Rich Habits Podcast - 99: Our 5 Favorite Investment Themes for 2025

Episode Date: January 6, 2025

In this week's episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz share their favorite investment ideas for 2025.We did this last year, and you all loved it!---💰 ⁠Public⁠��� is officially the title sponsor of the Rich Habits Podcast in 2025!If you're investing, you need to be using ⁠⁠Public. ⁠⁠⁠⁠public.com/richhabits⁠⁠---🚀 Sign up for the Rich Habits Network so you don't miss out on the next big investment opportunity,⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here!⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠---📊 Join 200,000+ investors on Blossom today! See what your favorite investors, like Robert, are investing in and manage your portfolio with confidence.---🎨 Skip the waitlist and invest in blue-chip art for the very first time by signing up for Masterworks: https://www.masterworks.art/richhabits.Invest in shares in great masterpieces from artists like Pablo Picasso, Banksy, Warhol, and more.---Public Disclosure: A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. As of 1/6/25, the average, annualized yield to worst (YTW) across the Bond Account is greater than 6%. A bond’s yield is a function of its market price, which can fluctuate; therefore, a bond’s YTW is not “locked in” until the bond is purchased, and your yield at time of purchase may be different from the yield shown here. The “locked in” YTW is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. Public Investing charges a markup on each bond trade. See our⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠Fee Schedule⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. See⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠https://public.com/disclosures/bond-account⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to learn more.---Masterworks Disclosure: “Net annualized return” or “IRR” refers to the annualized internal rate of return net of all fees and expenses, calculated from the offering closing date to the date the sale is consummated. IRRmay not be indicative of Masterworks paintings not yet sold and past performance is notindicative of future results. For additional information regarding the calculation of IRR for a particular investment in an artwork that has been sold, a reconciliation will be filed as an exhibitto Form 1-U and will be available on the SEC’s website. Art sales price data is comparative only. Each painting is unique and historical data is not a direct proxy for any specific painting or investment. Data represents whole art not an investment into our offerings which includes fees and expenses. Past sales are not indicative of future results. This communication is sent exclusively from Masterworks and is not endorsed by or affiliatedwith Bank of America. Masterworks did not contribute to the creation of the referenced content.The report is not intended to be regarded as investment advice, an offer, or solicitation of anoffer to enter into any Masterworks offering. See important Masterworks disclosures: https://masterworks.com/cd. Masterworks affiliated issuers have now conducted more than 450 offerings of securities, representing over $1.02 billion in Art Investments, as of December 1, 2024.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 brought to you by public.com, 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 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 say. 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, today's episode is going to be a blast, so why don't you kick us off with the intro? Yes, in this episode of the Rich Habits podcast, we'll be sharing our favorite investment themes for 2025, so we are super excited. As you all know, we did this type of episode last year as we turned the calendar to 2024 and you all loved it. So this year we're running it back. Remember, these are investment themes which means big general ideas, but you all know we're never going to just leave you hanging and will of course share our specific ideas and favorite names benefiting from these growth trends. We share these themes with you as a reminder to always

be actively managing your portfolio, both from a position's perspective as well as from a a valuation perspective. Robert is completely right. Valuations in the stock market right now are pretty frothy. So don't be afraid to make a watch list or something of that nature and buy these names if they experience some red days, some pullbacks, things like that. With that being said, Robert, kick us off with your first big bet of 2025. Sure. We've been talking about it for a little while yet, but we want to dig deep into this topic in this episode as the first episode of 2025. And that is humanoid robotics. A massive shift is underway as we enter the dawn of the robotics age, where machines can do more than just compute. They now have the ability to act, perceive,

and transform in ways that are once viewed as a sci-fi dream. It's one of those once-in-a-lifetime themes you can't afford to miss. AI now merges with robotics to reimagine the future of productivity. So you have to imagine a world where human-like robots, autonomous, complete tasks in a warehouse, assembly lines, or a distribution center. This world is only months away, not years like some people think. And these robots look like humans, act like humans, and are about as 50% of the speed as normal humans. So these robots will exponentially learn more tasks over the coming years and will be used

by every major commercial partner in the world as the cost of human labor drops dramatically. Navidia's Omniverse acts as a playground for these humanoid robotics to learn new actions, as well as their superchips to power their compute functionality. Companies like Tesla are already using their humanoid robotics on their assembly lines, and Google has recently partnered with Apptronic to share their large language models for more learning as well. Also, Amazon remains the robotics king so far with over 750,000 programmable robots used. in their warehouses worldwide. These are programmable, not autonomous just yet, but I'm sure they'll jump into that race eventually. Robert, I love this investment theme for 2025. Major shout out to Chris

