Rich Habits Podcast - Q&A: Avoiding AI Investments, Financing Business Buyout & Nancy Pelosi's Portfolio

Starting point is 00:00:00 Hey everyone and welcome back to the Rich Habits Podcast question and answer edition brought to you by public.com. These are our Thursday episodes where every Thursday we answer your questions as if we were in your shoes going through whatever you're going through. You can ask us questions on Instagram at Rich Habits Podcast. You can ask us questions via email at Rich Habitspodcast at gmail.com or maybe you want to ask us questions inside the Rich Habits Network, our community for our biggest fans, Whatever you do, get a hold of us, ask a question, and it might end up on these Thursday episodes. We love these episodes because we can hear it all from you guys, personal finances, personal, and everyone has so many great questions in our DMs, like Austin said.

Starting point is 00:00:45 And it's just so fun, just taking it off the dome and trying to create as much value as we can for each and every one of you. And you guys love these episodes, even those of you that don't ask the questions. So that makes it even more fulfilling for us. 100% Robert. People love these Q&A episodes. It's a really popular segment of the show. And I like them a lot because it offers our audience the ability to like, we get to really provide value to them directly. It's not like a lesson. It's not, you know, some headlines that can go read somewhere else. It's a real value. It's my perspective. It's Robert's perspective. It's our combined sort of back and forth on a question or, you know, whatever's going on. So I love these episodes. Now, before we jump into this episode that we both love so much, got to give a. shout out to public.com, the investing platform for those who take investing as seriously as we do here on the Rich Habits podcast. 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 artificial intelligence. And it all starts with your prompt. From

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Starting point is 00:02:28 investing, full disclosures in the podcast description. So we have this first question here, Robert, sent to us via email at rich habits podcast at gmail.com. It's coming from Sean H. Sean says, Hi, Austin and Robert. My name's Sean, and I've been listening to your podcast for the last two months, and it's been awesome. I never really thought about retirement. I always focused just on getting by, but I've since opened a Roth IRA because of you all, and I'm working toward building other wealthy, rich habits. That's awesome, Sean. That's so cool. All right. So, Sean, says, my question is regarding my father-in-law's construction company, which I've worked at for 12 years now and have taken over most of the operations over the last few years, including acquiring

Starting point is 00:03:08 the license the business runs under. My father-in-law has proposed getting me into the ownership side of things. He's drafted a proposal with his attorney in which I'm given 25% of the company and the other 75% will remain with him until he passes and then it will be split evenly between his three daughters, one being my wife. Together, we will control 50% or more of the business, and I'm getting the first rider refusal to buy the company off the other two daughters as well. How would you go about preparing financially for this? Do I throw as much of the company profits that I earn into a certain type of account to prepare for a future buyout in the future? Do I invest in work on building my own wealth and maybe just plan to take out a loan when it comes time

Starting point is 00:03:52 for a buyout? Thanks so much. We'd love to hear your opinion on the best way to prepare for such a buy out as the company is just shy of 50 years old and I'm excited that this is going to be my turn into building this business. Sincerely, Sean H. Robert, I feel like you've probably had some experience when it comes to buying out existing owners and maybe loans to do that or different financing options or, you know, different ways to prepare for that. So what advice do you have for Sean here? Yeah, Sean's in a great position. This company's established. It's been around for almost 50 years. It seems like the current owner, his wife's father, is really meaningfully trying to take care of Sean, which I love. And I think it is a perfect storm. So Sean, what would I do in the

Starting point is 00:04:35 meantime? I don't know how old the gentleman is. So I don't know if this is a 10 year plan, a 20 year plan, a 30 year plan. But what I would do in the meantime is get that traditional brokerage account set up. Get your Roth set up as well. Make sure you're up and running, building for your own wealth, because you never know what's going to happen with the company. But I would get a traditional brokerage account set up, and I would also get that emergency fund set up like we always talk about. So you've got cash building for the future for this purchase. But I think you're on the right track with the SBA loan. I wouldn't worry about it for down the road that you have to have all this money to do the buyout in cash. There's always going to be ways to raise capital,

Starting point is 00:05:13 especially when purchasing or investing in a successful small business. So I love your situation. I would get the paperwork done sooner than later because things change over time. You don't want this to linger for another year or two. Something happens between you and the daughter. And you give up that equity that you rightfully deserve. So I would get the paperwork done. I think he's doing a great job, how he's proposed it with the 25% now. And then you would be able to buy the rest later in that first rider refusal.

