Rich Habits Podcast - Q&A: $300K Settlement, Pro Rata Rule & Dividend Kings

Episode Date: August 20, 2026

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Two and five Canadians will hear the words you have cancer. That's why every step and dollar raised matters. On September 19th, join thousands in Toronto for the Princess Margaret Cancer Foundation Walk. Challenge yourself, friends, and family to walk 21 kilometers in support of life-saving research. Together, we can carry the fire and help create a world free from the fear of cancer. Register today at pmcfwalk.ca.ca. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows.

Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. Bye. Hey everyone and welcome back to the Rich Habits Podcast question and answer edition. These are our Thursday episodes where every Thursday we answer your questions as if we were going through

whatever you might be going through. You can ask us questions on Instagram at Rich Habits Podcast. You can email us your questions on email at Rich Habitspodcast at gmail.com. There's a ton of different ways to get our attention, Robert. These episodes are so much fun because we get hundreds of if not thousands of questions, I feel like, on a weekly, monthly basis around here. And it's so hard to pick. And so if you've been asking questions and we haven't answered your question yet, give us some patience. There's a ton in the queue.

And we're just going, we're flying by the seat of our pants when it comes to these episodes, Robert. I love these episodes, but you're right. Be patient with us because our inboxes are inundated with really, really cool questions. And we want to make sure everyone understands when we do this, and we select the questions, we want to select them in a way that they cover everything. Because we get so many questions about the Roth IRAs or what do we do about real estate and all these things. And we want to give you well-balanced episodes of questions because

we want to put ourselves in your shoes because personal finances, personal. So please be patient. We are here to serve and we love these episodes. So our first question comes from Barney. Barney says, hi, Robert Nostin. First and foremost, I want to express my sincere gratitude. for the incredible content you both have been providing. To give you a bit of background, my name is Barney, and I recently moved to United States with my family from Canada earlier this year. I have a good understanding of ETFs,

and I've been actively investing in them for the past five years, allocating $300 per week. However, I'm not familiar with the various accounts, savings and tax-free accounts, available in Canada as I am with those in the United States. I feel a bit overwhelmed and unsure of which account to you, and which one to maximize. I earned $300,000 per year.

I've maxed out my 401k at work, and I was informed that I will receive a refund for my child daycare expenses when I file my taxes, but I'm still unsure of the best course of action or where to find information about things like Roth IRAs and other brokerage accounts. Any assistance you can provide, including a link to an older podcast of if this topic was covered,

would be greatly appreciated. This information would be specifically helpful for newly migrated, immigrants to the land of opportunity. What a really cool ending there. I love that. Well, welcome to America. Glad you're here. Let's get started. You came from Canada, which is cool because there are a ton of Canadian investment saving retirement accounts that have, you know, a sister account here in the United States. So I'm just kind of kind of rapid fire, Robert, through what I found. I'm not a Canadian retirement investment expert. So if I mess up some of these, like,

Give me a little bit of slack here. But this is what we've been able to find online ahead of this episode. So the first one is the TFSA. The rough U.S. equivalent of this would be the Roth IRA. So this does those after-tax contributions. Your investments grow tax-free. And withdraws in retirement are also tax-free. We think the Roth IRA is awesome.

Up next is the RRSP, which is that traditional IRA. Contributions generally reduce your tax. income because the pre-tax contributions, that growth is tax deferred, and those withdraws in retirement are also taxable. I believe this could also be done as a 401K. Specifically now, you've got the group RRSP, which is the 401K. Employer-sponsored retirement account often comes with that employer matching that we talk about. And then you've got the RPP defined contribution, which is another sort of equivalent to that 401k. You have the RPP defined benefit, which is a traditional pension. If you're in the United States and you work somewhere that has a pension, congrats. I feel

like those are going out of style pretty quickly. I don't know many people that have that, but that RPP defined benefit is that employer promising a future retirement benefit for you. And then the RESP, which is that 529 plan here in the United States, a tax advantage savings plan for a child's education. So if I were in your shoes here, Barney, I would be looking into that Roth IRA. I would be looking, you mentioned the 401k, which is great. You're maxing that out already, which is incredible. And then you mentioned you came here with your family. I would start looking into what I can do with a 529 account. You can open one of these up on Vanguard. That's what I've done. Seed it with $2,000 or $3,000. Get a monthly contribution rocket and enroll in there.

