Rich Habits Podcast - Q&A: Investing $200K of RSUs, Buying a Failing Biz, & $1.4M Net Worth at 34

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Starting point is 00:00:30 Hey everyone and welcome back to the Rich Habits podcast brought to you by public.com, a top 10 business podcast on Spotify. This episode is our question and answer edition, which means we take your questions via Instagram DMs, emails, or inside of the Rich Habits Network, and we answer them as if we were in your shoes. Now, the majority of the questions we're actually taking in today's episode were emailed to us over this holiday break. We had about 40 of them that were sent to us in the last two weeks, and we included like six or seven. in this episode email specific for you guys. So if you've not sent us a question via email yet at rich habits podcast at gmail.com, definitely do that. We try our best to read all of them.

Starting point is 00:01:11 And speaking of emails, Robert, we have the rich habits newsletter, which I would argue is the best newsletter all of 2025. Definitely. I spoke to several people over the holiday that are in the rich habits network and people that we've gotten to know. And so many of them commented on the newsletter, which was amazing. because they were like, this is the best newsletter out there. And so it is really rewarding to see that we have created this community,

Starting point is 00:01:37 but also the newsletter is so helpful for so many people along the way. So I'm excited about 2025 and all of the amazing things we have in the works for everyone that follows along. So if you want to subscribe to the newsletter, it's completely free. Just drop in your email address. You can Google Rich Habits newsletter and it'll pop right up or there'll be a link in the show notes below. You can subscribe that way to every single Thursday, mid-morning, mid-afternoon, we send you an email. It's succinct. Illustrations all over the place. It's perfect. So go check out the Rich Habits newsletter. Now, if you're serious about investing, you should not just be reading

Starting point is 00:02:10 the Rich Habits newsletter, but you should also know about public.com. Public.com is where you can invest in everything. Stocks, options, bonds, and crypto. They even offer some of the highest yields in the industry, like their bond account, at 6% or higher yield, and it remains locked in even if the Fed cuts rates. So what sets public apart is how they give you the tools you need to make informed investment decisions. And this is why it's so important, Robert. They went out and they built their own AI tool. It's called Alpha. And it doesn't just tell you if an asset is moving in your portfolio.

Starting point is 00:02:42 It tells you why the asset is moving. So if it's down 4, 5, 6% like Tesla stock was the other day, it's going to explain to you why the stock is moving. So you can actually understand what's driving your portfolio's performance. I love it. And remember, public is a. FINRA registered SIPC insured U.S.-based company with a customer support team that actually cares. So the bottom line is your investments deserve a platform that takes them as seriously as you do. So fund your account in five minutes or less at public.com front slash rich habits and get up to $10,000 when you transfer your old portfolio.

Starting point is 00:03:19 That's public.com front slash rich habits paid for by public investing, full disclosures in the podcast description. You heard that right. They will pay you up to $10,000 in cash if you take your existing portfolio from a different platform and migrate it to public. Now, to earn that much money, you need to have a big portfolio, but the average person will get a couple hundred bucks. Super simple. You guys can go figure that out. Public.com slash rich habits. Thank you so much, public for sponsoring the show in 2025. Now, our first question is coming from James D. James says, hi, Austin and Robert. I appreciate all you do with your show. your dedication to explaining the intricacies of personal finance in layman's terms doesn't go unnoticed.

Starting point is 00:04:01 With the average 30-year mortgage now around 7%, how would you approach a down payment? Say an individual has the ability to put down upwards of 70% on a property. Is it in their best interest to do so and pay off the mortgage quickly to avoid significant interest in the long term? Or is it better to put down, let's call it a 20% down payment and keep the lump sum invested, knowing that the rate of return over the 30 years has a strong chance of beating the interest rate. Now, I know I could always refinance in the future, but there's no mortgage, like having no mortgage. So, Robert, what's your take on this question? Yeah, I love this question, James, and it really is something that comes up a lot.