Starting point is 00:05:43 So I think it's a great situation. Get the paperwork done. Get your own attorney, though. This is what I would recommend. Get your own attorney. on this because you want to make sure it's all legitimate and done properly because it seems like a great guy, but you always want to get a second opinion. I think that's great. And the one part of this that I want to double down on is the aspect of ensuring that our friend Sean here is doing his own

Starting point is 00:06:06 wealth building things outside of this company, right? Because maybe God willing, your father-in-law stays alive a lot longer than you might think. And that's 75% that he retains that's supposed to go to the, you know, your wife and her three sisters, maybe that doesn't happen for another 25 or 35 years. And you might be retired by that. You could be so much older. And so all I want to make sure is that, and you already are working on this, you'd mention the Roth IRA and things of that nature, but I want to make sure that you yourself are preparing for your own retirement outside of whatever this company could be or could not turn into into the future. Robert called out, you know, who knows what's going to happen to the company. Maybe a competitor comes in and just wipes

Starting point is 00:06:48 you guys clean, right? Like, who knows? So I love knowing that you are building toward your own retirement with a Roth IRA. You got the emergency fund set up, I'm sure. Maybe you've already got some extra funds in a bridge account, a taxable brokerage account on public.com. You're investing into the ETFs and index funds we talk about. Maybe you have a couple children. You're contributing to their 529 accounts. Whatever's going on here, but you are finding yourself in a way where you're out of high interest debt and you're investing aggressively toward your future and your retirement, exclusively away from whatever this company might turn into into the future. Now, I also agree with Robert as it relates to the other 75%.

Starting point is 00:07:26 Yeah, some of it's going to go to your wife. You guys will control 50% or more. That's great. The other, let's call it 49% that's owned by her two sisters and you have the first rider refusal to buy them out. First rider refusal means that if they want to sell it, you are the first one up to buy it. They might not want to sell it. So you have to also then think about that.

Starting point is 00:07:47 You might be running some numbers in your head here, Sean, okay, the business does this much in profit. If I own 100% of it, you know, I'll be able to do this and keep this much per month and I'll have a nice big retirement. You're probably running a lot of scenarios in your head and you're doing all these different things. And we might not have full information as it relates to the sister's appetite to own equity in this business.

Starting point is 00:08:07 But you've got to run all those same scenarios assuming you only will ever own 50% of this business. And they might never want to buy out. They might just want to keep collecting their equity, you know, those distributions. And that might be their retirement. And that's how they're thinking about it. So I love that you're thinking through all of these different scenarios. But my biggest piece of advice for you is to assume they keep 49% or, you know, whatever it might be. So you guys maintain that majority ownership. And you are building wealth for your own retirement that, you know, has nothing to do with the success of this company. I love that take. And I want to add one more layer to this. For Sean, make sure when you do get the paperwork and you have your attorney

Starting point is 00:08:47 look at it. Make sure that there are some language in the contracts that state that upon his passing and you given that opportunity for this first writer refusal to buy them out, that if they do say no, that there are some operational language in there that states that you have either supermajority voting rights or operational control of the business because you don't want this ending up in probate court for two or three years where the business gets ruined, everyone's fighting over scraps, and put yourself in a bad situation. Because you always want to hope for the best, but plan for the worst. And in this situation, he could get hurt tomorrow.

Starting point is 00:09:25 Private equity could come in and buy, you know, a competitor could buy the company out before your paperwork is signed. All of these things could happen. And we just want to make sure you're fully prepared. Great call at, Robert. Our next question comes from MC. MC says, good afternoon. I love y'all's podcast and greatly appreciate you sharing the stocks and such that you invest in and would recommend others to look into. However, two of those investment themes are ones that I cannot morally get behind. AI and REITs, specifically Funrise. As a conservation list, it's my life's work to restore, protect, and care for the natural environment. Investing in AI means investing in AI data centers, which is the exact opposite of conservation. Not to mention, I'm from a rural tech. which are often the targets for these centers and face several impacts from them.