And this will grow into hopefully tens of thousands of dollars, depending on how old your children are and you can use that money to pay for their education in the future, all tax-free. Yeah, the only thing I'll add, that was a great breakdown, would be a high-yield savings account. You did mention savings, and they're pretty equivalent from Canada to the United States, but just make sure you always have that emergency fund in that high-yield savings account. That way you're fully covered if something pops up, but everything else Austin mentioned, the Roth IRA to us is always going to be first and foremost the most important, account type you want to have in your investment strategy as your building wealth. And also the

529 is a fantastic plan for the kids to get them set up as well. So those things all come into play, and I hope that helps. Remember, match beats Roth beats taxable. So up to the match with your employer for the free money, max out that Roth IRA, back to the 401k and max that out, assuming you have autonomy, which is something you're doing. So I hope you have. autonomy, which just means you can pick your investments and you're not boxed into a high fee mutual fund or a high fee underperforming target date fund. So match beats Roth, beats taxable. So max out that 401K. And if you still have money left over, go throw it into a public.com taxable brokerage account, put it into some ETFs and index funds and ride the wave. Or like I was

mentioning earlier with the 529, put that extra money in a 529 account for your kids, college, and other education in their futures. Our next question, Robert, comes from Samina. Samina says, I discovered your podcast a few weeks ago. Now I listen to it regularly on my commute. I'm managing my finances, and doing this has always been a source of stress, especially as my income grows. The financial space feels complicated and full of pitfalls. I'm Samina. I'm 33 years old. I'm a single female who hopes to retire at 55 with the following financial profile. I have a $350,000 mortgage at 4.5%. I have a $60,000 emergency fund. I have $91,000 in my current 401k, and I maxed this out for those pre-tax benefits despite no employer match. My previous 401k has $150,000 in it, and I have a taxable

brokerage account with $100,000 in it, invested into ETFs in individual stocks that I will continue to grow so I can retire early. After learning about IRAs on your podcast, here's what I want to do. I expect to be eligible for a Roth IRA for a couple more years, and I want to max that out instead of contributing to my current 401K. Does that strategy make sense? I guess my follow up to that is I want to roll over this $150,000 I have of a previous 401k into a rollover IRA and invest it into the index funds and ETFs you guys often talk about. But will doing this trigger any issues with the prerata rule in the future?

I'm not planning to use the backdoor Roth IRA strategy as of today, but that might change as my financial literacy grows. I look forward to your advice. Thank you, Samina. Robert, you want to kick this one off for us? Yeah, I do. And then I want you to break down the pro rata rule here because that is important as this, you know, portfolio and her wealth throws. But I think Samina, you're doing a fantastic job. You've got all your ducks in a row. I like the fact that when you think about retiring early at 55 years old, you've got that traditional broker's account rocking and rolling with the ETFs we talk about because that's going to give you the freedom to be able to have access to those funds, why. that Roth IRA, your emergency fund in your previous 401k and your current 401k, are rocking and rolling for retirement, traditional retirement. The things that I would add to this right now is absolutely keep adding money into this brokerage account to make sure that you have that flexibility of this pre-tax money that you can get access to at any time.

And absolutely for the Roth IRA, we would love to see you max that out every single year. at 33 years old right now, you have such a long investing horizon. And the Roth IRA is one of the most potent tools you can use to build well for the long term. So that would be my take. Austin, why don't you break down anything I missed? And then the pro rata rule. Yeah. So you mentioned you have this previous 401K of $150,000.

