Rich Habits Podcast - Q&A: $1M Inheritance, $500K in Student Loans, and Farming

Episode Date: March 21, 2024

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz answer your questions. ---To listen to Public's new podcast, The Rundown, click here!⁠⁠⁠---Public has finally released options trading on their platform! To learn more about all of the product features Public offers, ⁠⁠⁠⁠⁠⁠⁠⁠click here!⁠⁠⁠⁠⁠⁠⁠⁠---⭐ Download our FREE Budgeting Template – click here⭐ Earn 5.1% on your savings with a High-Yield Cash Account – click here⭐ Automatically buy stock where you shop with Grifin – click here⭐ Protect your family with term life insurance from Suriance – click here⭐ Use code “Spotify” for 15% off our 4-module video course – click here⭐ Optimize your portfolio with Seeking Alpha – click here---👤 Explore everything Austin does – click here👤 Explore everything Robert does – click here❓ Ask us questions for our Q&A episodes – @richhabitspodcast on Instagram📬 Inquire about working together – [e-mail]---Options are not suitable for all investors and carry significant risk.  Certain complex options strategies carry additional risk. Options can be risky and are not suitable for all investors. See the ⁠⁠⁠Characteristics and Risks of Standardized Options⁠⁠⁠ to learn more.For each options transaction, Public Investing shares 50% of their order flow revenue as a rebate to help reduce your trading costs. This rebate will be displayed as a negative number in the “Additional Fees” column of your Trade Confirmation Statement and will be immediately reflected in the total dollars paid or received for the transaction. Order flow rebates are only issued for options trades and not for transactions involving other assets, including equities. For more information, refer to the ⁠⁠⁠Fee Schedule⁠⁠⁠.All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Open to the Public Investing, Inc., member FINRA & SIPC. See ⁠⁠⁠public.com/#disclosures-main⁠⁠⁠ for more information.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.

The ride that steals the spotlight every time it hits the road, that's the Volkswagen Tiguan. Its sleek exterior makes a first impression you can't ignore. Step inside to find available full leather seats and wood accents. Under the hood, the available 201 turbocharged horsepower power engine gives it a fun to drive edge. The refined Tigwan, you deserve more style. Visit vw.ca to learn more. SUVW, German engineered for all. presents Laura versus fruit flies. Swarming your fruit and terrorizing your kitchen. These little freaks

multiply at a rate that would make a rabbit say, yo, chill. But Laura shopped on Amazon and saved on cleaning spray, countertop wipes, and fly traps. Hey, fruit flies, your baby boom ends here. Save the Every Day with Amazon. Hey everyone and welcome back to the Rich Habits podcast question and answer edition. Robert and I spent a lot of time curating these questions for you and we are so excited to jump into them. But before we jump into the episode, I want to remind everyone that options trading is now live on public.com.

And if you activate by March 31st, you can earn a rebate of 18 cents on every contract that you trade. So by simply signing up for public.com and activating your options. options account, you get that lifetime rebate. You don't even have to start trading right away to get the rebate, but just make sure you're signed up because who doesn't like a little bit of a rebate when you make a trade. Meanwhile, if you want to switch from your current brokerage, public will reward you with up to $10,000. It only takes a few minutes to kickstart your transfer with a simple online process. So join thousands of traders earning a rebate of 18 cents on every options contract

traded. But hurry, because you have to activate this by March 31st. only at public.com. And as always, this was paid for by public investing. You must activate your options account by March 31st for that revenue share. Options are not suitable for all investors and do carry significant risks. So to read the full disclosures, please scroll down to the podcast description and check those out. And as always, this is for U.S. members only. Now, Robert, I have our question here from Christopher W.

And I think you're going to like it a lot. This one's pretty funny, actually. So Christopher W. says, I've been binge watching the Rich Habits podcast. podcast episodes, and I'm learning so much. But I have a question about bonds. What happens if the U.S. can't pay back their investors from these bonds? Robert, what happens? Well, Christopher, we're all in deep shit if the government can't pay back these bonds. We're going to have to get those doomsday shelters up and running. We're going to have to buy a lot of batteries and dried foods and make sure we have lots of water because we are going to be in trouble. So all seriousness

aside, I wouldn't worry about it. I know there's a lot of gloom and doom talk about the dollar going to zero and the U.S. market evaporating and all of these crazy things. But just look at it this way. In our lifetimes, there's ups and downs and yes, the dollar gets devalued more and more over time. But I don't think we're going to get to that point to where we fully are at zero with the dollar and you have to worry about those bonds. But if you are worried, consider diversifying into cryptocurrency. Bitcoin is going to be a great store of value over the coming decade. And there are other ways to make sure you're safe during any strife-ridden economic times. Yeah. So, you know, what happens if the U.S. can't pay their investors? I mean, buy water,