Camillo for spotting this, call it 9 to 12 months ago. I really want to encourage people to go online and type in Figure A-I, F-I-G-U-R-E-A-I. They're a company that's partnered with OpenA-I, They've got some crazy demonstration videos of their autonomous robots helping BMW on their assembly line. There's another video of it, like talking with someone else with dishes and an apple. It's just really interesting to see it. I think a lot of people listening right now, Robert, don't yet understand just how advanced these robots are. And I also want to make sure we're on the same page too, because when people think about robots, they think about like assembly lines and they think about like an arm that's like, you know, on something and then like it picks something up and puts it together.

that's programmed. Someone wrote a code and said, move your arm nine feet to the right, go down two feet, pick something up, move it. Like, those are all programmed. We're talking about autonomous, humanoid robots. There is no programming. All that's happening is we say, hey, go do this and figure it out, and it figures it out completely. I know in the figure AI demonstration video, Robert, there was like a time where the robot, like, put something in a box and it, like, fell over in the box. The robot really, realized it fell over, went back down, picked it up, and then like, that happened, right? So that's what we want people to understand. This is a major shift in technology. This is not programmable. This is autonomous. It's only 2025. And we're accomplishing this autonomous type technology today.

Just imagine what's going to happen and be accomplished by 2030. This humanoid robotics investment theme, Robert, I think is going to be major for the next two, three, four, five, six years. And being able to get on the right side of it early with NVIDIA, with, Google, with OpenAI, with some of these other names that we'll be talking about is just so important. Yeah, and it's really important for everyone listening to understand, and we've been saying this for years now, is you don't have to be first to an investment. You just have to be ahead of the masses. And with humanoid robotics, we are definitely there. We've been talking about it for months now,

and we are really getting all in on this for the coming years. And it's just really important to understand this is happening. This is real. It is no longer sci-fi. I can, can't wait to the day, my warehouse for all of my production, for silly bands and all of the consumer products, can have humanoid robotics in the warehouse because then there's no sick leave, there's no time off, there's no bonuses, there's no vacations. Sorry warehouse staff, I love you, but it's just going to make things so much better for business owners small and large to be able to be efficient and keep things moving in the right direction because labor does get out of control. And that's not my fault, but the labor cost can ruin a business because it's inefficient.

So I love this sector into 2025. And that leads us into sector two. And that is energy, nuclear and all of the like. Because with AI's expansion significantly, it increases energy demands. This surge challenges our existing power grids traditionally powered by fossil fuels, raising concerns about emissions and sustainability. In response, all the. the tech giants are massively investing in nuclear power. For instance, Google has agreements

with Keros power for small modular reactors SMRs. So to visualize that, instead of these big, ugly, inefficient nuclear power plants of years gone by, these are going to be smaller municipality, condensed versions of nuclear power that are going to be much more efficient to meet the AI data center needs. Microsoft also has deals with Constellation Energy to restart the three-mile island plant for AI power, and I love Constellation Energy as well. And Amazon recently invested in nuclear through a $500 million deal with Dominion Energy for small modular reactors and similar investments in X Energy, plus purchasing nuclear power data centers for AWS.

And the key players in this nuclear shift include Camaco Energy, Constellation Energy, Vistra, next-gen. are many others. Those are just some of our favorites. So despite the challenges like high costs and waste management, nuclear capability for consistent power is a significant draw. OpenAI CEO Sam Altman invested in Oaklo and Bill Gates invested in Terra Power. And these are both recent investments. So this movement indicates a strategic pivot towards nuclear energy for the long term to meet all of these data center and AI needs that are growing experts. financially year over year. So the way to think about this, Robert, is not just like, okay, Amazon,

Google, Microsoft, OpenAI, like they're the ones investing in this, therefore I should invest in those companies. Think about the picks and the shovels, right? If everyone's going out and they're trying to find gold, well, the person who's actually making the money is the one selling them the opportunity to find that gold. The gold they're all looking for right now is sustainable energy, aka nuclear. So I guess what I'm trying to say, Robert, is instead of picking the Microsofts, the Googles, the Amazon's, right, pick the ones selling them, pick the ones that's taking their money and working with them, like the Camacos, the Constellation Energy, the Vistra, the Next Gen, things like that. I think these small modular reactors are going to be something we'll see a lot more of.