Starting point is 00:10:12 Likewise, I was interested in funderized because of its accessibility into real estate, but when I saw that there was no way to choose what and where I wanted to invest and that the majority of the projects are invested in Florida, which as a resident who despites the overdevelopment of this beautiful state, I could not in good conscience support that. So what options do you recommend someone to look into if they, like myself, want to grow their wealth but do not want to do it at the cost of financially supporting what they do not morally support. That's a good question, MC. I love that. So I guess there's two ways to

Starting point is 00:10:43 answer this question. The first way to answer this is there are absolutely resources out there. There are ETFs that exist. There are mutual funds that exist. There are financial advisors that exist specifically to serve people like you. They will find and build and craft model custom portfolios that are investing specifically into companies that are operating within the guidelines you give them and are trying to, you know, make sure that your money is being invested in owning equity into businesses that you morally agree with. Now, let's be very clear here, just because I want to make sure everyone's on the same page. When someone goes and buys a share of Amazon stock for $250 a share, you're not giving Amazon $250 a share. You're not giving Amazon, $250 a share.

Starting point is 00:11:32 You're buying one share of Amazon from someone else somewhere that's selling it to you at $250 a share, right? Amazon is not getting money by buying their stock just like Google or whatever, right? Because I think a lot of people make the mistake of thinking, too, oh, I want to invest in all these cool things. But I don't want to be giving these trillion dollar corporations my money. They don't need my money. You're not giving anyone your money. So I just want to clear that up too in case there's any confusion. But there are tons of resources.

Starting point is 00:11:59 There's tons of, you know, ESG ETFs out there. other sort of vehicles that exist that align investors moral compasses with their financial, you know, capital deployment and portfolio construction. And so I don't have any of the, I'm not going to recommend any. I don't really know too much about that space. So I don't want to pretend to be an expert. But I do know they exist. I know there's tons of resources out there. And so I highly recommend MC just doing a little bit of research on Google or I was going recommend chat GPT, but you don't like AI. Well, I guess Google is also AI. That's going to be a tough for you because the whole world's going for AI. And so just kind of, you know, not using that or

Starting point is 00:12:38 not supporting that might be tough. But regardless, I'm so sure there's a lot out there for you. I think that's a great take. And I'm very similar MC in I don't invest in companies or sectors that I don't agree with what they do or what their social construct is. So if you take like gambling, I don't invest in weed companies, tobacco companies. Generally, I don't invest in liquor companies. So there are different sectors that I also am very similar to. And like Austin alluded to, and it is AI, unfortunately, but you could literally go to public's generated assets,

Starting point is 00:13:17 type in a prompt based on exactly what you asked within this question. And it would make you a portfolio of companies that are socially responsible around your conservation list beliefs. And I think that would be a good start for you because I get it. I don't want to support companies and sectors that I'm not into because I don't want to make money off of things that aren't healthy or good for the environment.

Starting point is 00:13:43 So that's where I would start, public generated assets, go in there, put together some prompts, it'll build a portfolio for you and use AI to not invest in AI to help you get to where you want to get financially by still use. using these tools. I think that's where I'd start. I didn't even think about generated assets,

Starting point is 00:14:00 but you're right. I mean, MC, that's the, that's a perfect place to start. I want to invest in these things. I don't want to invest in these things. I want to ensure, you know, whatever that description is for you. And it will do a really good job as sort of pulling that stuff up. And I think that kind of bodes well to, because the next question comes from Lucas V, who says, I've built my base with index funds and ETFs you guys talk about. I have a couple thousand dollars and I want to invest in SpaceX as soon as it goes public, should I invest it all at once or DCA. You know, SpaceX's whole sex appeal right now is data centers in space, right? Literally taking these reusable rockets, I think it's Starship and being able to, because I watched this conversation between Elon and

Starting point is 00:14:43 Jamie Diamond over the weekend, which essentially said, it's going to be cheaper for them to move cargo into low Earth orbit with Starship than it is going to be for Amazon. to move your packages around the world because of the way that they've been able to reuse these rockets and things like that. And so data centers in space is a really cool thing that people are chatting up around, trying to figure out. And so to our friend MC, yeah, a data center in rural Montana sucks. No one wants that.