And I don't know where that's sitting at the moment, but you mentioned wanting to roll that over into an IRA, a traditional IRA. I'm assuming because the 401K sounds like a pre-tax. 401k. So no tax obligations on that rollover. So I'd roll over that $150,000 from this previous 401k into a traditional IRA and invest it how you'd like. However, whenever you do these backdoor Roth IRAs, essentially where it gets sticky is the prorata rule. So the prerata rule is the IRS rule that prevents you from cherry picking only the aftertax dollars that you've put into a traditional IRA and then converting those dollars into that tax-free Roth IRA. So this matters because if you're doing a backdoor Roth IRA, essentially how that process goes is you drop it into a traditional account. You then

take that $7,000 or I guess $7,500 this year, convert that into a Roth account and then you invest the money. You can only do that assuming that that is your entire pre-tax retirement bucket. You don't have other pre-tax money sitting over somewhere else like you would here, Samina. So Samina, using your number here of $150,000 in this old 401k, as long as that money does stay in a 401K, it does not create a pro rata problem for a future backdoor Roth IRA. The pro rata calculation only looks, generally speaking here at that traditional IRA, CEP IRA, simple IRAs, things of the IRA category, not so much the 401K category. But the issue would come up if you roll that $150,000 of 401K, into a rollover IRA like I was alluding to.

Now, again, you would want to do this if you can choose your investments, because I'd much rather you have this money invested for you correctly, versus rotting away in a bad target date fund in some 401K that you might not have autonomy over anymore. So let's say a few years from now your income is too high to contribute to a Roth IRA directly, and you've got to do this backdoor Roth IRA. So you'd put that $7,500 into a traditional IRA,

and then you'd convert the $7,500 to a Roth IRA. At that point, assuming everything kind of stays the same here, you would have $150,000 of pre-tax rollover IRA, $7,500 of that after-tax IRA contribution for $157,500 total between these two contribution and this 150 before in this IRA, right? So only $7,500 of that $157,500, when you kind of do the math on that,

that's only 4.76% of your total IRA money being after tax, which is that recent contribution of $7,500 you made. If you converted that $7,500 to a Roth, you can't just say, oh, I'm only going to convert this $7,500 contribution I made, because the IRS treats that as a 4.76% after tax conversion and 95.24%, the difference there, as a pre-tax conversion under Form 8606.7. which would mean $357 of tax-free and then $7.43 of that after-tax conversion. 7143 is less than that $7,500 you thought was going to be in that backdoor Roth IRA, and that's where all of this starts to unwind. So here's the advice we could give you. If you think a backdoor Roth IRA is in your future, I guess would keep that money in that 401K, assuming it's invested correctly and you still have autonomy and you can choose it

everything's fine unless there's a real compelling reason again the autonomy to move it into a traditional IRA leaving you the ability now to have no money no pre-tax dollars in a traditional IRA it's all sitting in a 401k and the only dollars that are pre-tax are ones that you were going to convert that same year from a traditional IRA to a backdoor Roth IRA I know that was a lot but like pro rata rule is is really confusing and it's it's why some of this stuff bites people in their butts when they do it wrong because they come out the door of like a wrong conversion or they didn't know the money got sent that way or something like it's just it's kind of weird sometimes so long story short here robert don't forget the pro rata rule when you're thinking about

doing a backdoor roth IRA i know that was long but for everyone watching this episode and listening it is so incredibly important one of the hills austin and i live on inside the rich habits podcast and rich habits network is it's not what you make it's what you keep and so many people as things get more and more complex, they try to do it on their own, Austin, and that's troublesome sometimes, and that's the importance of what we do in the Rich Habits Network is helping people navigate what they seem is so complex

they can't figure out. And even for us sometimes, we have to do a lot of research to make sure that our guidance is sound because things do get more complicated as you move along. So I want to add one more thing to this as well that I forgot to mention, and that is the emergency funding,

at $60,000. If it's in a high-yield savings account, fine. You're making three and a half, four and a half percent. I'm okay with that, but I think 60,000 is a lot to have sitting if it's not in a high-yield savings. So keep that in mind. Our general rule is three, four, five, six months of your total bills monthly in that emergency fund, but it's always making money through a high-yield savings or a high-yield cash account at public.com. So please for anyone listening. Make sure you understand the emergency fund isn't just money sitting in your checking account. It is money available to you for those emergencies, but it is still making money while you sleep. So our next question comes from Braden T. Braden says, hey, rich habits hosts, I have come