I have yet to do a deep dive into sort of this like nuclear energy, kind of secular growth trend. I know Robert knows a lot more about it than me, as you guys can see here. So it's really interesting for me to kind of be someone learning in real time next to you and saying like, wait, you're right, Robert, this is a really big deal. And there are some companies that are making a ton of money on the back end of this. So that, to me, is the opportunity, right? Finding the companies that will be taking the money from the Amazon's, taking the half a billion dollar deal from Amazon to go help them build what they want to build. I love the takeaway of bringing up the picks and shovels because everyone looks at these large secular growth trends and go, I'm going to buy the big

boys. And that's great. We've made a ton of money, you know, with the navidias of the world and the Palantiers and the microns and stuff like that. But it's also those pick and shovel companies like you're talking about, like Constellation Energy, like Oak Lowe, like Vistra Energy. Those are the ones that are supplying all of this help and assistance, kind of like how we look at, you know, if you take Taiwan Semiconductor and what they provide for the AI sector, for the chip sector, and a lot of people sleep on the stocks like that that are the providers. And that's why I really like that takeaway of the picks and shovels theory. So let's now jump into what I believe is going to be a major theme for 2025. And that is not as futuristic and sci-fi as what we also just talked about here, but instead

something incredibly simple. As you all know, there are betting platforms that got incredibly popular during this most recent presidential campaign between Kamala Harris and Donald Trump. Kalshi and Polymarket are the top two, and both of these platforms allow you to trade something called an event contract. You buy the event contract for a specific price, and then if the event becomes true, the event contract's value automatically becomes $1. And the price you buy the contract at completely depends on the probability of the contract coming true. So for example, there's an event contract on Polymarket that's priced at about 92 cents right now titled, Will Donald Trump be inaugurated, which means if you want to go bet $92, that Donald Trump will be inaugurated on January 20th,

your 92 will turn into 100 once that happens. So 92 cents turns into a dollar. That's an 8% return in only three weeks. That is an entire average year return in the S&P 500, delivered to you in only a few weeks time. So it's my hunch, Robert, with markets all over the place lately in valuations trading on some of the highest levels we've seen since the dot com bubble back in 2000, I think a major investment theme in 2025 is going to be parking money inside of these no-brainer safe bets that will return 3 to 6% in a few weeks time, which compounded throughout the year of 2025 could return for your portfolio 20, 30, 40% on an annualized basis. This is something I'm going to watch extremely closely this year. I really, really

believe there's probably going to be between six to 12, maybe 15, like a once per month type cadence of a crazy no-brainer bet where I could put $10,000 and it's going to return $10,400, a little 4% return. Also, what's $400? You're right. It's not all that much money. But when you compound that week over week, month over month, quarter over quarter, 4% here, 7% here, 9% here, now you have a total return of 37% in a 12-month period. of time, which dramatically outperforms the S&P 500, at least it has for the last couple of years. So I really want to encourage people. And if anyone finds a fun event contract on a Calci or a polymarket that they think is a no-brainer and is totally worth the two, three, four percent that

it's going to spit out. Send it to us on Instagram. We'd be really, really interested to see. I love this theme because the predictive markets are so fun as a research tool as well, because you can see in real time what people are willing to bet on with their money. And it's not just election stuff. It's everything you can think of of what's going to happen with a specific crypto or an ETF or whatever it may be. And so I love this theme. And I think it's going to be a really easy way to make great returns in 2025 by following

along and understanding these bets because most of them are foregone conclusions and they're going to happen. And so to make that percentage and let it compound. is awesome and I love this call out. And Robert, it kind of comes back to this idea that like, sure, we want to be investing in the future and the future is sexy, it's AI, it's humanoid robotics, it's nuclear energy, right? All these crazy cool things.