Starting point is 00:15:15 No one wants to look or hear or see what's going on there. So let's put those suckers so high up that we can't even see them. Let's put them in low Earth orbit or whatever's going on. there. So they're getting all the power from the sun and we don't have to worry about electricity costs for, you know, neighboring communities and towns or whatever's going on. Let's put them all in space and then use a laser to shoot down the energy somehow, some way. I have no idea how that works, but it sounds fun. And I think that's what's so cool about just this whole idea of innovation. And it's inspiring, Robert, because people then find and see, okay, we need a lot of energy

Starting point is 00:15:52 if we are going to continue to use artificial intelligence like people have shown to want to use it, right? A billion people use chat GPT every single month on average. And so that's only going to expand. Same thing with Anthropic and X and all these other models and all the agents and everything like that. So we need a lot more energy.

Starting point is 00:16:10 But the problem is no one wants these data centers in their backyard. So let's then use reusable rockets to put them in space where no one has to see them and some sort of cool laser technology you to shoot it down to, I don't know, something else. And it's, it's cool. That was a roundabout way Lucas of answering your questions. If I had a couple thousand dollars to invest in SpaceX, I'm not sure I'd buy it the first day. I'd normally don't buy IPOs the first day or even the first couple months. I like to wait for an earnings call or two. If you really want a good rule of thumb,

Starting point is 00:16:41 think six to nine months, in my humble opinion, is kind of the range there where the stock will start to find support. It'll start to, you know, not violently trade. up 9, 10, 12% in a day. Oh, it's up 7%. Now it's down 12%. Oh, it's up 4%. Now it's down 6%. You know, like that's what the IPOs tend to do in the beginning. But over time, they tend to really find their couple percentage points here and there. And I think that's where I like to accumulate my positions. So Lucas V, to answer your question, I'd probably wait a little bit or just dollar cost average over a long period of time. I agree with you 100%. I think SpaceX, anyone that's buying at the IPO is late to the party. Not saying you might not be able to make money on the

Starting point is 00:17:24 initial spike because there will be one, but most of the money is going to be made from the people that have been investing in SpaceX long before the IPO. And they're going to take profits. They've been waiting for one, two, three, four, five years to be able to get some liquidity out of SpaceX. So I would be careful, like Austin said, I'd wait three, four months, see what the price action does, then start dollar cost averaging in. because right now it is the most hyped up IPO ever, and it's probably going to price way above what the actual value is. Yeah, Robert and I were doing some research.

Starting point is 00:17:58 And again, this goes back to our episode that we got so much flack for, which was why are you guys talking about these event contract websites like Polymarket in Kalshi? I don't understand. I thought we aren't gambling here. No one's using them to gamble, but it's fun to use those to understand the investor sentiment around big events like a SpaceX IPO. We were looking at Pollymarket. Polymarket says that SpaceX's market cap on the first day of trading

Starting point is 00:18:24 would likely close between $2 trillion and $2.5 trillion, which is higher, Robert, than the $1.75 trillion sort of target there. I think on Hyper Liquid, it's trading at 167 a share right now, which is higher than the 135 that they priced it at last week. All this stuff, you know, this comes out on Thursday. Friday is the IPO itself. So we have no idea what new news has come out since then, I'm sure. Sure, but long story short, you should be using these tools, using these platforms to better

Starting point is 00:18:54 understand what's going on with sentiment, how people are trying to, you know, buy and sell these things. And it's just a really great way to do a little bit of extra research. So you're not caught off guard on day one of an IPO or some political event or, you know, whatever's going on. 100%. I love that take. Now, before we jump to our next question, this episode of the Rich Habits podcast is brought

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Starting point is 00:20:02 organizations supporting American veterans, aligning investor capital with support for those who have served with a minimum commitment of $150,000 during the fund's first year of operations. I love this. I think it's very cool. It is really cool, Robert. And for investors, exposure to the long-term growth of America's defense and national security ecosystem, DUTY offers a different approach to defense investing. So to learn more about the U.S. defense ETF, visit us defenseetf.com. Investors should carefully consider the investment objectives, risks, charges, and expenses before investing. For prospectus or summary prospectus, containing this and other information about the fund, please call 888824-4467 or visit U.S.