to a crossroads in my life. Call it a quarter life crisis. I've made my way into corporate sales without a college degree, making a guaranteed $70,000 a year. I have $10,000 I owe to my stepfather from a credit card debt that he saved me from, which I'm paying $1,000 a month. I pay $400 a month to rent, $350 a month to my truck, $700 to investing in the ETFs plus my high-yield savings. I have $2,500 saved up and counting. I have $5,000 owed to a truck that I can't sell, and I just don't know why, but I want to go back to college to get a technical degree in either marine biology, which does not pay well or a degree in nuclear engineering, which is way more economically practical. Both of them are rich in passion, but I don't know how I feel about going into student loan debt when I already

have such a high paying job. I'm mainly scared of making the wrong decision at such a young age. Robert, what's your take here for our friend Braden? Braden, you're crushing it, and I get where you're at, but I think it's a mistake at this moment until you get out of debt, you get your base built, and you're up in running because you're already making great money. And the market is changing so, so rapidly right now in these engineering fields and in these marine biology fields because with AI and robotics and so many new technologies that are entering the market every single day right now, I think you should stockpile the money as much as you can, get out of debt, get everything paid off, and then reevaluate in one,

two, three years down the road. Because right now you're doing such a good job at 23 years old. You have a high paying job. And you're actually investing when most people in your age group are not investing or even thinking about their futures. And remember this very, very important thing that so many people get wrong. When you hear people online and influencers and people talking about follow your passion and you'll never work a day in your life, generally that's coming from someone that's

already rich because they already have their money. they already have built their base. They're already wealthy, and then they follow their passion. When you're in your 30s or 20s or even 40s, I don't care about passion. Get the money first so you can be all the passion you want later on in life, and you never have to think about making the bills monthly because you followed a passion that took too long to come to fruition or underpays in general because it's not something that you can really build financial freedom through.

So that's my take. Follow the passion later. Get the money now and keep doing what you're doing. I cannot agree more. Money gives us options. If you have a ton of money at 33 and you've been grinding hard and doing your thing, you know, have the option to if you want to go get that nuclear engineering degree, do it. You have the option to work part time and spend the other, you know, call it 20 hours a week working on getting this degree. But that option would not be afforded to you without the money. So I remember being 23. I'm only, I'm only, 30, right? Like, I remember graduating from college and, like, looking for that job and trying to feel as if there was more to life and, like, escaping the Matrix. I watched The Matrix this weekend. It's, like, so interesting. But it's, like, trying to, like, build something and do something and be passionate about something. Like, yes, you can do those things. And I encourage you, Brayden, to find that while keeping

your job. I love the $70,000 guaranteed. You're also in corporate sales, which tells me that that's the floor, not the ceiling. Right? Maybe there's a world where. 70 turns into 90, that turns into 110. And at 23 years old, that is a ton of, ton of money, dude, maxing out that Roth IRA, getting that 401k going, building up that emergency fund, getting a couple hundred thousand invested between now and 30 years old. Like, there's a ton of headway that you can make by earning the 70, 80, 90, $100,000 in your 20s and being smart and strategic with it so that when you're in your 30s and 40s, you have the options. You have the optionality to say, hey, I'm 33, I'm 37, I'm 42, and I want to pursue these other goals and dreams.

But those options would not be afforded to you without having the money in place. And the only reason you have the money is because you stuck with it in your early 20s and you just kept going and kept going and kept going. Now, I'm not trying to stifle any dreams or tell you to not follow your passion. Maybe there's a different way to express your passion in a marine biology. Maybe there's a blog you can write. Maybe there's a newsletter you can create. Maybe it's a YouTube channel you want to start. Maybe there's something.