But sometimes the people that make the most money are the ones betting on things that don't change. I think we talked about that a couple episodes ago. Jeff Bezos recently was interviewed. I think it was call it six or 12 months ago. And he said something I love to bet on as an investor is beding. on things that don't change. He goes, I will always bet that people will want their packages delivered to them quicker. That's never going to change. Therefore, I need to reinvest Amazon's

profits into a better delivery system, right? So it's just like betting on things that don't change, I think, is a really interesting philosophy to have. When everyone zigs, it's fun to zag. And I'm thinking about zagging when everyone else zigs in 2025 by having a little bit more of an even keel, what's happening today type approach to the markets. Yeah. And that's, brings up a recent interview that Raul Paul did, and it really drove me nuts because I generally respect him and believe in his knowledge and his thesis regarding the crypto markets and where we're going in the economy. But he said, don't waste your time investing in the NASDAQ or the S&P 500, because you'll never get returns that are meaningful enough to build wealth. And it really shocked me. I

thought it was fake. I thought it was AI and somebody just made a fake video, but it was real. And this really speaks to having those sure bets. To me, sure bets are QQQ, VO, and other ways. And of course, we want everyone listening and watching to have diversity. We want you to be into these newer investments and have these alternative investment strategies, but we also want your base to be awesome and be a sure bet. So that really shook me and speaks kind of volumes to what we're talking about in this episode and what you just highlighted. Now, before we jump into our next investment theme, we had to make sure that you're investing using the right platform. So if you're serious about investing, you need to know about public.com.

That's where you can invest in everything. Stocks, options, bonds, crypto, they even offer some of the highest yields in the industry, like a bond account at 6% or higher yield that remains locked even if the Fed cuts rates in 2025. What sets public apart is how they give you the tools you need to make informed investment decisions. Their built-in AI tool called Alpha doesn't just tell you if an asset is moving. It tells you why the asset is moving. So you can actually understand what's driving your portfolio's performance. Public is a FINRA registered, SIPC-insured, U.S.-based company with a customer support team that actually cares.

We work with Public for a long time, and the bottom line is your investments deserve a platform that takes them as seriously as you do. So fund your account in five minutes or less at Public. com front slash rich habits and get up to $10,000 when you transfer your old portfolio. That's public.com front slash rich habits paid for by public investing, full disclosures in the podcast description. Robert, it's so funny. I was looking at my Tesla stock. It was down like 7% on Thursday, January 2nd.

And I was like, man, why is my stock down so much? And I literally, what I did is I went to public and I went to Tesla. And it told me it's because they like, you know, didn't deliver enough vehicles or whatever on their right but i was like oh my gosh that's so cool right it's like why is this stock up or down six or seven percent let me go see what public has to say that's just a simple example of why public is the best platform for investing in stocks crypto bonds options everything in between go check out public dot com slash rich habits open your account you're not going to regret it yeah i love it when i saw tesla was down my immediate thought was yes i got a reprieve from all of these gains

so i can buy more so it was awesome so let's get into our next big idea that is kind of just the continuation of AI. We've been talking about it for years and we continue to believe this technology has a long future ahead of it. Specifically, 20203 and 24 seem to be the years where the stock market assigned value to the hardware companies operating in this space, whereas we believe 2025 will be the year of the software AI stocks. Of course, in the video will remain the biggest powerhouse in the space moving forward. but some of the software names we believe are using AI to their advantage in 2025 include Snowflake, CrowdStrike, Palantir, MongoDB, Cloudflare, and other massive software

names in the space. We've been talking about these for a long time, but we are reiterating that we believe AI is making a little bit of a shift, but definitely still growing in 2025. I think this makes a lot of sense, Robert, because in 2023 and 203, in 20, 2024, especially 2023, it was a lot of, you know, oh my gosh, this is such an interesting technology. And all these people are investing, you know, billions and billions of dollars into it and trying to figure out how to use it for their business and things like that. And it went from, oh my gosh, this is such an interesting technology to, okay, wait a second, how are we going to use it to make money? Right. And I think the how are we going to use it to make money aspect is why we're

focused on software AI stocks in 2025. They have figured out how to use it to make money in 2020. If it's, you know, snowflake and they're just data lakes, if it's MagoDB's analytics, Palantiers, AIP, there's so many different ways that these software companies are using AI to generate net new revenue and cash flow and profits, things like that for their business. So totally agree. AI is going to remain here, but the software side of the equation, I think, is what's going to be the needle mover for the industry in 2025. Now, our last big bet for 2025 is quantum computing. This one might seem a little. little early. I get it, but it's important to realize quantum computing is a game changer. This isn't a science podcast, so we're not going to explain to you how quantum technology works. Go Google it