Starting point is 00:20:48 FNCTF.com. Please read the prospectus or summary prospectus carefully before investing. And remember, investing involves risk and possible loss of principle. Distributed by Foreside Fund Services LLC. All right, Robert. Our next question comes from Skyler. Skyler says, hi, Robert Nosson. My name's Skyler, and I love the podcast. I started listening to the podcast a couple months ago on some long car rides, and it's made me feel a lot more comfortable about investing. I'm 23 years old. I make 67,000 a year. I currently have $23,000 of

Starting point is 00:21:18 car loan at 3.5% interest, 14,000 of student loans at about 5% interest. I pay $200 more combined per month than the minimum payments to pay them off just a little bit early. I pay $630 per month toward my Roth 401k that I only get a $42 match on, and I plan to max out my Roth IRA every year. I also save $600 per month toward my emergency savings fund, which currently sits at $9,000, and I have a goal of $15,000. I got engaged two months ago and we hope to get married in about a year. Because my fiancé is in school until next summer, I'm the only one able to save for the wedding. My question is, what funds should I put toward the wedding? I could reduce my payments on my loans.

Starting point is 00:22:03 I could reduce my Roth 401K contributions. I could reduce how much I put in my emergency savings fund. But beyond that, I don't know where else I could pull money from. So I want to understand the smartest way to begin planning for this expense. Thank you all so much for your insight, Skyler. First off, Skyler, congratulations on getting engaged. Super, super excited for you and your fiancé. I'm engaged myself.

Starting point is 00:22:27 It's awesome. It's a really cool time of life. So a couple things to think through here. You mentioned that you are contributing $200 a month extra to pay off your student loans and your car loan. Yes, you could totally not do that and start saving $200 a month in a high-yield cash account on public, earning some extra interest. on your wedding savings. So that's, that's what, $2,400 bucks a year. Now, you're contributing $630 per month towards your Roth 401k, which against that $67,000 year salary, it turns out that's about 11% contribution rate. Y'all can get mad at me for this one, but, but here's my honest take. I firmly believe

Starting point is 00:23:07 not to go into debt to fund a wedding. That doesn't make sense to me. Do not go into debt to fund this wedding. Pay cash as much as you possibly can, as well as accept gifts from family members and things like that. If you want to pause on your 401K contributions for 12 months, take that $630 plus the $200. Now we're at $830. That's about $10,000 that you can have set aside for this wedding over the course of 12 months. Now, if you ask me, Austin, can I get married at 10 grand? You probably could. It's just not one of these extravagant weddings you see on a TikTok or an Instagram, but maybe it's on a cool farm or a property. that maybe your family owns, maybe it's at a house or a shared, you know, whatever.

Starting point is 00:23:50 But that, in my opinion, is how I would try and fund this. And then, day after the wedding's over, you kick back up that $630 contribution toward that 401K, accept that match, get a little bit more here, contributing toward the car loan and the student loans, pay those off how you want there if you want. But in my opinion, that's where the money would come from. I would not dip into this emergency fund, right? I don't want to see you moving that down to zero or any less. I think 9,000's great there.

Starting point is 00:24:16 Maybe you even pause on that $600 per month contribution. $9,000 in emergency funds already pretty great. If you did that, that's what, 830 plus 600. Now we're at $14.30 a month. Over 12 months, that's $17,000 that you could save cash for to pay for this wedding over the next 12 months. That's what I would do if I had no other way to attain money. Hopefully your family that wants to chip in a little bit. Maybe they want to pay for some of the catering or maybe they want to pay for some of the alcohol

Starting point is 00:24:45 or whatever's going on. But that's, I think, how I would approach to this. Robert, what did I say wrong? And what would you do differently? I just feel I'm going to get my head on a stick from answering this question. So I don't think you did anything wrong, but let's use some math. In my opinion, and again, don't come for me, everybody. I don't think people should spend more than 10% of their gross household income per year on a wedding.