Maybe you can volunteer your time at the local, I don't know, aquarium, right? Like there's a lot of really cool ways that I think you can express this passion outside of, I'm going to derail my entire situation, go back to school, go up to my eyeballs in debt for four years, make no money. Like it's just, don't do that, Braden. Stick to the plan. You're doing great. Stay focused.

You're going to make so much money in your lifetime. I love that breakdown. Stick to the plan like Austin said, Braden. I remember once I really was passionate about helping animals and I wanted to go do the whole animal shelter thing, but then I realized it's very, very hard to make money. So what I did is I built this wonderful career and then I started volunteering in an animal shelter so I could still give back. So always remember, get the money first, build your base and you'll be fine.

Now before we jump to our next question, got to give a shout out to public.com, the investing platform for those who take it seriously. On public, you can build a multi-asset portfolio of stocks, bonds, options, cryptocurrency, and now generated assets which allow you to turn any idea into an investable index using AI. And it all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one-of-a-kind index,

and even let you back tested against the S&P 500, all with just a few clicks. You can think of generated assets like ETFs, but with infinite possibilities. They are completely customizable. They're based on your thesis and not someone else's. So go to public.com slash rich habits, transfer your portfolio, and start finding and building your own generated assets on public. Paid for by public investing, full disclosure in the podcast description. So our next question comes from Kristen F.

Kristen says, hey guys, my question is, what investment recommendations do you have for a 23-year-old computer science engineering student who's graduating in the spring of 2007, who recently received a $300,000 settlement? This young man is a gregarious person who would give you the shirt off his back, and although he's talented in math and physics, he's not that proficient at managing money. Also, he's not eager to work indoors, staring at a computer, sprouting what he calls a tech neck. That's so true. I feel like I'm growing one of those myself, Robert. Kristen says his passion is coaching, skiing to underprivileged kids, and organizing outdoor festive events. Is Mr. Gregorius a candidate for a spendthrift trust? I would greatly appreciate your guidance and wisdom to secure this wonderful man's future.

Please let me know if you need any additional context. sincerely Kristen F. Robert, kick us off. He is definitely a candidate for a spendthrift trust, though that's hard to say. But I don't think it's necessary in this instance. So many times you see someone younger, they get all this money and you want to make sure to help protect them. But in this instance, there's so many different ways. There could be a structured annuity, which is a little less stringent. There is the irrevocable trust that could possibly work depending on the relationship with the parents.

and if he would agree to be able to allow them to set this up in his behalf and help him handle this money over time. The main thing is finding the best way to allow this money to grow for as long as possible because at 23 years old, this can turn into millions and millions of dollars over a lifetime as long as it's not squandered away. So I think you have a lot of options. I don't know that the spendthrift trust would be the best option. And also you could look at real estate. There's some other things I'm sure Austin can allude to. But for me, I think the easiest way would be the structured annuity or the irrevocable trust.

That would be my take. Yeah, Robert, I'm looking at a investment calculator right now. And if they put all $300,000 in the S&P 500 and after inflation, it compounds at 7%. Right? So, like 7% is after inflation and after everything. This Mr. Grigarius at 65 will have five and a half. million dollars, assuming he adds no more money to it. So 300,000 compounds into over five million of today's dollars, right? This is it, this is today. So really, really cool stuff there.

Here's a thing. You're asking these questions because you're worried that Mr. Gregorius might squander this money, that they might want to buy a gaming setup or go travel the world and do some, who knows, right? Like, I understand your concerns. And I think the hard reality, is the money is already his because it's his settlement and you can want to create these trusts, you can want to create these rules and boundaries around this person and how they spend this money, but at least how I understand the situation here legally, you have no authority to do so unless they agree to it. So how I understand it here is this 23-year-old computer science engineer has $300,000 that they were given from a settlement. And that $300,000 is theirs.