Starting point is 00:04:40 So let me take a stab at what my take is on this. And it's really important to understand you're absolutely on track. I believe you should put down the 20%, not the 70%, take all that extra cash, get it into the markets because you're right. Over time, a long period of time, the markets are going to outperform six or seven percent. But also on the flip side of that, you're absolutely correct that we're going to see in the next one to two years interest rates come back down in which you could refinance. And just keep in mind that the wealthy get wealthier by leveraging their credit and good debt. So I am not of the belief that having no mortgage is a good thing, especially because in a year or two from now,

Starting point is 00:05:23 let's say you get it back down to four and a half five percent and the market's in a bull market making 12 15 percent all of that positive arbitrage going to you is going to help you build your wealth faster so in my opinion people should not bury all their credit and bury all their cash in a property because then it is locked up and you cannot get that money out or use that capital until you sell the home or you would have to take out some sort of a he lock or home equity loan so that's my take on it. I like the fact if you have the cash and you want to put down the 20% to avoid the PMI, great. But I would never put down the 70% because to build that wealth, you're always going to have debt. And as long as it's good debt and it's low interest debt, that is a very, very key

Starting point is 00:06:10 structure in being able to build wealth for the long term. Good debt and low interest debt. Those were the two key terms there, right? I believe there's such a thing as good debt and there's such a thing as bad debt. Good debt is used to buy appreciating assets. Think businesses, think real estate, things of that nature. Bad debt is used to go buy things that go down in value. Think auto loans, boat loans, credit cards, appliances, furniture, stuff like that. And then the other side of this equation, Robert, you know, personal finance is personal. So I am someone who is with a 6.6% interest rate on his mortgage of about $325,000 right now. And I wholeheartedly want to pay off my mortgage as quickly as possible because I pay about $25,000 a year in interest on this mortgage. And it sucks.

Starting point is 00:06:58 And I realize that. But I also realize if I took $300,000 and I put it in the stock market in $24, it would have returned about $65,000 back to me. Now, of course, that was an anomaly, right? the stock market on average goes up between 8 to 12% per year. We've had two awesome back-to-back years of 20 plus percent, which is, again, an anomaly. But I guess it really comes down to like this idea of, and this is how I justify in my head, Robert, why I think it will be okay if I pay off my mortgage at the 6.6% interest rate over the coming years. The reason I think it would be okay is because I have three times my mortgage balance right now already invested in the markets. right. I'm just around a million dollars invested in the markets at the moment. And assuming I keep that

Starting point is 00:07:45 money invested and that money continues to work from a year over year over year, I already have the exposure, right? Like I guess I could put another, you know, 200, 300,000 into the markets and like, that's cool. But like, I guess I'm at that point now where I can choose. I have the flexibility. I have the autonomy to say, no, like, my money is already working for me. Now, it would be a completely different story. If I had no money invested, I had not built my base and I wouldn't put 70, 80, 90 percent down on a house. Like, that to me seems silly. I would much rather have that money invested and building wealth for me over time. Because again, the big difference here, Robert, between money that we invest in the markets and the interest rates we pay on the mortgages, the money we invest in the markets

Starting point is 00:08:22 compound and grow exponentially. The interest with a mortgage is simple interest. It's a flat every single year. And so once you understand the difference between compounded interest and compound growth and simple interest on debt and arbitraging that difference there, I mean, that is where wealth begins to unlock for people. Yeah, and that's why if you think about it, some of the wealthiest people in America have mortgages and they have loans on their yachts and they have loans on their buildings because they're leveraging this low interest debt that we talk about and arbitraging the difference into their own accounts. So I love the explanation and the two sides of this. And it's just really important for everyone listening to understand that because it's all about

Starting point is 00:09:02 not what you make, but what you keep and how you maximize your gains along the way. So our next The next question comes from Manicon V. Manicom says, Hi, Austin and Robert. First off, happy new year. I'm excited to hear all about the great episodes you've lined up for 2025. I recently had newborn twins and was looking into opening custodial IRAs for them. However, during my research, I found that each child must have earned income to qualify for

Starting point is 00:09:27 these accounts. Is there any way around this, or do we need to wait until our twins have earned income? I also looked into the 529 plan, but I'm more interested in the custodial IRA in case they don't want to go to college. I know that Austin mentioned that we can roll over up to $35,000 of the unused 529 plan funds into a IRA account once they turn 18, but what happens if there are remaining funds in the 529 plan? Would we just withdraw the remaining funds as income and face the additional 10% penalty fee when the time comes? Any insights would be greatly appreciated. Thanks for all you do. Best regards. This is a really great question, and let me just take a

