Ohio, and let's say your Alabama rental property
residents somehow hurts themselves and they're trying to blame you for it. They're going to go and
look you up. They're going to say, I'm going to go sue Key for everything he's got. And as part of that,
is this rental house and the Ohio rental house if they're not structured in different entities,
right, because you still own them. But in this situation key, like you're thinking of doing,
you don't own these houses. They're owned by these LLCs. Now, you control the LLCs,
but you don't own them. So when they sue you, you're talking about this 100,000 of assets.
I understand having some maybe umbrella insurance or some policy around that to help you kind of
stay protected there. But what Robert's saying is like, if something bad happens and they go
back and try and sue you for something frivolous, they can't really impact your ability to own
and keep these rental properties because you don't exactly own them anymore. Yeah, it's so true.
And so many people really slack on their business structure. And that's why this is such an
impactful episode is really just drilling it into everyone's head. Protect what you own.
Otherwise, someone will take it. I promise you as you grow, it could be an inside attack. It could
be an outside attack. It could be a crazy ex-employee that comes after you and finds something
and they go after your personal assets. And I've lived through it and it's cost me millions of dollars
over the years and I just don't want to see any of you go through it. So I promise you. Key,
this is a great question. Please follow through and get these things done. And everyone else listening,
make sure you do the same. Now before we jump to our final question, let's take a moment to hear
from another one of this episode sponsors, Blossom. Investing is more fun when you're doing
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daily performance with your friends. Click the link in the show notes below to sign up for Blossom
or simply type Blossom in the app store. Now, our final question comes from Ari.
Ari says, which is more important to build up if I only have a limited amount of money to set aside for it every month?
Is it one, the emergency fund or two, the Roth IRA?
If the answer is the emergency fund, do I just also invest the money that's in my emergency fund in the stock market so I can also grow that money?
Like, how do I approach this?
Robert, I'll kick this one off.
Very simply put, we have sort of like this order of operations.
I think a lot of people make the mistake, Robert, of thinking they want to do nine different things at once, right?
they want to pay off their mortgage, they want to invest, they want to grow in their career,
they want to buy the rental house, they want to buy the new thing, they want to invest this and buy
this and do this and all these like 19 different things. If you try and do 12 things at once,
none of those 12 things are going to get done effectively. What you need to do is focus on one
thing at a time. Now in this situation, one of those things is building up an emergency fund.
You want to have, after you've paid off your high interest debt at 35 percent, build up your
emergency fund to call it $10,000, $10,000. That $10,000, $20,000 is not an investment. It is insurance. So you do not
have to sell your investments, right? People make the mistake of investing their emergency fund.
Let's call it they invested $15,000. The S&P 500 went down by 35% in 2022. Congrats. You now only
have about $9,000. And then also, congrats, your parent just died. So now you have to pay $12,000 in funeral costs.
Well, now you have to go borrow on your 401k or cash out of some stock options or swipe the credit card to find that extra $45,000, $7,000 you need in the case of an emergency.
Have you ever heard of medical bills?
They're pretty high, right?
Happens all the time.
People get stuck with those.
What we're trying to get out here is if you have that emergency fund of $15,000, $20,000, you can use that as insurance to say, oh, something popped up.
That was $9,000.
Here's my emergency fund money.
Now I don't have to sell my investments.
Now I don't have to do the short-term capital gains or borrow from my 401k or swipe my credit card, right?
It's ensuring that your investments remain.
So which one do you want to do first?
You want to do the emergency fund.
You want to build it up to three to six months of expenses.
Only you know what that number is.
For me, it's closer to $30,000 to $40,000.
And then after you have that money sitting there, take all the same money you were using to build it up to now go invest and max out the Roth IRA.
Now let's say an emergency pops up and you've depleted your emergency fund.
stop investing in the Roth IRA, hit pause for four or five months, and then go replenish the
emergency fund. Congrats. It's back up to where it was. Now go start investing again, right? One thing
at a time. If you do both, neither things are going to get done. Yeah, I agree. And that's a great
takeaway. And I think the most important part of your answer, Austin, is too many people try to get
too fancy with their money too early on. And they try to chase every trend and every different way of making
money and it just usually doesn't work. That's why we like to tell you guys, like I really love
the order of operations, get the emergency fund set up, get the Roth IRA moving, start simple,
build your base, then start diversifying more, getting more fancy because so many people
try the fly-by-night hustler gambler investing styles till they're about 35 or 37 years old,
and then they realize it doesn't work. And the next.
number one thing we can do to help everyone listening is getting you out of the mindset as the gambler
and getting you into the mindset of the long-term investor. I promise you, you'll thank us later once you
flip that switch. So Ari, great question. We hope this helps because we want to see everyone that
follows us win and win big. Everyone, we're wishing you a Merry, Merry Christmas and a very
happy new year. We'll see you here very soon. We're not going to take any pauses or breaks. The Rich Habits
podcast keeps rolling even during the holiday season. And then also, Robert, I just want to take a
moment to thank everyone again for all the support. Just reflecting back upon 2024 has been amazing.
We now have 200,000 people that have us in their top five podcast rotation. We have 70,000 people
that have us as the number one podcast they listen to out of every podcast every single week.
That's so many people, so encouraging, and we're so glad you're here. Cannot wait to continue the momentum in
It's really mind-blowing to think that the amount of people that watch us and we're their number
one podcast can fill a baseball stadium in most football stadiums. And it really just goes to show
that if you provide value and actionable information over and over again, that you're going to
succeed because we stick to what we're good at. We stay in our lane and we make sure that our
delivery is always the same so people can take notes and take action. And I love.
every minute of it. And what's interesting is a surprising statistic I saw, our largest growing audience
like segment cohort were those who are 55 and up. So this episode's really going to help a lot of
those 55 and ups who are trying to build that generational wealth in the last, you know, 10, 15, 20 years
of their career. So we're so excited. We're catering. We're doing everything we can to make sure that
our audience has all the tools and resources they need. And don't forget, leave us a five-star
review, share this episode with a friend that needs it, and we'll see you on a next episode.