purifiers and ammunition, right? Like, it's Armageddon, if that's the case. That simply won't be the case. You know, I'd imagine there's too much trillions of not hundreds of billions invested into treasuries and different types of U.S. bonds to allow that to actually happen. So I wouldn't sweat it. But what would happen is I guess you just don't get your money and the U.S. dollar is now worthless and the whole world collapses because we are the country that powers the world economy. So there's too much on the line to let that happen. So Christopher, I wouldn't sweat it. Which is why, of course, we're always owning T bills in our portfolio. Six month T bills right now on public.com pay over 5%, which is really exciting. So yeah, I'm here for it. We love our T bills and I'm not at all worried about the U.S. defaulting on their bond payments. Yes, Christopher, great question. And like Austin said, I wouldn't worry about it too much, but this is also why we are always talking about diversification. You just don't ever want to have all your eggs in one basket because we can't always control what one currency does or what the government's going to do and what their moves are going to be. And that's why if you're diversified, you're going to be safe and just know that you're going to be able to make it through any difficult economic times. And again, diversification could mean physical real estate. It could not. mean alternative assets like cryptocurrency, collectibles, artwork, music royalties, cash flowing small businesses. You know, diversification can mean a bunch of different things because there's a lot of

cool things to invest into given now the sort of democratization of investing over last, call it, three to five years, Robert. Yeah, last night I went into yet another rabbit hole like I do every night so I can be prepared and try to shed as much light on all the great things about investing and how to build personal financial wealth. And I found out that one of the huge trends right now in Asia is that Gen Ziers are buying what are called gold buttons. And I'd never heard of this before. I've heard of gold coins and gold bars and all this. But there's this huge trend now where these shops are creating these little gold cute buttons and they're selling them in tax in a jar for millennials and Gen Ziers that are too afraid of the Chinese economy and what is going

on. So I thought that was very interesting that there really are so many different ways to diversify and prepare for any economic condition that could come about. I've actually never heard of that. That's interesting. So our next question comes from Sushil K. Sushil K says, can I roll over my existing Roth 401k into a Roth IRA on Robin Hood? And does the amount rolled over count as a contribution. For example, can I only roll over $7,000 per year considering that's the Roth IRA contribution max for 2024? So the answer to this question is yes, you can roll over your existing Roth 401k into a Roth IRA account on Robin Hood, Fidelity, Vanguard, M1 Finance. It doesn't matter where, right? So all you have to do is open up that Roth IRA account if it doesn't yet exist.

If it does exist and you have a Roth 401k, you can roll that right over. I actually did this back in 2021 whenever I quit my job working in corporate finance. You just call up the 401k provider, let them know you want to roll over that IRA into a existing Roth IRA. Remember, it's Roth to Roth and traditional to traditional. If you kind of switch those up, there's a tax liability, so just be careful about that. And actually, when Robert and I were checking out this question, we discovered that Robin Hood offers a 3% match on all money rolled over from an existing 401k to an IRA. inside of Robin Hood, a 3% match if you have a Robin Hood gold subscription, which is $5 a month. You know, Robert and now are like, wait a second, if someone has $100,000 or even more than that,

right, sitting in a 401k and they're ready to roll it over into, you know, a different IRA that they want to have possession with because they change jobs or maybe they're retired or whatever the circumstances, they can earn a $3,000 immediate match on that money, which is really exciting. And for those people who aren't even like rolling over funds at all, and instead like me where you're contributing to that Roth IRA every year, that's what, $210 per year, Robert, if you do the math of that 3% on the 7,000. So kind of a good deal going on with Robin Hood right now. Again, a stipulation is you have to have the Robin Hood gold subscription, $5 a month, and you also have to keep the money on Robin Hood's platform for at least five years to keep the entire match.

Yeah, I love this. And what a great fine. Thank you for that, Austin. I can't wait to do a video about it. But one of the key takeaways here is that you can still automate your investing into the those VOOs and QQs all the while still getting this 3% match. So it really, truly is just free money. And just make sure you read all the stipulations. But I think it's a great little nugget to get some extra free money, especially if you have an older 401k that has quite a bit of money in it. Totally agree. And I forget if I answered the question about the rollover 7K per year, but that's only to contributing new money. You can move around existing money to any account as often as you want, there's no caps or limits or anything like that as it relates to moving money around,

but you want to contribute money, then it is that $7,000 cap in relation to the 2024 Roth IRA. Really good question. Now, our next question comes from Eric B. Eric says, I love the podcast. Keep up the great work, fellas. My wife and I have $38,500 in student loan debt at an 8% interest rate. I have an extra $600 per month that I can put toward either, one, paying off the debt faster, or two, investing toward a taxable brokerage account.