or watch it on YouTube or something. It's very simple to understand here. But essentially, Google's Willow quantum computer has figured out how to scale with accuracy, which is the biggest, most important factor about this, right? Scalability was never a, you know, something that was hard for these quantum computers, just keep buying more of them. But I guess, guess what I'm saying is the more that you added on top of each other, the accuracy would go down, whereas with Google's willow quantum computer, the accuracy remained stable and even increased, which was really interesting. This seemed impossible in the space just a few years ago. So is quantum computing one day going to be as important as AI? Apps are freaking lowly. Is it something we think

has commercial use case right now? Absolutely not. I don't think any company is going to go, hey, Google, let us use your willows so we can compute something. Like there's just nothing happening right now, right? We haven't figured that out. But I think this is the very beginning of the hockey stick like growth we'll begin to see with quantum computing. And really the whole trade here is just owning Google stock. I think Google, I think Amazon, I think Nvidia, right, all things like that.

But specifically Google is an important way to approach this. Yeah. And a couple of my favorites that are kind of this long term play, like you said, because we're so early on would be reggetti. which is R-G-T-I, Defiance Quantum, which is Q-T-U-M, and I-N-Q, I-O-N-Q. Those are three of my favorites of these kind of picks and shovels plays in the quantum computing space. But I agree with you. Is there money to be made right now?

Yes, but is this more of a long-term thesis? Absolutely, because we still have a long way to go in humanoid robotics. We have a long way to go in AI, but quantum computing is pulling up the rear. and something to keep your eye on and start maybe dollar cost averaging a small portion of your portfolio into because i think we have a lot of legs in the next three to five years in quantum computing totally agree with you robert quantum computing really interesting stuff i do enjoy the physics of it i think it's a pretty cool thing to see but yeah we're definitely early but i will argue too just want to reiterate i don't think we're as early as people might think with this humanoid robotic stuff

so please go take a look at invidia go figure out what tesla's doing with their optimist robot, go look at the recent figure AI demonstration videos, Google Deep Minds Partnership with Apptronic, go look at all these things. It's very, very important to understand just how big this industry can be. And I think we are, I mean, Robert, just a week ago in the financial times, in videos like head of human robotics said that we are less than a year away from a chat GPT moment in humanoid robotics. So if the smartest people in the world that are working on this stuff, like the ones that are working at NVIDIA, say we're that close to a chat GPT moment of people are now using it and understanding it and want to invest heavily into it. You are 12 to 18 months

away from getting left behind, right? Not to be first. None of us are first right now, but we're before the masses. So with all these investment themes, we share them because we want you all to, one, be actively managing your portfolios, but two, understand that there's always something to be looking forward to, and there's always ways to make money in these markets. You have to be ahead of the curve ahead of the masses, which is why you listen to the Rich Habits podcast. Yeah, and on that note, I want to tell a quick story from just yesterday. On my flight back, there was a gentleman next to me who we ended up speaking for over an hour that was reading a financial newsletter about should you be investing in cryptocurrency, specifically Bitcoin or not. So he and I started talking.

He was 91 years old, and then he asked me what my thoughts were on cryptocurrency. And of course, I've been in crypto forever. So I loaded him up with information. And then two or three other people around us started engaging in the conversation mid-flight. And none of them own any crypto. Why is this important to this episode? Because of what Austin just said. Being ahead of the curve.

When you're watching podcasts like the Rich Habits podcast every single week, you're in the know. You are on top. You are on the top five percentile of information gatherers in the country in the United States. that is important to understand because you have to remove yourself and remove your thought process out of it because what you know most of the world in the United States does not know because they're not focusing on their wealth, they're not focusing on what's next and how to invest their money. So they are left out in the cold and those are the people that are late to the party. And this is important for this episode because if you look right now at the

stats. 36% of U.S. adults over 18 only listen to podcasts once a month. So think about that. They're only engaging their brain through podcasts 12 times a year at best. And so they're just leaving all of this information out on the table until much later on when someone tells them they should be involved because their thought process daily is that of a consumer and not as an investor. We are here to educate people to become investor thought process type people because then you are going to be ahead of the curve and you are going to crush it every single year in the markets because you're going to know what to do because you follow this podcast and you are engaging your brain and making it part of your daily life to be on top of things that are important to you like your money.