It's in their name. And they can choose to squander it. They can choose to invest it. They can choose to do whatever they want to do with it. I think the like two or three pieces of advice I'd give you is this. The first piece of advice is to take it super slow. You don't need to make any big decisions quickly. And anyone that's trying to pressure you to make a big decision quickly with it likely doesn't

have your best interest in mind. You might get approached by the uncle or the aunt or the cousin and says, oh, I heard you guys got this sentiment. Let me put you in a whole life insurance policy. It's going to turn into all this money in the future. if you just do this one thing, but we got to act fast. We got to do it now. It's like, take your time.

The kid's 23 years old. Like, he's got a lot of time of compounding ahead of him. He can do nothing with this money, but let it sit in a high yield savings account for six, 12, 18 months and it's still going to be just fine in retirement because it gives him that opportunity to kind of like come to terms with like his new reality of having so much. So they're just like, don't make any like quick rash decisions. The second piece of advice I'd give you is interview as many people as possible about this. Like surround yourself with sort of like a,

board of directors of advisors, right? So think like accountants, think financial advisors, think career advisors, think like all these are the different people, real estate professionals that can help guide this individual with this money that you trust. And I guess the third piece of advice I'd give you is if you're truly super scared, I would not do this. I'd probably just convince them and by convince me and educate them as to why 300,000 invested in the markets is smart and how compound over a long period of time and make sure, I mean, there's a smart individual computer science degree. It's tough, right? So like, just show them how to put this in a taxable brokerage account and watch it compound over their lives. So they have retirement figured out.

It's done. Like, that's what I would do. But if you are super worried about them and like things maybe aren't trending in the right direction and you don't want them to lose this money, yes, do the trust. If they don't agree to a trust, something you could maybe convince them to do is take all of it and use it to buy some real estate so that they, now live in a house and that house has that 300k of equity now inside of it sort of being treated as like a built-in savings account for this money that will grow over time with, you know, how real estate appreciates over time. But they don't have like immediate access to the money, right? It's sitting in equity in a home that they can benefit from every month because maybe

I don't know where in America you're going to buy a house for 300K cash, but maybe you do that. Probably not though. You're probably buying a $500,000 house. But their mortgage is now a lot smaller than what it would be. Maybe if they were renting or bought a house in the future. There's a bunch of different ways that you can skin this cat and like figure out how to pull it together. But the best case scenario is convincing this very smart individual that having this money sit for 40 years essentially will turn into millions of dollars. Say I'm half wrong, right? Seven percent. Let's say it's four percent or five percent. It'll still be millions of dollars. Right. So like let it sit. Let it compound. Let it grow. And they're going to

to be just fine. What a great breakdown, Austin. You know, Charlie Munger's famous quote about the first $100,000 saved and invested is the hardest is so incredibly true. And for any of you watching this episode, when you get your hands on money, think of it as your future because it's so hard to get a lump sum of any amount in your hands. And if you invest it wisely, it will change your life for decades and possibly your family's life. So always remember that when you get a chance to make money or you get a chance to invest rather than blow the money. And Austin, I'll tell a really quick story.

When I was 19 years old, my girlfriend at the time, she got hit by a motorcycle, she got a $40,000 settlement. She was talking about buying a convertible and doing this and this. I said, can we go sit at Croke Capital and sit with Tim and explain the things you should do with this money? She said, sure, we went and met with Tim. He told her what to do. She didn't do it.

She bought the convertible. So the convertible went to zero. And now if she would have invested that $40,000, you know, over 40 years of time, it would have been $500,000, $600,000. And last I checked a few years ago, she does not have $500,000 in net worth because she had to have the convertible. So don't do that. Do what Austin said. Sock the money away and get invested for your future.