You guys always talk about building your base, and this would be money I would use to build my base. Should I use that money to either build my base or get out of debt faster? Robert, we're going to kick this one off? Yeah, I mean, it's a tough one, and I love this question. But look at it this way. 600 more per month is 5K in total interest paid. So compared to 12K during the life of the loan,

If you were to invest that 600 a month towards V-O-O at 8% over the next seven years, that's around $70,000. So Austin, explain the difference in how this positive arbitrage works in their favor if they were to take this route because I think it's the play and the move, especially in thinking what kind of returns we saw in 2023. You know, I know 8% is perceived as high interest, but in this instance, I'm not sure. And I think the math favors the break.

So take that away for the listeners. Good question, Eric. So there are two routes to consider. The first route to consider is paying off the debt early. If you pay off the debt early, you're taking that extra $600 per month, and you are using it to pay down this debt. It'll take you about three and a half, maybe four years to do that, just depending on how aggressive you can be and disciplined you can be with paying it off early.

If you pay it off early, you're going to save about $7,000 in interest, right? Robert mentioned the $5,000 total versus the $12,000 total if you kept it around for that seven-year time period. Now, instead of paying it off fairly, let's say you kept the student loans and you did pay 38,500 on principal and the extra 12,000 on top of that throughout that seven years. But you would also now have $70,000 invested in working for you. So you kind of already built your base while also paying off this debt. You know, Robert and I talk a lot about how it's not always black and white. You know, sometimes you don't have to make these decisions of I can only do one thing at a time.

I know Dave Ramsey and the Ramsey crew are very focused with. their baby steps on going hyper-focused and only focusing on one thing. And sure, if you have a bunch of debt or you're very like, you know, underground as it relates to your finances, maybe it's a good idea to do that. But in this situation, I think you can be a little bit more in the gray area, Eric. So if I were you, I'm not mad at all, actually, of taking that $600 and investing it to build $70,000 of this taxable brokerage account over the next seven years and paying off that $600 per month payment as well. So I mean, you're going to be debt-free in seven years anyway. And now you're also going to have $70,000 waiting for you when you are debt-free to continue to build wealth with.

Yeah, the math, just maths on this one. And I really, really like this strategy. So great breakdown Austin and great question, Eric. So before we jump into our next question, I just want to remind everyone that public is officially the cheapest way to trade options. That's because they're doing something no other brokerage has done before. They're sharing 50% of their options revenue directly with you, the customer. So whenever you trade options on public, you get something back, minimizing your transaction costs. So go to public.com and activate options before March 31st to lock in your lifetime rebate. Public.com the cheapest way to trade options. If you guys haven't yet made a public account, what are you doing? Public has been our best friend now for years.

I've used the platform, I think, since 2020. Robert, I got him on it because the music royalties and T bills and crypto and alternative assets and now they have options trading. I mean, public is the real deal. Thousands upon thousands of you have already gone up and created a public account. So if you've not yet done that, what are you waiting for? If it's to trade options, if it's to create a high yield cash account instead of your high yield savings that you're only getting 4% with at wealth front, or if it's to buy some cool T bills to diversify your portfolio with. I mean, this platform has it all. And we talked about the Shrek music royalties, Robert. I think I gave you the update. I'm up like 80% on those from like the last six months. How weird is that? Yeah, it's so crazy how much we talk about

public throughout the podcast, our private lives, our public lives, our newsletters. And it's like, I feel like, you know, we're on this island where we kind of were the first people, these financial educators really pushing for public.com. And it's just such an incredible platform. So yeah, I love being involved and just working with them and using it myself. And I think everyone should check it out for sure. All right, Robert, this next question is pretty intense. So it comes from Stephanie L, and she says, I love the pod, and I recommend it to everyone I know. I'm 39 years old, I'm single, and I don't have any kids. I have $500,000 in student loan debt at a 7% interest rate. I'm a doctor making $600,000 per year pre-tax. I have enough saved and invested to pay off the $500,000 of student loans right now,

But it wouldn't leave me much with anything saved or invested if I actually go through with it. This money is spread across high yield savings and in a taxable brokerage account in the index funds you all talk about. Should I use half of it to pay it off? Should I use all of this $500,000 that I have saved and invested to pay it off? How do I approach this? And as a quick reminder, my monthly payment on my student loan debt is $10,000. I am going to take this one from the top and then you can rally behind me. Stephanie, thanks for the question.

This is a crazy one. so let me take a stab at it. Here is what I would do. I would never pay it all off in one lump sum because then you're leaving yourself at zero and the big issue at zero is you don't have an emergency fund and you also put yourself in a position where you lose all opportunity cost on money that you have. And what does that mean? I always like having a cushion of available liquid cash. It can be in investments but available if I needed it for opportunity costs. That building might come along that I've been wanting to buy, or it might be a business opportunity for an acquisition of a company that I want to make sure I can jump on right away. So I like the idea of going half and half.