Starting point is 00:25:13 or more than 5% of their total net worth as a couple. Because here's the problem. So many people go crazy for these big weddings when they're not already financially set up and stable. And then they have all of this debt where they put the catering on a credit card. They got a loan from somebody to pay for the flowers and everything. And it's beautiful and it's wonderful.

Starting point is 00:25:36 But then the next day they have all of these things to worry about because they have all of this debt that occurred. I think there's a lot of really cool ways to have a beautiful, lovely wedding without going super into debt. And like you said, Austin, I don't think you said anything wrong. Get the family to help. See what you can do to get creative so you're not spending more money than you're going to recover from. Because it's kind of like when we talk about this on some of the episodes where people get into wedding season that are your age, Austin. And all of a sudden they run up their credit cards all year long because all their friends are getting married.

Starting point is 00:26:09 and they're going to all these destination weddings and they don't know how they're going to pay for it, but they have to go. It's the same thing when you are the one getting married if you're paying for all this. So I would keep it simple. I would make sure you understand the budget. Keep doing what you're doing.

Starting point is 00:26:24 I agree with everything you said, Austin, about cutting back on the 401K contributions, cutting back on the extra payments and get this money moving and set aside. And I also, the last thing I'll say is I think you have enough in your emergency fund instead of taking that all the way to 15,000, I'd maybe stop it at 10,000 and pile all of that money into this wedding fund as well. Yeah, yeah, I like that. I think, you know, there was a popular,

Starting point is 00:26:50 maybe it was not popular because there's just one season, but it was called wedding or mortgage, something like that where it was like people would either take their 30, 40, 50, 60,000, of cash that I guess they had saved or whatever and they'd go spend it on a wedding. Or they would then say, hey, instead of doing that, maybe we have a small wedding and we put all this money toward buying a house. And so it's interestingly, you're going to think about the opportunity cost of every dollar. And Skyler, I really want you to have an awesome wedding. And I really want to make sure that you're not going into high interest credit card debt for this wedding. You're not taking on personal loans for this wedding. And that personal loan also means maybe asking your

Starting point is 00:27:26 parents or your grandparents. Like there's nothing worse than owing your grandparents, $30,000. And like, you know, Thanksgiving is just weird now because of that. So let me say this. Elyler, you're crushing it. There's absolutely a way that you could save $15,000, $17,000 over the next 12 months toward paying for this wedding. But I think it's a wonderful opportunity for you and your fiance to get on the exact same page with money as it relates to expectations, how you think about spending money on a one-night event versus perhaps saving money for the future. Maybe this is an opportunity for you both to sit down. We talked about this in a previous episode. Robert, get the laptop, get the notebook, sit down and make sure everyone's on the same page about how we think

Starting point is 00:28:12 about retirement contributions, how we think about budgeting, what is important to us. Do we want to go on an extravagant honeymoon? Like maybe that's what this is for. You do a little small bang-up wedding and then you go have the best honeymoon ever. I don't know. But that's how I would approach your situation, Scholar. So our next question comes from Christian on Instagram. Christian says, Hello, Austin and Robert. Big fan of the show. I've been listening for a little while now and it's help me a lot in gaining insight into how to start diversifying my investment portfolio. I'm 18 years old. I go to college at San Jose State University and I'm wondering what steps I should take to start building my credit. I've heard a lot of names pop up like credit unions, big corporate banks. I've seen

Starting point is 00:28:52 a lot of stuff online, but I just want to make sure that I can get pushed in the right direction from people I trust. This is a really good question. So let me talk a little bit about how I built my credit when I did it and what mistakes I made. I was not told or taught about credit until after I graduated college. So I unfortunately had no idea what any of this was when I was your age. That said, what I did was after I graduated college at 22 years old, I did not have any credit. I had no credit history. And so I went and like everyone else, I went to apply for like an Amazon, you know, student card or a Discover it cashback card and all these little things. But I would, was rejected everywhere because I had no credit history at all. No one wanted to loan me anything. So what I did