Starting point is 00:10:03 first step at this one. So you're completely right. You have to have earned income. to contribute to your IRA, and unless your newborns are Gerber baby models, they're likely not making any money. But I would be very surprised if you can't find a way to spend this 529 money after rolling over that 35,000, right? So the money you have over, left over, which is what you're so concerned about, I'd be surprised if there's not a way for you to spend this in a manner that furthers your children's development. Think trade schools, think certificate programs, maybe study abroad programs, apprentices, even K through 12 tuition for private schools even before college, right? Up to $10,000 per year can be withdrawn tax-free to cover tuition expenses for

Starting point is 00:10:47 private, public, or religious, elementary, or secondary schools. So the 529, like, let me just be very clear. It's a very flexible way for you to save and invest on your children's behalf. And again, I'd be really surprised if you just simply can't find a way to spend this money. in such a manner that further develops your children's learning and career opportunities. Yeah, I think that's a great takeaway. 529s are a really great tool. And there is so much flexibility with them. And that is why they work even if the kid doesn't go to school.

Starting point is 00:11:19 So keep that in mind. I think it's a great question. Austin, awesome takeaway. And just really do your research to understand and make sure it's a good fit for you. So our next question comes from Danish V. Dynish V says, hi, Robert Nostin. I'm 42 years old. I work in tech.

Starting point is 00:11:33 and I'm based in Seattle, Washington. First, I want to very much thank you both for helping me fix my 401k, which was drastically underperforming. After listening to your podcast, I've diversified it into V-O-O-Q-Q-Q-Q-SpyI, Q-Q-Q-I, and other awesome index funds and ETFs that you recommend. I'm already excited with the results of the new strategy. I've already saved six months of expenses in an emergency fund. I've automated my investing and maxed out my 401K for 2024.

Starting point is 00:12:02 My certified financial planner says I'm even on track for an early retirement. I have two children and my wife also earns just about as much money as I do. I have a rental property and it's net cash flow neutral, but I also own my own house. Both mortgages are less than 3% interest. I could not be in a better situation because of you all. Now here's my question. I'll be making about $200,000 from my vested RSUs at my job after taxes in January of 2025. All of this money is from company.

Starting point is 00:12:32 stock that I'm selling because I want to diversify out of this single stock. I'm torn between putting the entire 100% of it into SPY or even splitting it across SPYI and VOO equally. I do love the passive income considering cash is king. I'll be hitting the highest tax bracket next year largely because of my stock RSU appreciation. I might not get such a large vest for future years as I'm hitting my cliff. What is your advice on investing this $200,000 if you're were in my situation. Robert, I'll let you take the first step at this. I love this question. And at 42 years old, you have a long time horizon for investing. So I'd really like to see you have more diversification with this $200,000. I love V-O-O. Nobody talks about it more than Austin and I. I love

Starting point is 00:13:21 SPYI because of the income you get. But I think you should have more diversification with this money. So I would like to see you add in some more funds into this and break it down with a little bit better waiting rather than just 50, 50 or all in one because there are other categories that I think you could cover as well. Maybe look at the NASDAQ, maybe look at some global economy stuff and really get some diversification. We didn't talk about crypto and at your age and depending on your risk tolerance, maybe a portion of this goes into some crypto funds. I bet we love and there's some other good ones coming out right now. So I love where your head's at, but I would just get a little more diversification if I were you. I like this answer, Robert, the perspective I want to share is it seems like, and I only mentioned this because he mentioned it himself, but it seems like he wants to retire early. And to retire early, two things have to happen.

Starting point is 00:14:13 One, you have to have monthly expenses that you have clear visibility in that likely aren't going to increase dramatically in the future. And two, your portfolio income, your passive income, has to be more. then those monthly expenses. So if this person was making $7,000, $8,000 a month in passive income, and their monthly expenses were $6,000, then theoretically speaking, they could retire and they would have that $2,000 of sort of flexibility every month to spend or save. If you are someone wanting to retire early, I totally agree, right, go with the diversification. That's a great idea.