What a great breakdown, Robert. And it's a really awesome, you know, perspective to think. It's like children do what feels good in the moment. Adults devise a plan and they stick to it. Broke people react, wealthy people forecast, right? Like you just want to be that person who's like forward looking. Our next question here comes from Grant Y on Instagram. Grant says, thanks for answering my past question. I really enjoy your insights as I learn more and more. I've been doing research online and I keep seeing the term dividend kings. I was curious to hear your opinion on these types of stocks. Do these types of stocks have a place within a portfolio for

potentially more consistent income to count on. I was thinking probably not at the start because the average increase of VOO or QQQQ will outgrow the increases from dividends. But as you get closer to retirement, potentially moving some of a portfolio into these stocks and living off the dividends while the rest grows sounds like a good idea. We'd love to hear your thoughts. Good question, Grant. I am a firm believer. And this is just my risk tolerance and what I do with my money. I'm wrong in the eyes of some people. I'm right in the eyes of others. So like personal finance, is personal, figure it out for yourself. I'm a firm believer of having money invested into sort of, you know, different segments, sectors of the markets, but also different like

types of stocks and companies, including dividend stocks. I have a dividend growth portfolio that's got the Coca-Cola's, the, you know, United Health Groups, the lows, the Home Depot's. Like, I've got a ton of money in those names because I like the Dividend King mentality, which is defined as a company that has paid a dividend to investors consistently for 50 years straight. If there's a company out there that's paying a portion of their profits every year for 50 years straight, that company is bulletproof for all intents and purposes. Right. Like, they've been around for a long time. They're going to be just fine. But they don't grow too, they don't grow too fast, Robert. They're not these sexy nebius or core weave or cerebrus. Like, they're not those

names. They instead pay out those dividends. And so I've got a chunk of my net worth in them. That's me. That's what I want to do. And they grow every single year. So that's the cool part about these dividends, Robert. I've been doing this dividend growth portfolio now for over four and a half years. What I've done is I've been able to see in 2022 how much they all paid in dividends. And then in 2023, how much that number increased. And then increased again, increased again. You go look at Visa. You go look at MasterCard. They increase their dividends every year by double digits. It's really interesting stuff if you turn into one of these dividend passive income people. But it'll be very, very clear. That's a chunk. That's a portion of my portfolio. It's not my whole portfolio. And I definitely don't encourage

anyone to go all in on dividend investing. Now, if you're into that type of thing, go for it. But you called out a very great caveat grant, which is that generally speaking, dividend stocks don't outperform the S&P. And they certainly don't outperform the NASDAQ. Those companies are driven higher by the Magnificent Seven, by tech innovation, by AI, things, like that. Coca-Cola is not going to beat out, you know, your Microsoft. It's just not our, not our reality, Robert. So at the end of the day here, dividends belong in a portfolio, in my opinion, but they shouldn't make up the entire portfolio. I agree 100%. And I am closer to retirement age, if I ever thought I would want to retire. But I agree with Austin. I think everyone should have a

small sliver in dividends at any age, but you should not be thinking about taking your foot off the gas from growth to really focus on dividends, especially earlier on in your investment journey. So I agree with Austin. I would always be building towards growth, but then have a small sliver in those dividend stocks. Currently, I own Coca-Cola, Lowe's Home Depot, Verizon, and a couple others. But I think it's only about 3% of my total net worth. And I like to keep it that way, because I want growth still over the dividends. Now here's a fun stat, though, Robert. A third of the total return of the S&P 500 since its inception in 1926 has come from dividends. So you need dividends.

You should reinvest those dividends, right? Like dividends have a part to play. But dividends are not the whole picture. So what a great breakdown. Let's now jump to our final question coming from S.O. on Instagram. S.O. says, hi. I've been listening to your podcast for a few months now. And it's helped my financial goals tremendously.

I grew up in poverty, my parents were refugees on welfare, and I'm trying to change that for myself and my children. I'm a 38-year-old nurse. I only started investing two years ago when I had my second child. I hear you both talk about the 100K net worth in building that 100K base. Would that include my kids' 529 accounts? I currently have 150,000 in a rollover IRA. My bridge account is 60,000 in it. My Roth IRA has 14,000, my 401k has 31, my HSA at 7,000. Emergency Fund, 33,000 and 529 at about 20,000 between my two children. I just want to know, am I thinking about this correctly? How does a 529 account play into building your base? Good question from S.O. here. I can answer that, Robert. I would say it probably doesn't. I would say because you have the goal of spending this money with a 10, 15, 20 year period of time since creating the

account, it should not really count toward building your base. The whole point, Robert, of having your base build, of having that $100,000 plus invested into index funds is back to the quote you mentioned earlier from Charlie Munger. Getting that first $100,000 is the hardest. It's very, very hard, but once you have it, it starts to compound aggressively. And that compounding aggressively means you are now building a nice nest egg as you head into retirement. That $529 account is not going to be with you in retirement. The goal is to spend that money on education and other educational expenses for your children. Now it's a really cool tool so that you can save some money on taxes and things of that nature, but it's not, in my opinion, a nest egg retirement, you know, focus strategy.