I'm right there with you, Robert. I am so excited for 2025. We are going to see volatility. We're going to see some of the biggest returns in our portfolios. We're hopefully going to see a Bitcoin go up to 150, 200,000. We're going to see so many fun things in 2025. So cannot wait to keep you guys along for the ride and update you every step of the way. Which reminds me, Robert, investing is actually a lot more fun when you're doing it alongside of like-minded people. From dividends to growth stocks, there's a community for everyone on Blossom. And remember, Blossom is not an online broker like public.com. They are a social investing app built around transparency, a social media platform built specifically for investors. Yes, and transparency is key when it comes to investing,

and you all know just how important this is because you listen to our podcast. I've already connected my personal accounts to blossom, and I enjoy seeing how everything is divided up and performing on a daily basis, and you can see my portfolio as well. Additionally, they offer dual-ingle-style educational video content for those of you still learning, and I think it's a great resource. They were recognized as the top 25 app for 2025 by the Apple App Store for very good reason. So if you've not yet joined Blossom, we really encourage you to do so. They now have over 200,000 users on their platform. It's a very easy way to both find your own community of like-minded investors, but also manage and analyze your portfolio in just a really clean way. Click the link in the show notes below.

to sign up for Blossom or simply type Blossom in on your app store. All right, let's now dig into the Q&A section of the episode. Now's a quick reminder. If you want to ask us a question, head over to our Instagram at Rich Habits Podcast and send us a DM, which is where we got all of these questions. You can also email us at Rich Habits Podcast at gmail.com or ask your question inside of the Rich Habits Network. More about that in the show notes below.

So our first question comes from Bindu. Bindu says, hi, Austin and Robert. I love your podcast. Your podcast boosted my interest in being financially smart. I'm 27 years old, and I've been working as an electrical engineer in California for three years now. I started out with an $80,000 salary, and now I'm making between $115,000 and $120,000 a year, depending on the site that I work at. My rent is pretty high at $1,600, but I recently paid off a car, which is now worth about $25,000. I have $70,000 saved up.

Out of this, I have $55,000 in an investment account, but I'm not really sure how. how to go about investing it wisely. Should I put it in index funds? Should I buy some single stocks? What should I do? Also, which websites do you suggest looking into for a beginner who wants to learn more about investing but doesn't really understand the American markets? Robert, do you want to kick this one off?

I love this question and it really speaks to something we talk about every single day. And that is people building their base. We want everyone to have $100,000 saved and invested before they get too crazy or get too fancy or go invest in a food truck or buy some meme coins. We want to see that base built and we want you to build it in a simple way. You mentioned ETFs and index funds. That's the way to do it. So for me, I would go to public.com, open up your account, get that Roth IRA component set up, get your traditional account set up, whichever way you feel is best for you. And then I would invest in a basket of those index funds that we talk about every single day. We like V-O-O-O-V-U-G.

QQQ, maybe you could throw in a little VTI, but just get that basket of tried and true funds that perform well year in and year out and build your base with that until you get that first $100,000 saved and invested. I love this answer, Robert. First off, I want to congratulate Bindu

on being a 27-year-old, making $120,000 a year with $70,000 saved up. That is unheard of at your age. So first off, congrats on being. a unicorn. The second thing I want to encourage you to do, and this kind of goes back to the episode we published on Thursday, which was this idea of having real financial goals in 2025 and not just drifting through life. Obviously, Bindu, you've got some crazy, awesome financial goals,

and you've done a great job achieving them as it relates to your savings and your earning potential, things like that. But now it's time to extrapolate upon that. So maybe start thinking about your financial goals like this. One, how do I put $100,000 in ETFs and index funds that Austin and Robert suggest. Two, how long is that going to take me to achieve? Once achieved, what should I do next? Buy a house, take a vacation. You know, you already paid off your car, maybe upgrade the car. Like, what are some things that are going to make you happy that you know that you need to be doing and will continue to move the needle for you from a financial independence perspective? Do you want to max out the Roth IRA? Absolutely you do. Are you doing that, however? Are you investing up to the match with your 401k? Yeah,