Starting point is 00:14:49 But also consider what your mortgage might look like, what cash flow might begin to look like, what your income might begin to shape up as. I guess I'm saying is it's really hard to retire early if you're paying $4,000 a month with a mortgage or you know, you're paying, you know, maybe sometimes your cash flow on this rental is neutral, maybe sometimes it's negative. So just like figure out what big debt expenses you have in your life. And if it makes sense in the next, call it, you know, two, three, four, five years, pay those off if you do want to retire early.

Starting point is 00:15:22 Now, in that two to five year period, invest the money, make the money grow. Money doubles every seven years on average in the stock market. So I love this idea. I love the idea of retiring early. Having income paid to me by SPYI and much of these other NEO's funds allows me to be on track to retire early as well. But I will not be able to retire early if I have, call it my existing mortgage of like 2450 or whatever I pay every month. It's just you want to get rid of that before you retire. And also for anyone else listening that's thinking about, what their retirement looks like. We talk about the 4% rule in all of this. Please keep in mind, and this isn't a scare tactic, but keep in mind that things are changing. People are living longer. We are getting to a point where with better medicine and better care, the average age of people is going to be extended. So you need to make sure that you understand that when planning for retirement so you don't run out of money. Because in the old days, when the average person would, you know, live to be 76 years old, the average male in the U.S. That is getting extended year over year. And in the next 10 years, we're going to have dramatic breakthroughs in medicine. So keep that in

Starting point is 00:16:29 mind when you're thinking about retiring early, but also looking at how your retirement, what that looks like and how to maintain the life that you want to live in retirement. I love that perspective, Robert. And just a quick plug for your boys here, episode 33, how to calculate your freedom number is a wonderful place to start if you're someone who wants to retire early, right? This freedom number is the amount of money you need invested to be able to say, wait a second, I can stop working and just live off of my portfolio income, assuming the 4% rule, things like that. So go give episode 33 a listen. We published it on October 9th of 2020. Our next question comes from Joe F. Joe says, hi, hi, Austin and Robert. A friend connected me with

Starting point is 00:17:12 your podcast, and I love all the great information you share. Thank you for what you guys. are doing. My question is this. When investing in the major ETFs you typically mention, think VO, VGT, VTI, and QQ, regardless of whether if this money is in a retirement plan or a bridge account, would you distribute your investment equally across all four? Or would you follow some other allocation? For context, in case it impacts your advice, I'm 47. I plan to work for 20 or so more years, and I have a traditional 401k that I'm maxing to the full match, as well as two bridge accounts that I DCA and two monthly, but I'm considering changing the allocation of my investments. So please let me know your thoughts. This is a really good question, Joe. One of my favorites actually, because every year,

Starting point is 00:17:55 and I shared this with Robert a couple of days ago, I write a long reflection piece as to how my portfolio performed during the previous year. And so in 2024, my portfolio delivered 74.9% total returns, which was amazing. And the majority of that was driven by Bitcoin, because it was up like 100 something percent there. So don't like think I'm crazy here. But you know, I did have some 100, 200, 300 percent return stocks, but it was mostly just Bitcoin. But in that piece, I sat down and I said, wait a second, something I need to get better at in 2025 is understanding weightings inside of my portfolio. Because one of my biggest winners was HMS and her health. It was HIMS. I think the stock was up like 180, 200 percent or something from my average cost in 223.

Starting point is 00:18:41 when I, so I think the total return was like in the 200% there from what my average cost was, but I only had a three or four percent weighting in it, right? It wasn't a big enough waiting to make a difference. And so for Joe's question here, I would really encourage him to look more and learn more about the core satellite portfolio strategy. Core satellite portfolio strategy. What that means is think about your portfolio as the Earth and then satellites that are orbiting the Earth.

Starting point is 00:19:10 Okay. So the earth of your portfolio is the vast majority, right? That's the 50, 60, 70% waiting. You want the vast majority of your portfolio's weightings to be in big ETFs and index funds, blue chip stocks that are going to be here for a long time, and things that have great track records of strong performance. Because we want to make sure that a lot of our money is invested into good ideas. Now, the satellites come in in the sense of, call it this 15, 20, 30 percent weighting of these more opportunistic, diversified ideas that you might have. Think cryptocurrency, think real estate, think masterworks or fundraise or, you know, things of that nature, right? Maybe a single stock that you have an idea on that you're really optimistic about. So that's how I try and approach building a portfolio. I try to have 50, 60, 70, 75 percent in these blue chips.