Keep half of those funds, making money for you each and every day while you sleep, being invested, take the other half and pay a portion of this down. That way, it's not so overwhelming, and your monthly payment isn't so incredibly high because that's really difficult to swallow, even though you can afford it. That's the strategy I would use. The one way to look at this is when we're taking a 7% interest rate, it would be considered high interest debt. But in 2023, we ripped.

The markets did so well. We made way more gains on our money in 2023 and now going into 2024, the same thing. So that's where I want to make sure you keep some money on hand to be able to continue investing because we still want to look at the positive arbitrage going in your favor. And even at 7% interest, I believe that properly invested in 2024 and possibly 2025, you could see 12, 15% returns. And so that's going to be in your favor. Where are you at on this? I largely agree. I think that the end goal, of course, is to pay off this $500,000 in student loans. I mean, that's going to free up for you $10,000 a month. And if I did my math, right, you're taking

home about $35,000 a month after taxes on this $600,000. a year. So it's going to free up a third of your income. I mean, oh my God, that's so much money. So how I would approach it is to Robert's point here, if you use all this money to pay it off like right now, like you're at zero. No one wants to be at zero. And, you know, sure, you could use that same $10,000 a month now that would have gone to the student loans as like building up an emergency fund. But I mean, you're still pretty low here for the first three or four months, considering your income and I'm sure your expenses are also equal. You know, they're definitely up there, I'm sure. So here's what I would do instead. I would also, to Robert's point, take about half of it and pay it off.

But then I would spend about three to six months finding an extra 5,000 or so in my monthly budget, which if you're taking home 35,000, Stephanie, I know you can find five. I guarantee you can. Find yourself an extra, call it $15 to $30,000 over the next six months or so. And then say, okay, now that I've got $30,000, maybe $40,000 or $50,000 saved, you know, you're not at zero now. you've actually put this aside to a separate savings account, now you can take the remaining $250,000 that you have invested and saved in these different accounts, pull them out and drop it on the student loans and be done with it. And now that you have this $10,000 extra monthly sort of

income freed up for you, do not act like you have that money at all. Take that $10,000 a month that you were paying toward the student loans. Congratulations. That's now your time to build my accounts back up money. It's going to take you four years of this $10,000 a month, which by the way, your student loans would have been much longer than four years anyway. So if you think about it, you would have paid this money out to the student loans. No, no, no, you're going to use it to invest. So take that $10,000. You're going to keep investing it into these index funds that we talk about. And over the next four years, you should be back to that $5,000, $600,000 range if the market performs about 8.5 to 9% per year. I love this take, Robert, and I'm really excited for Stephanie

to hear what's such a great income that she has and she's so young at 39 i mean she's going to be such a multi-millionaire by the time she's in her 50s it's going to be unbelievable yeah and the other things she could do to really accelerate this and you know where i'm going here is go buy yourself a two-year-old camper van park it at the hospital where you work use the hospital's gym and showers and save that extra four or five thousand a month that you're spending on the condo or the home you're living in chunk that in to pay this down do that for two or three years sell the van, then house hack by the time you're 42 or 43, so you're still living relatively free until these are completely paid off. That would get you even faster to the millionaire

status, especially because you have to look at this opportunity cost, and I'm not kidding, Stephanie, where you can say, I'm single with no kids, so you can capitalize more than most people at your age at 39 years old to be able to create this dreamy, dreamy retirement scenario because you're not bogged down in tons and tons of monthly expenses. So that's another ripple in this beautiful equation of what you could do. Robert, it's starting to seem like you own stock in camping world holdings. Is that true? You're over here telling everyone to always buy campers now.

Two episodes back to back with the camper answer. I think it's just because I live a block from the beach. And I think it is so incredibly beautiful on my daily walks or shooting content or us riding the bikes down the beach. You will see 30 camper vans or just vans all backed up along the little beach in my neighborhood. Doors open. They're all working on their laptops. Their dogs are running around in the water.

And I just think it's such a great consideration when you have freedom to work remotely to be able to not bog yourself down in a ton of debt early on in life. I just think it's a cheat code that so many people are figuring out. So I love talking about it as a consideration. That is all no stock, no shilling and no initiative. No, I believe you. Yeah, I think really what Robert's trying to say here is that a lot of people, and I was talking to my friend Jonathan about this over the weekend.

He's 30 years old. He's going to be a fireman on April 12th, I think, is his graduation day. And he's going to be making like 60K a year, which is the most he's ever made in his whole life. And he's like, dude, I've got some debt. I want to buy a house. Like, what do I do? And I told him, I was like, listen, man. And this also goes to Stephanie, right?