I mean, there's so many cool things that you have the opportunity now. to achieve in the next probably three to five years considering your earning potential and your ability to save and invest. It just comes down to laying it out as a blueprint and actually going and achieving it. But yes, to answer your question, is index funds the way to go? They certainly are V-O-O-O-V-T-I, V-G, V-G-T, QQQQQ, all the fun stuff. We've talked about them a hundred times. They are the best way to build wealth over a long period of time. Now our next question comes from Thu N. Thu says, hey guys, I'm a 32-year-old female looking to better invest in my retirement. I have already maxed out my Roth IRA for 2024 and 2025, and I'm trying to see if I should now

move my 401k out of target date funds into something like the S&P 500. Here's my dilemma. I don't know if I should just leave the current money in the target date funds there and just start contributing new money to the S&P 500, or if I should sell all the target. date fund money and contribute all future money into S&P 500 index funds. So I'll be all in on the S&P 500 in my 401k. Should I split it up? Should I go all in? What do I do? All right, Robert, I'll take this one off. So this is a really, really, really important question for everyone listening to understand. Target date funds, I'll let Robert talk more about them, but they are absolutely a way to invest toward your retirement. They're just not always the best way to invest for retirement.

I'm sure Thori here probably is seeing some returns in her portfolio, but they might not be the best returns, especially as a 32-year-old who has another 30 years of investing before she retires. So I would sell the target date fund money. I would put all the target date fund money into the S&P 500. I would then also change all of my contributions to go into the S&P 500. So I have now a complete portfolio out of target date funds and into S&P 500 index funds and ETFs inside this 401K. Something else the thing is also really important to consider is there might be other funds that you can invest in in this 401K. Of course, we want the S&P 500, but maybe there is the NASDAQ, maybe there's the NASDAQ, maybe there are other index funds and ETFs that have done very well throughout our lives that you

could also get some exposure to. But making sure that you are fully exposed to someone who has 30 more years of good investing ahead of you. You don't need to be sitting in 42% weighting of bonds. You don't need to be sitting in crazy international stocks. You need to be sitting in, you know, all these little things that are going to be taking away from your long-term growth. You need to be all in on American capitalism, which is the S&P 500. I agree totally. And to kind of come back around on the target date funds, the reason I don't like them is,

because they don't take into consideration market fluctuations and things that happen, you know, like COVID or Black Swan events or wars or any of those things. And so Target date funds generally underperform the S&P 500 by quite a bit year and year out because they're more built for capital preservation than capital growth. They are there for the person that is afraid to death of the markets and the stock market. They're just happy with making four or five or six percent a year. And unfortunately, that is going to leave too much money on the table for anyone listening that their company 401k or whatever has them in these target date funds. So that is why we prefer to see you in the S&P 500 or the NASDAQ more so just because, yes, there's going to be volatility like all markets. But the upside potential is much greater over the long term, like Austin said, the next 30 years than it is being in target date funds. Now, Robert, before we jump into our final question, I've got some data from Bank of America that I found was pretty incredible, and I had to share it.

In just two years, so by 2026, ultra-high net worth individuals could be devoting about 11% of their portfolios to find art in collectibles. Yeah, it's no coincidence that the art market is now back in the headlines. The big story was the banana tape to the wall selling for $6.2 million a week or two back, but there were also multiple artists' work. records broken in the tens and hundreds of millions of dollars in the last year. It's important to keep an eye on multiple asset classes because we always preach diversification. We have our own investments in art. Personally, we both use Masterworks, and I've been using the platform for over five years now. That's right.

Both Austin and I invest with Masterworks, the sponsor of today's episode. And we've even interviewed their founder and CEO, Scott Lynn, on the show. This summer, they crossed over a billion dollars in capital raised, offering paint. paintings that typically range from a half a million to $20 million, although with Masterworks, you don't need to spend millions or even be an expert. That's exactly right. Masterworks has offered investments in over 400 pieces with investors realizing annualized net returns, including 17.6, 17.8, and 21.5% on works held longer than one year. Auction season is now in full swing, and listeners can learn more at masterworks.art forward slash rich habits.

which is also in the show notes below of this episode, that's masterworks.art forward slash rich habits. As with any investment, past performance is not indicative of future returns. Investing involves risk. Sale returns are not inclusive of unsold works, and important regulation aid disclosures can be found at masterworks.com, front slash CD. So our final question comes from Garrett. Garrett says, hey, everyone, my name's Garrett.