It's supplemental so that you are being as strategic and looking for that arbitrage on a annualized basis with your wealth building, but it's not something that should count toward building your base. Yeah, I agree. It kind of comes back to the difference between actual net worth and liquid net worth because you're going to spend this money down the road. It's kind of like having equity in a home. It looks good on paper. All of that is cool, but you can't access that money because it's illiquid. So understanding that I think is important. And I think that's where the 529 comes into play because yes, you're saving it. Yes, you're building it over this next 15 years. But because you don't have access to it and you have to spend it in other ways, I don't feel

it should be part of your net worth, but I do want to have a caveat here that you are crushing it. You saying you grew up in poverty and you just started investing two years ago, you are absolutely crushing it. I love the question. And keep doing what you're doing. You're covering all your bases. You're really doing a phenomenal job. And you're going to be just fine in the long term.

I could not agree more. So you've knocked it out of the park. What a great episode, Robert. And if anyone's listening right now thinking, I want to get my question answered, you can do this super simply inside the rich habits network every tuesday night we host a two-hour live stream where robert myself jump on a zoom call with like 300 of our closest friends inside the rich habits network and we have about what you say maybe an hour to an hour and a half of prepared remarks about the markets and headlines and investments that we're making and then the last like 45 minutes to an

hour there is focused on answering your questions you can drop them in the chat on zoom you can turn on your camera, turn on your microphone, ask us a question that way. You can also DM us questions. Like, the Rich Habits Network is how you get more access to Robert and Austin. And you can join now. Robert, we're coming up on 1,100 people inside the Rich Habits Network. It felt like just the other day, we hit 1,000 people, and we've grown tremendously. Robert, just in the month of August, and we're filming this on August 17, we've had 103 people join the Rich Habits Network. 103 people have joined us inside the Rich Habits Network in August alone. Why are you not the 100th and fourth person listening to this podcast episode right now?

We'd love to have you. Our DMs are open. There's eight hours of video coursework, and we also host, we call it the office hours. We're just kind of hanging out for an hour on a Google Me, just kind of shooting it and talking and having lunch and just chit-chatting and networking and having a good time. But Robert, the Rich Habits Network is so fun. And we're doing, you know, really cool private placement investments. Right now we're investing into a BCI. company that's a competitor to Elon Musk's neuralink, a brain computer interface company, like the chip.

Like it's pretty interesting, pretty cool. So if you want to learn more about that, join the rich habits network. Yeah, it's definitely one of the most informative and game-changing networks, not just because it's us, but just because of all the different aspects of the community. You have the community itself, which is great. But then you have the investment opportunities, the coursework, office hours on Fridays. But all of those things. things wrapped into one community. So for anyone out there that's been on the fence, check out the seven day free trial. There's so much to offer in this community. And like Austin alluded to, we are growing very, very quickly. And I think that is attributed

to everything that you get within this community. We don't try to upsell you. There's none of that happening. And the fact that I think, Austin, people generally want to find community more and more when times get tricky. And we've had, you know, six, eight months of wars and and this and tariffs and all these things. And people just want really solid advice and guidance. And I think that's something that we do better than most and definitely at a very high level. So check it out if you're interested in leveling up.

The Rich Habits Network seven-day free trial. Thanks, everyone. And we'll see you tomorrow for our episode of the Rich Habits Radar. Two and five Canadians will hear the words, you have cancer. That's why every step and dollar raised matters. On September 19th,

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