Stephanie has a little bit of debt. She's making great money. A little bit different situation. But I was like, man, you need to put yourself in a season. A season means it is a small chapter of your life. It's not the whole life. It's not your identity, but it's a small season. Call it 18, 36 months, right? Call it maybe two, three years if you want. But in this season, you're saying no. You're saying no to the long vacations. You're saying no to going out with the buddies. You're saying no to taking your girl on crazy dates. You're saying no to people and you're prioritizing your financial future. And what that means here is that you are, saving money aggressively, you're earning money aggressively by selling stuff. You got the side hustle. I know he's like, I think on Saturday he went and mowed a bunch of lawns, made like $600 bucks. So Stephanie, maybe you're just now going to be once you pay this off in a season of saying no for maybe 18 to 36 months where you should be really focused on again, taking this $10,000 every month of extra income you just freed up because of these student loans and investing it so you can really build that base of $4,000, $600,000, really setting you up for financial. freedom in your 50s. Yes, Austin, I love when you talk about these seasons because I just think that

so many of our listeners, let's say that are in their 20s and 30s, when you have this opportunity to where you could be lean and mean and really work on a season, it could set you up for life. So think about it this way. If you were to do this season, let's call it 18, 24, 36 months, and you were just to save $20,000 and you were to invest that at 8% gains, Average 8% gains per year for 20 years, you'd have $230,000, which is just crazy to think that you could set aside that short little season in your long life and then set yourself up forever. So really think about that of having that season to be able to just really say no to everything that doesn't benefit you for the long term and set yourself up for life. I love it. Congratulations again, Stephanie, on becoming an awesome doctor with his incredible income.

rooting for you. Our next question comes from Merritt D. Merritt says I'm 63 and I'm rebuilding my financial life from scratch after a bad divorce. I've got $55,000 in a taxable brokerage account, $92,000 in a traditional IRA, $38,000 in a high-yield savings account and I'm paying $8,500 a year toward an IUL that claims to have $150,000 value for long-term care when I'm older. What should I do to ensure a comfortable retirement in my late 60s or even early 70s. Merit D, great question, and let's dig into it. I would say first and foremost, I would lose the IUL. No one has ever been able to show me that an IUL truly is a good investment. The numbers just don't add up. The fees are incredibly high. The commissions are incredibly high. And the number one thing that the IUL salesman don't tell you is that if you

miss a couple payments and you stop paying, all your money goes away. And that really bugs me because Already I don't like IULs because the sales rep is making more off of your money in the first five years than you are. But secondarily, if I make an investment in V-O-O-O or QQ-Q-Q and I stop making investments and adding to that account for a month, a year, two years, five years, guess what? It keeps growing. So I don't ever want to be investing in a product where my money just goes away if I miss a payment. What if you go through a hardship and miss a couple payments or something happens? You don't want to be in that situation. So that's one thing.

for me, I think you have way too much sitting in high yield savings. To me, at your age, you probably need $10,000 in high yield savings. And I would take that other $28,000, and I would really get that aggressively working for me. Maybe it's in a cryptocurrency portfolio, diversified assets, but I would really get that money working hard for me because you want to make sure to accelerate your earnings as much as possible so you can retire comfortably in your late 60s. So I would do that and then I would really just look and focus on your IRA that $92,000. Is it optimized?

Do you have autonomy in it? What is it invested in? And I would make sure to dig into those items and make sure that those investments are keeping up with the VOOs and the QQs and the MOATs and the VTIs that we talk about. Because the number one thing is to make sure that every year you're optimizing your gains as much as you can while. staying diversified. That was a great answer. A couple things I want to add from a math perspective, you're 63 and you're paying $8,500 a year toward an IUL. If instead of paying that $8,500 a year toward an IUL for this $150,000 value with long-term care, let's say you took that money, that's $710 a month premium and you put it in the stock market at an average of 11.5%, which is

the longstanding average of the S&P 500, assuming that for the next 10 years, you would have 162, thousand dollars sitting for you and you would own this money and wouldn't go to commissions and like it could keep growing for you as well if you weren't ready for long-term care at 73. So let's say you want to do long-term care instead five years later at 78. Well, this money is now worth 360,000, right, versus this 150. So I don't know the exact terms of your policy and I don't, maybe there's a reason you really want to sign up for this. All I know is that the math ain't math and.