Starting point is 00:20:03 And the other, you know, call it 25, 35 percent in these ideas. Now, with Joe's question, he's talking about all blue chip index funds. So Joe, if you want to have, you know, an equal split among all of them, I think that's great. If you want to be, you know, more heavily weighted to the S&P 500, I think that's cool too. If you want to be more heavily weighted to VGT or QQQQ, that's fine. Just know that those are a little bit more volatile in nature. So just be ready for that. But I think this is a wonderful way to approach investing, having these big index funds and ETFs in your portfolio and having to be the real core to your investing strategy is really important. Yeah, my big takeaway, Austin, great, great answer is that core.

Starting point is 00:20:44 We're talking about that bridge account or that 401k where it's the meat and potatoes of your wealth as you're building. You want to make sure that you have these blue chip accounts. So when you look at like VOO, VGT, VTIQQQQ, we love all four of those. If I were going to wait those in my portfolio, I would look at it as something like maybe VOO is 40%, QQQQ is 30%, and then VGT and VTI are 15 and 15, because I would wait a little heavier to the tried and true S&P 500 in the NASDAQ, because over time, those just really do well. They're very stable. They're going to average 10, 11, 12%.

Starting point is 00:21:25 And that's how I would do it. But like Austin alluded to, you also want to make sure that with this, waiting, you understand why. Because so many people, me included, I'm guilty of it, I'll take a nibble on something that I think is going to do really awesome. And then it goes crazy for two years, but like Austin alluded to, it's only 3% of my waiting in my portfolio. And if I would have just adjusted that further. So for instance, with me, my portfolio for 23 and 24 was probably around 8 to 10% just in Navidia, Palantir, and Micron. I was very fortunate over the last two and a half years. They have absolutely torn the cover off the ball. So it was great. But then in retrospect,

Starting point is 00:22:11 you say, man, I should have just up that, got that to 15 or 20%. But then you're in a situation where you're very risk on, on highly volatile sectors. So just keep that in mind. So that's why that's what I would do if talking about these four funds, how I would wait. them personally moving forward. Now, Robert, the cool thing about Joe is he has a follow-up question. It's this. Would you ever try to buy out a franchise that is failing due to improper management? There's a chance that a business that I used to work at, which was an auto retail franchise, will go under unless there's a change in ownership. This business was thriving five to seven years ago and making a bunch of profit before the current owners bought it. In addition to that, is it worth

Starting point is 00:22:51 trying to take out an SBA loan in order to pay for the initial down payment of the $75,000 to $100,000 for acquisition. I wish I could say that I had more capital, but I just started getting everything in order, and I'm a little bit late to the party. I want to make sure that this is an overall good idea before I even fully approach the current owners to start discussing acquisitions. Robert, that is right up your alley. I'll let you answer this one. It is. I am waiting. So yes, I think it's a great question. And the answer is very complex, but let me try to break it down succinctly. I love the idea of buying failing businesses, as long as the business isn't failing because it's a bad service or it's an antiquated service or it's something that just isn't

Starting point is 00:23:33 a growth proposition for the future. But if you know and you have experience like you do in this instance that the owners did a poor job, but that the audience is still there, then I love this idea. And the way to look at it for everyone listening is look at value engineering. When you go look at a property or you go look at a small business, really look around it all of the simple things first. The numbers are important, but what is simple is understanding the value proposition of your improvements. So like when I bought the pizza store last year, when I pulled up to see it, you know, they had old lights, the grass wasn't mowed, they didn't have great signage, they didn't do a good job with social media. So immediately, I knew that I could improve that business almost overnight by

Starting point is 00:24:21 integrating modern technologies and modern sales tactics and modern marketing. And the same goes for this business. So if you can buy it right, even though it's losing money and you can turn it around with good management and good marketing, I think it's a win-win, but just make sure you understand something. When you're getting your financing order, you need to make sure that you have at least six months to a year of cash burn because of the fact that if it loses money for you for a while, let's say it loses five to $10,000 a month. You need to have that on top of the cash flow because otherwise you're going to be coming out of pocket every single month to baby that business along and get it to profitability.