I'm 21, and I have a car loan for 34,000. My monthly payment on this loan is $800, and I'd like to lower that so I can afford a home someday. Problem is, my vehicle is only worth $21,000, so I've got $13,000 of negative equity. I'm currently making $60,000 a year. What would you do in my situation? Robert, you are the car guy, so I'm going to let you take this one. Yeah, Garrett, you're in a tough situation, but it's not unique. Most people that go buy new cars end up finding themselves with negative equity,

even people that buy really new used cars find themselves in this situation. So you have kind of two choices. You could either sell the vehicle and pay the $13,000 in negative equity off so then that way you're back to even. And I know this is a difficult one because I don't know if you have $13,000 available at your access to be able to do that. Or, and I don't suggest this, you could trade the vehicle in, try to roll over as much, if not all of the negative equity into a, a less expensive vehicle and be able to lower your payment and get out of that negative equity, but that would mean a serious downgrade in the vehicle. So either way, you're in a very tough situation, but those are the two options. I could see that could get you out of this mess.

And for anyone listening, try to always remember this. The only time you should buy a new car is if you're going to drive it to the wheels fall off and the negative equity won't affect you. Because in most instances, when you buy a new car, 30 to 40% of the value is going to be lost in the first two to three years. So you're always going to be upside down on that vehicle. Remember, a car is one of the biggest depreciating assets you're ever going to buy. So be careful and follow along of what I've laid out in this question.

Yeah, I think for Garrett, if I were him, I'd go to like a local credit union and just do a signature loan, a personal loan of that $13,000 of negative equity. I would try my hardest to sell this car for $22, $23, $24,000 on a Facebook marketplace, you know, get it detailed, take some really good photos, things like that. And then pay off this negative equity loan over time. Buying a used car that's worth $7,000 to $10,000, I think, is going to be the biggest sort of needle mover for Garrett's situation here. Man, that's tough. Yeah, you could also, I guess, go to a dealer and see if you can trade the car in for a much cheaper car, and then they just eat the negative equity.

But the thing with that is they're going to give you a terrible deal on that negative equity. because they can't move cars themselves. So if they can't move the car, they don't want to give you any money for your car. I saw Robert that a lot of these dealers right now are sitting on, you know, 500, 600 days per car that it takes to sell some of these. It's really, really bad right now with these dealers. So I think your best bet is to try and get a good deal on Facebook Marketplace, really try and take some good photos. Maybe the car you have is a cool car that someone could maybe have as that first car. Maybe there's a rich, you know, family that wants a $21,000 car for their 16-year-old, and maybe that's your car.

And you can convince them to do 22 or 23. It's really hard, right? It's tough. It's so tough with this negative equity situation. But that's how you should go about it. Get yourself a signature loan. Get rid of the negative equity. Pay just, you know, that monthly payment over there.

And then go buy a car for $7,000 to $12,000. That's going to lower your monthly payment dramatically, even when you include the monthly payment for the signature loan. And then work your ask. off. You're making $60K a year. How can you turn that number into $80,000 in 2025? Is it DoorDash and Uber eats? Is it TikTok shop affiliates? Is it dog walking? Is it cleaning car headlights like I was doing, right? What can you do to make an extra $10, $15, $20,000 in 2025? And one more thought for Garrett as we wrap up this question is maybe you look at a world if you're in the right market where you could tour the vehicle and you take all the money that you earn during the month from Turro rentals and you

put it towards the loan to get you to a better spot of getting the negative equity paid down. So you're not in that situation. Turo can be a really profitable situation. You would just have to give up some days of use of your car. But that could get you out of it without you going further into more detrimental debt to try and get out of this situation. It's a good idea. Anything about Turo. That's pretty cool.

Everyone, thanks so much for joining us on this week's episode of the Rich Habits podcast. We hope you learned something. We hope you got inspired. maybe you're taking notes and taken action as it relates to some of these stocks and ideas and investment themes. We'll definitely have to check back this time next year on how everything's shaped up for the year of 2025 with our ideas. But with that being said, do not forget go check out public.com as well as all the other amazing sponsors in our podcast description below, as well as the Rich Habits Network and the Rich Habits Newsletter. You will learn so much after you

join either of those. The newsletter is completely free and the Rich Habits Network is incredibly affordable. And thank you all for following along every week, every year, and just really, we just want to provide you massive value and help all of you become financially free. And don't forget, if you find value in these episodes, share it with a friends, share it with a family member. Everyone needs help in their financial journeys. And we're here to provide the best information possible to help each and every one of you. So thank you so much. Thanks, everyone. And have a great start to your year.