Second thing I wanted to mention is that, you know, you mentioned sort of having a comfortable retirement in your 60s and 70s, I would argue, merit, you know, depending on your income, I think you mentioned you're making like 70 to 80,000 right now, you own a small business in the email that you had sent us. You know, maybe for you, retirement might look a little bit different, right? It might not mean golfing every day and sitting on a beach. Maybe it means that you are just really loving your small business and you're still doing half the amount of work when you're in your 70s, but that still means $30,000, a year that you're making in a very low stress environment in a business you own and you're growing by yourself. So I just don't want you,

to think that there's a day that your income should drop to zero. A lot of people when they think about retirement, it's like, okay, I'm done. I'm not making any money anymore. I'm just going to sit on a beach and then golf every day or, you know, whatever, go and walks with my dog. Sure, I hope that happens for you if that's what you want to do, but nine times out of 10 people find a hobby, they find a passion, they do something after about two years of doing nothing. Like, wait, this kind of sucks. And they either go back to work, they do consulting. I know Robert. I mean, you love consulting and you love what you're doing with your life, man. And no, you're not doing it for money. So like, that's what I'm trying to say here is like people really have a purpose and need a purpose. And so Merritt, you know, you have the small

business. So I just want to encourage you comfortable, happy retirement could mean working part time for your small business. Maybe you hire a manager to help you do that. And you're still making 30, $40,000 a year while also investing and doing these other different things, allowing you to retire pretty comfortably. I love it. Yeah. For me, every single day is a blessing that I get to be a financial educator. And the goal for me in the next five years is to make one million people, millionaires by us giving really, really good strategies and guidance to help people understand that getting rich is not as difficult as many people make it sound like it is and really just guiding people through great strategies and education. What was that equation, Robert? Discipline plus intention

equals wealth. Our next question comes from Tammy M. Tammy says I'm a huge fan of the podcast and I actually love watching your videos on Spotify. Yeah, Tammy, actually, thanks for reminding us. If you do listen to the podcast on Apple or somewhere else, go to Spotify and watch the podcast because we have a video podcast on Spotify. You can watch us. I'm waving at you right now. Hello. Thanks for watching. So yeah, don't listen. Go watch us. It's even more fun. So Tammy says I'm 65 and I just inherited a million dollars. The money right now is in a Vanguard account and I'm letting Vanguard expertly manage the portfolio. I pay 30 basis points per year for this management. However, I recently spoke with Fisher investments and they also

have a lot to offer and they're enticing me to move my money over with them. I only have $40,000 of my own money invested toward retirement. I'm a late bloomer. I didn't really invest anything until my 60s. So what should I do here? Robert, do you want me to kick this one off or are you going to get after it? No, I think I want to kick it off because I'm going to give you the whole enchalot of what I think when it comes to wealth management, having advisors and why it's important to understand the difference. So starting out, you're with Vanguard. right now. Not bad. They're probably going to do a decent job for you. Austin and I love Vanguard products. They're very, very good. However, you should also be looking to shop around because with $1 million,

if properly managed, remember, it's not just about picking the ETFs or the stocks or the bonds to be in. It's also about wealth preservation. It's about growth. And it's about tax strategies. these are the reasons why you need a really good advisor so when you think about fisher they're courting you is fisher good yes they're a behemoth but also keep in mind that for your size portfolio fisher is charging 1.3% management fees to watch over that money so how does that relate i always look at it this way so my family owns croak capital dot com anyone listening can check it out the way to look at it is when you have a fiduciary like we are, and I believe Fisher is, you just want to understand that they're going to give you a full spectrum of everything you need for your advisory.

Then it just comes down to their past performance, what kind of customer service are they going to provide for you, and what are the fees? To me, Fisher charges more than they should. I think any management fee on $1 million plus should be, you know, 0.85% up to 1% depending on what all you getting but that's how I would look at it is get second opinions third opinions and really understand what your options are out there so you can do the very very best you can with your money because what you don't want to do is just be a cog in a wheel in some massive company to where you're not getting those monthly check-ins those monthly calls some of these larger companies you might only get one email a quarter or even a year you just really want to make sure your money's being optimized

and your customer service is there so you can make optimal decisions with your growth. That was a great answer, Robert. And, you know, Tammy, let's be real here. You've got $40,000 of your own in retirement. That just tells me that you sort of haven't maybe taken the time to learn about personal finance and investing throughout your life, right? We all learn at different paces and have different desires and interest. So I'm not blaming you.

But to go from, I don't really know much and I only have, you know, 40,000 invested to, wow, I've got a million dollars now. This is so cool. I'm just scared for you because I don't want you to feel like you need to do a hundred different things with immediately, right? The first thing what you do is take a deep breath, right? There's no shot clock here. No one is telling you you have to do this tomorrow or next week. Like there's no pressure here. I need you. You obviously inherited this money probably because of a loss in the family. So like you're probably grieving too. Don't make any irrational decisions off this, you know, events and with this inheritance. The second thing I'd want to tell you is that there are options. And I would argue that considering the size of your portfolio with this

million dollars and your lack of perhaps general knowledge on personal finance and investing, just given the fact that you only have 40,000 invested at your age, would mean it's probably a good idea to have a professional in your corner, someone who's not only just an investment professional, but also perhaps a tax professional. Maybe they really understand where you are in your career. They understand from a retirement perspective what it would mean for you to retire in your 60s. Someone that can understand the whole picture, not just like a vanguard, like, oh, I see the money. Let me make sure the money is working. Like, I don't know Tammy, right?