Starting point is 00:25:02 So be very, very careful because a lot of people buy businesses with the thought they can turn them around, but they don't turn them around fast enough and they end up having to either take on more debt or sell the business at a loss because they weren't prepared financially to be able to harbor those losses because everything, takes longer than you think and costs more than you think when turning around a small business. Yeah, I think the only piece of advice I have for Joe is build your base first, my friend. You want to make sure you have the $100,000 invested across the 401k, the Roth IRA, the bridge account, everything around you before you go and you buy a business like this, take on all this debt.

Starting point is 00:25:40 I've seen too many people make the mistake of going into a crazy, cool, big idea that they're so excited about and they tie up all their capital into it. and it keeps their capital tied up for three, five, seven years before they ever see some sort of return. And sometimes the returns aren't what they were expecting. So Joe, please have money working for you in the markets while you buy this business over time and you're going to be just fine. All right. Listen up, folks. Time could be running out to lock in a 6% or higher yield at public.com. You can lock in a 6% or higher yield with a bond account. But remember, your yield isn't locked in until the time of purchase. So you might want to act fast. Lock in a 6% or higher yield

Starting point is 00:26:22 with a diversified portfolio of high yield and investment grade corporate bonds. Only at public.com forward slash rich habits. Thank you, public for sponsoring the podcast in 2025. So our next question comes from Brandy G from inside of the rich habits network. Brandy says, how much do we really need to retire? The 4% rule lets you withdraw without having to touch your principal. I'm child free. and I don't plan to leave any money for anybody. Should I still be following the 4% rule or should I be spending more money in retirement? How should I go about enjoying my money while I'm older? Robert, what's your take on this? Yeah, I love this question, but you have to look at it differently. The 4% rule isn't necessarily utilized so you can leave enough money for other people. So I think

Starting point is 00:27:07 what you're alluding to is can you spend more of it in retirement because you don't need to leave it to other people or family members. And the way to look at this is the four percent rule was built around the Trinity study. And it's to make sure you don't run out of money in your lifetime because the worst thing that can happen to people is they go into retirement and they up it. And they say, oh, I'm going to spend 6% this year, 8% this year, whatever. And then instead of having enough money for 25 or 30 years, it goes down to like 12 or 14 years, then you have to go back to the drawing board and figure out how to make enough money to keep living the lifestyle you desire. So keep that in mind. It is not built and it is not structured for you to leave a bunch of money for

Starting point is 00:27:49 the future. It is to make sure you don't run out of money. And like I alluded to in the episode earlier, is that people are going to be living longer in the coming next 10, 20, 30 years. And therefore, you need to keep that into consideration when you look at the 4% rule and how much you should be spending yearly in retirement. Robert, I'm right there with you. I think, though, that sometimes people are a little bit too conservative when it comes to the 4% rule. I mean, if I had, call it $2 million invested or even a million dollars invested, right? And it was invested properly, right? Very risk managed. It wasn't into some crazy meme stocks and it wasn't into some crazy small caps or international things. I think I would be able to sustainably return, call it

Starting point is 00:28:30 six, seven, eight, nine percent on average over a long period of time in that portfolio. Assuming I also have a mix of bonds, a mix of cash, things of that nature. And so if you want to take out 4%, 4.5%, 5%, be my guest. But back to what Robert was saying, again, it's so you don't run out of money in retirement, not so much that you have money left over to give to your heirs. So just being able to balance that is really important. I think there's a book. I haven't read it, but it's really popular. I think it's called Die With Zero that helps people understand how to approach living in retirement. The author's name is Bill Perkins. So branded, maybe that's a book to consider to reading yourself. Yeah, I love it. It's just everyone needs to understand what their freedom

Starting point is 00:29:16 number looks like in retirement and extrapolate backwards of how to get there. That's the key here. So great question, Brandy. I hope this helps. Our next question comes from Aaron G. Aaron says, I just purchased a new home to be a rental property. With that being said, I have not yet moved it into an LLC. How do I go about moving a home I already purchased in my name into an LLC? Yeah, sure. Aaron, great question. I think it's very important because as we say all the time, it is best to own nothing and control everything because you don't want properties in your personal names. And the easiest way if you already own it is to do a quit claim deed or a warranty deed it's called. And this is very, very simple. You're just going to contact your lender. You're going to

Starting point is 00:30:00 tell them what you're doing. And you're going to make sure that you have all your documents in order. So if you're going to form the LLC yourself, you just have to make sure that you have the EIN number. You want to make sure you have the operating agreement and have all of your ducks in a row before you do the migration because you want to make sure that it's done properly so you don't leave yourself in a situation where down the road, someone could say, hey, this was not done accurately. And they could try to pierce the corporate bail if they were going after you personally. Just make sure you follow all of the steps. It's not scary. It's not hard. Any lawyer can do it for a few hundred bucks in a couple hours.