Starting point is 00:29:38 was I went to my local bank that I had been banking with all of high school and college, Bank of Tennessee, and I got a secured credit card. What that means is I had to come up with the cash that I was going to borrow against with my credit limit. So I had $300 a cash. I gave it to them and I said, I want a $300 credit limit on a credit card from you all. And they said, sure. And it reported it to the credit bureaus. I would literally put my Netflix subscription on it to make sure that my credit utilization was low. I'd let it, you know, show as like, hey, he's got credit here. Oh, he paid it off on time. That's great. I did that for probably 12 or 18 months. Then I started seeing my credit score begin to evolve and trend up into the right and, you know, credit history and number of accounts and things like that. You know, I could log

Starting point is 00:30:27 into my, you know, different applications like credit karma and it would tell me what's going on and show me the progress I'm making. And then after about, like I said, 12 to 18 months, then I started saying, okay, what fee free cards exist out there that I could apply for that I would probably get accepted to? And that's where I applied for the Discover It 5% cashback card. They gave me a $9,000 credit line, which I thought was crazy because I'd never spend that much money at the time. But it was really cool. And so I started using that for everyday purchases here and there. I would enroll in their cash back. I made a couple hundred bucks or whatever it might be. And that continued to grow my credit score. And then eventually what I did was then I started using, you know, some of the fee-based credit

Starting point is 00:31:08 cards that have all the perks and features and things like that. Now my credit, I think, is around 815, 820, something like that. So, you know, I guess I'd been building it now for about eight years or so because I graduated college in 2018. So that's pretty cool. Not bad for an eight-year stretch. but that's how I started with no credit history and continue to grow it over time. So the advice I have for you is to get $300, $500, $100. Go to your local bank or whatever you can do here to get a secured credit card with your cash, put a tank of gas or a Netflix subscription or something where the credit utilization is below 10 or 15% and paid off religiously every single month throughout college.

Starting point is 00:31:51 Just doing that is going to get you a lot of. further than even where I was at your age. I love that, and that is the blueprints. I did the Discover It card way back in the day when I needed to build my credit as well. But there's a couple other things you can do. You mentioned getting ready to start school. You could apply for a student credit card. A lot of campuses have deals with banks and credit unions.

Starting point is 00:32:13 You mentioned credit unions, where you can get a student credit card. And many times it's going to be an introductory, unsecured card. So that is another way. But also, if you live in houses, where you're going to have any utility bills in your name as well, you could go to like rental karma or boom pay or even Experian boost and upload your utility bills, and that will also report to help you build credit along the way as well.

Starting point is 00:32:40 Just make sure, like Austin alluded to, keep the utilization low, make sure you pay everything on time, and you will have your credit built in no time. Yeah, here's the other piece of advice. I had friends in college that had credit cards, if it was the Amazon or the, you know, student card or whatever it might be

Starting point is 00:32:55 and they're having a bad day. I'm like, what's wrong? Oh, I'm $7,000 in credit card debt. What? You're 19. What do you mean? You're seven. Yeah, man, I just keep swiping it at the bars. I keep buying the PlayStation games. I keep like, so just be careful. Whenever you have any type of credit given to you, it does not mean you have to go spend it all, Christian.

Starting point is 00:33:15 All it means is you want to keep that utilization much lower than 10 to 15%. This is just a way for you to begin building. some sort of history with the Bureau saying, hey, I can borrow money and pay back that money very consistently. And I do that. And it's all good. So our final question here is coming from Evan on Instagram. Evan says, hey guys, I really hope to get my question answered in some future episode. My name's Evan. I just graduated high school a year early with my graduation gifts coming with checks, which I'm starting to invest into a taxable brokerage account to work toward my base. So a few questions for you. If I'm getting a bunch of money,

Starting point is 00:33:54 now should I just put lump sums into the ETFs you talk about like V-O-O-QQQ and VGT or should I dollar cost average the money in over a longer period of time? Also, I invest on Webel and they offer a Nancy Pelosi portfolio which has shown to outperform the S&P 500. So my question with that is why not just invest all of my money in that portfolio and why don't other people do the same if it has outperformed index funds? I'm not sure if other platforms have this feature but I think it's pretty cool. I would love some help getting started building my base. Thanks so much, Evan. Robert, I'll let you kick this off. Yeah, Evan, I love what your brain's at. You're thinking about investing at 18 years old and most people kick the can down the road till they're 40.