Where maybe Fisher wants to know Tammy, maybe Kroke wants to know Tammy, right? There's a lot of different things to consider here. But you should definitely sit down with someone who is not just looking at the money as a number, but also Tammy as a human being. And what does Tammy want to achieve? What are Tammy's taxable events coming up? what like from a holistic perspective, how can we best optimize Tammy's, you know, financial performance, not just from an investment perspective, but from a tax savings perspective, from a, you know,

maybe passive income perspective. There's a lot of different things to consider here. So I would continue shopping. I would continue talking to people, looking for different alternatives and making sure you're asking the right questions. Yeah, I love that take, Austin, and it is so important. And I kind of, how I equate this to is like when you hear about pro athletes or people that win the lottery, When people all of a sudden come into wealth and they weren't prepared or didn't have the literacy to understand the opportunities, what generally happens is a lot of people get into their pockets. So, Tammy, if your friends, your family, the guy down the street that supposedly knows finance is going to get into your pockets, you can't let them. You need to get this million dollars out of your hands and into the hands of someone that can work with you and set you up for life. and just really preserve this money because what will happen if you don't promise you, I promise you

it will, is you're going to lend Uncle Billy $50,000 for his business idea, you're going to invest in something else that you thought was a good idea that you saw on the internet and pretty soon that money is going to dwindle because you don't have someone that knows what they're doing helping you. So please do that. Like Austin said, you're in no rush. It's in Vanguard right now. It's making money, figure out the best strategy, find a mentor, and go with that. So you have someone guiding you through that's been down the road many, many times, and you'll be a lot better off. And two more callouts, Robert, because I think they're both important. First one is don't fall victim to, hey, give us this million dollars and we're going to get you in this life insurance policy

that's going to pay you whatever. Like, you are not using life insurance as a investment vehicle with this money. Like, that's just like, don't do that. Second thing, I want to encourage you to think about as well, you're 65 and God willing, you live to be 105. However, everyone dies, right? Only thing in this life is death and taxes. Therefore, this money, I would imagine, is going to be passed down to your heirs, if it's your children or your nephews and I don't know, right? But think about as well, making sure that you have an updated will, an updated trust, that this money is going to be invested in such a way that people have access to it when you do pass, right? Make sure that this is not just, oh my God, I figured out that Aunt Tammy had a million dollars in this account. She never told

anybody. And now we don't know how to split it up. And so now the family's fighting over it, right? Make sure that you've got it all figured out. You have a good plan for whenever you do pass away. Hopefully again, not for 40 more years. But when that does happen, it of course will that you do not put the burden of figuring all this out to other people. Instead, you laid out on a piece of paper. You work with perhaps an estate attorney. And you've got it all figured out for when that time comes. Love it. Yes. What a great question, Tammy. Man, these are so fun. I'm ready for this last one, Robert. I think this is a good one as well. And hopefully you guys listening right now are like, wow, these questions are great. Yeah, we definitely tried to find some good ones here. Okay, so our last

question comes from Christopher H. Christopher says, hi Austin and Robert. Love the podcast and I'm a huge, huge fan. I'm 37 and I farm for a living. Because of that, my annual income varies greatly. I have 600,000 invested into dividend stocks, real estate investment trusts, ETFs, and index funds. I also max out my and my wife's Roth IRAs every single year. Right now, I have $300,000 I'm trading the options wheel strategy with, which is generating a consistent $6,500 per month for me in premium income. I then take that $6,500 and I invest it toward the $600,000 account mentioned above. Should I continue doing this, or should I just take the entire $300,000 and put it into that $600,000

account with those index funds and dividends. Wow. What an awesome, awesome question here from Christopher. And just want to give you your applause, man, for figuring out how to use capital to generate more capital. Right. I think that's what's most important here is a lot of people kind of forget that there's two types of investing. On one side of the equation, you've got the high octane stocks that don't pay dividends, but they're like in video, right? Invidia pays a very small dividend, but oh my gosh, has their stock price gone up like crazy. Then on the other side of the equation, you've got the dividend stocks that are a little bit more boring, like your home depots or your lows or, you know, Kroger, things like that.

So their stock price doesn't go up like a rocket ship in times of really good growth, but they do pay a consistent dividend and they allow you to build wealth over a longer period of time. It seems like you're kind of doing both, which is something I do myself. So what would I do? Oh my goodness. Okay, there's two scenarios, right? Scenario one, you continue doing exactly what you're doing.