Starting point is 00:30:37 but just make sure you understand to do all the steps and that the LLC is fully flushed out and set up properly. Totally agree. There's a website called getdynasty.com where you can put your house in a trust. They make it very, very simple. I've actually met with their CEO before. He's a really smart guy. And I'm telling you, they are, they're super focused on helping people protect their properties

Starting point is 00:31:02 from those different types of attacks, if it's a rental, all the crazy stuff. So go check out get Dynasty.com. You can also, of course, work with a lawyer. You can just probably do this for free. I mean, there's so many different ways to do this. But the quit claim deed process that Robert laid out is the absolute best way to go about this. Now, our next question comes from Duck City USA on Instagram. They say, hello, Austin and Robert.

Starting point is 00:31:24 I'm a longtime follower and grateful for what you do. My financial advisor, who is a fiduciary, underperformed the S&P 500 this year by at least 10%. And then, of course, I have to pay their fees on top of that underperformance. I could have done substantially better if I just put that money in VOO. What are your thoughts? Do I keep them? Do I fire them? Do I just have a heart to heart with them?

Starting point is 00:31:43 How do I approach solving this problem? Robert, I'll you take a first stab at this one. Duck City, you have been a longtime follower. We appreciate the support and I'm going to lay it out straight to you. There is no way you should be underperforming that badly in a bull market like 2023 and 2024. So you definitely need to have a heart to heart with them and you need to shop around Because at the end of the day, I had someone recently say that their millions of dollars lost 24% in

Starting point is 00:32:11 24. And I don't see how that's possible. You could literally have put your money into V-O-O-Q-Q-Q-Q and maybe V-U-G or, you know, V-T-I and made 15, 20, 25%. So be careful. Absolutely have that conversation with them. And if you're not happy, you can always move it to your own account and manage it yourself and keep it simple, stupid. because so many of these advisors, the reason they underperform is because they have you in way too many funds and they have mutual funds and they have bond funds and they have all these different vehicles that just don't perform as well as the basics. So keep that in mind. I hope that helps. And if you need anything, you can always DM me and I will gladly help you. Yeah, I think just to further explain, you know, a lot of these financial advisors, they make their money not by just charging you a 1% fee or whatever that looks like, but also, by funneling money into mutual funds and ETFs. And normally those are owned by the financial advisors themselves, right?

Starting point is 00:33:12 So like, for example, Morgan Stanley, Bank of America, right? They all have their own financial advisor stuff. And these people also have mutual funds. It's kind of like a double fee structure, really. Like they charge people 1% just to manage their money. And then they take their money and they put it into their own financial product that then also charges people money to participate in. sometimes 40, 50, 60 basis points, right? Over half a percent. And so net net, you're paying one,

Starting point is 00:33:40 one and a half, sometimes two percent every single year just to now underperform the markets, which over a long period of time is, God, a whole lot of money. So I'm right there with you, Robert. If you want to self-manage, I think it's a great idea. If you don't feel comfortable self-managing, maybe you can have a conversation with this financial advisor, let them know what specific funds you want to be in, like V-O-O, like VTI, like other, you know, index funds and ETFs that we talk about and see what they think. Yeah, I love that take. And just keep in mind what Austin's alluding to is a lot of these advisors, they charge commissions on the ins and the outs. So you have to remember that. If it's a true fiduciary, it should only be one fee,

Starting point is 00:34:21 and that is the fee they charge you for assets under management. Like at Croke Capital, if you're paying, you know, 1%, it's 1%. Everything else is free that comes along with it. And you need to understand that. So go have the hard conversation with them, really discuss their fee structure, the commission structure and all of that so you can understand and gain more autonomy on your money because they don't care about your future. They are there to preserve your capital, not grow it. And your best bet is to understand that. And you've obviously done the work by following us for a very long time to understand what you should be doing. And you have to make those decisions and not let them talk you into anything else. So before we go into our last question, you have