Starting point is 00:34:34 So I really, really love that. But you're asking two different things. If you're talking about the VOO and the QQs and the VGTs and dollar cost averaging into them, that is fantastic. If you want to do the copy trading of the Pelosi Fund on Weebo, that's a little bit more. I know it's performing pretty well, but that's a little bit more gambling, in my opinion. So what I'd rather you do is the first part. Get your Roth set up, get it maxed out through the VOO and the QQ and the VGT. So that way you know you're up and running and you're building towards your retirement. And then maybe if you want to play around with Webo with 10, 15 or 20 percent and do some of that, that's okay. But we always want to make sure you set aside enough money to get the Roth IRA up

Starting point is 00:35:17 and running, get your emergency fund set up with that high yield cash account on public before you start investing in some of these other things that I consider a little more high risk. So that's what I would do. That's the move, especially because this money, you have such a long window of growth and compounding. I'd rather see you put it in things that I believe are a little safer and a little more long term because even though a lot of different sites are tracking the Nancy Pelosi portfolio. You have to remember as well. It does perform pretty well right now, but it is on a 30-day delay. So you're not buying and copy trading exactly when she does. And a lot of the growth by the time you hear about it is already taken up. So just keep that in mind when deciding what to do.

Starting point is 00:36:02 Yeah, I think it kind of bodes well to this idea that we talk about after you build your base of $100,000 invested into the index funds and ETFs, we really like to encourage people to have a core satellite portfolio construction, which means 65 to 85% of a total portfolio is invested into index funds and ETFs. I know there are 15 to 35% is diversified into other things. Maybe after you build your base here, Evan, the other maybe 15 to 35% of your portfolio in the future could be diversified into things like precious metals and real estate and, you know, things that we talk about, but also maybe some of that could be in a Nancy Pelosi portfolio tracker. The whole key here is to ensure that you don't have so much of your portfolio invested into one single theme or idea that if it goes wrong,

Starting point is 00:36:50 your net worth just evaporates, right? We all know the S&P and the NASDAQ and the Dow Jones trends up into the right over a long period of time. And yes, we have drawdowns and volatility and things like that, but I'm willing to bet that American capitalism is going to continue to thrive over several decades, where a Nancy Pelosi, I don't think I'm willing to bet that several years from now that track record is going to maintain. and I don't know. And that's why, you know, if you want to do that, carve out a small section like what Robert said versus putting the whole portfolio into something like that, which is what you were alluding to, Evan. Everyone, thanks so much for tuning into this week's episode of the Rich Habits Podcast question and answer edition. Don't forget, if you have questions for us, email us at Rich Habitspodcast at gmail.com.

Starting point is 00:37:31 You can DM us on Instagram at Rich Habits Podcast. And of course, Wallstreetfavorits.com. So many of you, like so many of you, are loving Wallstreetfavits.com. We get DMs about. it, we get emails about it, we get screenshots of your portfolios and how you guys are using this platform to find stocks and see what Wall Street thinks about your own portfolio. And so we're so grateful to have that support. Be sure to go check out wallstreetfavorits.com. If you want to know the technical analysis, the price targets, the historical valuations, the hedge fund activity, everything as it relates to what Wall Street is doing and what they

Starting point is 00:38:06 think about your portfolio. Yeah, great shout out, Austin. We love wallstreetfavorites.com. I think it's the best tool on the internet right now. And don't forget to come back tomorrow for our Friday episode. Thanks, everyone, and we'll see you tomorrow.

Rich Habits Podcast - Q&A: Avoiding AI Investments, Financing Business Buyout & Nancy Pelosi's Portfolio

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