You have very unpredictable monthly and annual income with your farming job. Therefore, having a predictable $6,500 per month coming in from doing this option wheel strategy allows you to have a little bit more predictability in your life, which I think is a very, very, very good thing. So you keep doing exactly what you're doing. The other option here is taking this $300,000 and investing it into the index funds and ETFs and dividend stocks that we talk about, which would probably get you right close to that $900,000 mark, which would $1,000.

dollar mark, which would double or so every call it seven to eight years, depending on how aggressive or conservative you are with your investing, making this a $1.8 million portfolio, probably by the end of the decade, if not a little bit closer to 2031 or 2032. And then you could, oh my gosh, really optimize that way, but you would have a lot of uncertainty over the next seven years from an income perspective. In my opinion, dude, and this is coming from someone who also loves trading options and generating income with those option contracts, I would keep doing what you're doing. You have the awesome stability of knowing you're going to make $65, $6, $6,000, $6, $6,000, $6,000, $6,000, $6,000, $6,200,000, whatever that number is.

I know it varies a little bit per month, but you have some stability and predictability from a month-to-month perspective with your option income. You also now have a $300,000 sort of honeypot that will continue to pay you every single month, and that's not going away, which is great. And you're taking this income to, I'm sure, live off a little bit, but also then invest into long-term index funds that are going to continue to grow a little bit more aggressively over time. So I think you're doing it great, man. I really wouldn't change anything. And I'm really, really proud of you. This is such a cool strategy, Christopher. And of course, thanks so much for farming.

I know how hard you guys work and how important your jobs are. I love it, Christopher. And I would just say I would make a couple small changes. You are the blueprint of someone that really understands how to maximize your earnings and your growth towards building wealth. The only thing I would say a little bit different is I would carve out 5% of all of this from somewhere and I would get a consistent dollar cost average in crypto portfolio. There's no secret crypto's hot right now. We're back in a bull market, but there's still some good opportunities in cryptocurrency. And I think at your age in your wealth building journey, it would be really smart. to add in that 5% of your net investable income and build a crypto portfolio that nestles right in

with everything else you're doing. And then I would think with that you would have almost the perfect strategy for diversification and growth. And additionally, I just did the math too. If you put that $300,000 into a blend of SPYI and QQQQI, which is the covered call Nios ETFs that Robert and I both love, you could make around 13 and a half to 14% on your money, just depending on how much of that's in QQQQI versus SPY, which comes out to about $3,500 a month. The only thing that I would mention and why I'm mentioning that is because that is actually a return of capital. And they use Section 1256 contracts, which are taxed at 60% long-term capital gains and 40% short-term. So you've got a lot more tax-saving opportunities with using

those ETFs than just being taxed as ordinary income like you are right now at the $6,500. So I don't know what your income. I don't know what your tax situation is right. now, but just know that that is an opportunity to maybe, if the numbers work out for you, optimize your tax savings a little bit more from that perspective, while also not having to do literally anything. They just pay you every single month. So if you haven't, I'm sure you have done your research. You're a smart guy. Check out SPYI and QQQI as well. I think this is awesome, Christopher. Congratulations, man. So as a quick reminder for everyone, Robert and I are hosting a webinar on March 27 at 4 p.m. It's going to be all about building an investment portfolio from scratch.

There's a link in the description below to register for that. We already have 600 people registered to show up next week. We are so excited. And if you missed our last webinar, you are not going to want to miss this one. Yes, I am so excited about the webinar coming up. I really love doing those and taking these deep dives. And for all of you that might not be aware, we have our first ever money mindset event coming up April 26th and 27th,

right here in sunny South Florida. Austin will be there with me. We are going to be chopping it up with several other really, really great speakers. So check it out. You can see it in the link in my bio and learn more about the event. And as always, we thank each and every one of you just for joining us every week, listening, following along, giving us those five-star reviews and sharing it with a friend because it means so much to us to really be able to continue forth on this journey with the Rich Habits community and podcast of providing you guys what we, believe is just invaluable information for all of your wealth building journeys as well. We love you guys. We love the questions. We love answering the pod. We love the Monday episodes where we get to share our own perspectives on building wealth. And this podcast has been probably the coolest thing I've done in my life. So I am really excited to continue the momentum in 2024. And maybe I get to hang out with some of you guys in Florida when we have that event. But also, don't forget if you've not yet left a five-star review or any review, five-stars only, though.

What is that saying, Robert? If you have nothing nice to say, don't say anything at all. Yeah, something like that. Definitely, definitely considered doing that. Share the podcast with your cousin, your little brother, your older sister, your dad, your mom, your nephew. You know, you know some of this graduated college. This is a perfect podcast for them. You know someone who's 47 coworker that's been asking questions about what the heck to choose for their, you know, 4-1K contributions.

Share the podcast with them, right? everyone needs to know the things we're talking about. And we take your questions every week so we can really dive deep into the different sort of perspectives and scenarios that someone might be going through hoping that you might find yourself in a similar situation and you can learn from our answers and our perspectives as well. So as always everyone, thanks so much for tuning in to the Rich Habits Podcast and we'll see you next week.