Starting point is 00:35:00 all heard us talk about the importance of diversifying your investments for a while now, and there could be a major opportunity today in private market real estate, especially with the market timing right now. Because we know it's a lot of hassle to be a landlord and of course requires a ton of upfront cash, we were focused on finding an option everyone could have access to. You can now become a real estate investor, whether you have $50 or $5,000, and you'll have an entire team looking for the best opportunities to add to your portfolio with today's sponsor, the Fundrise flagship fund. You'll gain access to the potential returns of real estate without the headaches of property management or maintenance. Check out the link in our show

Starting point is 00:35:42 notes below to become a real estate investor today in the Fundrise flagship fund. Now, as always, carefully consider the Fundrise Flagship Fund's investment materials before investing, including objectives, risks, charges, and expenses. This and other information can be found in the flagship funds prospectus at fundrise.com slash flagship. Shout out to Fundrise as well for being a sponsor to the podcast. All right. So our final question comes from Scott F. Scott says, my wife and I are 34 years old and we have a net worth of 1.4 million. Whoa, that is awesome, Scott. It's made up of our primary residence, which is about $300,000 of equity with the remaining financed at about 2%. $750,000 in our 401ks and our IRAs invested in the S&P 500 in other total market funds,

Starting point is 00:36:29 all at very low expense ratios, $250,000 invested on public.com in our bridge account. These are all in S&P 500 type funds. And I've recently started to increase our crypto exposure, which sits at about $25,000 currently. And in the last year, started allocating a portion of our capital, about $75,000 towards low-risk option trading. We also have about $50,000 in cash and cash equivalents in our savings account. My intent is to start to create cash flow without sacrificing long-term growth. Currently, between my wife and I, we're making about $315,000 a year from our W-2 jobs. Given our current position, what else should we consider? Ideally, we'd like to retire early

Starting point is 00:37:11 and start or buy a business, leave a legacy to our children in the form of a lot of money, and not have to worry about our financial position. Robert, this is a really, really good question. I'll take a first step at this one. If I were in your shoes, I would start thinking about the following. One, how can I begin to own rental properties, duplexes, apartment buildings, right? I think you've graduated from like just the one or two rental properties down the neighborhood to maybe there's a world where you can join some sort of real estate syndication that can present opportunities of like owning 29 unit apartment buildings. or maybe different type of strip malls, maybe types of reits and things like that, I think you're at that level now where it's time to begin to diversify into things of that nature, especially only at 34 years old. There's a ton to learn with that.

Starting point is 00:37:58 I also think that I love the idea of the low risk option trading. I think now you are at the point where you can probably begin to really enhance your returns if you're able to learn how to pick stocks in a very specific manner like myself. or maybe to your point of this low risk option trading, maybe those are covered calls. You mentioned cash flow. Cash flow is paramount to any investor. SPY, QQQI, BTCI, those are the funds that I'm all about. They pay cash flow like crazy.

Starting point is 00:38:32 I think it's time to start buying into those specifically. Every $100,000 you put into those funds is about $1,500 a month per month that you'll get paid in cash flow. So keep that in mind. But I mean, you're at a point right now where probably in the next. five years, if you really wanted to focus on growing your cash flow between selling option contracts on single stocks you already own with covered calls or owning some of these high income funds or diversifying into cash flowing real estate, you could probably be completely retired by the time you're 40

Starting point is 00:39:03 and still have a very awesome monthly cash flow to look at. Call it $6,000, $7,000, $12,000 a month in cash flow, I guess just depending on how you're able to build wealth and deploy it over the next five or six years. I love that answer. And Scott, my take on this would be you are definitely ready. You've got the base bill. You're crushing it at your age. Everything looks really good. Now it's time to expand. Get a little more risk on. And I think you're light right now in crypto. If you were to have 5,6, 7% into cryptocurrency, that would put you at more like 35,000, 50,000 in your crypto holdings. But also I think you could earmark 5% of your net investable capital and start looking at some of these pre-IPO investments, venture investments, and understand your buybox.

Starting point is 00:39:52 Maybe that buy box is $10,000, $25,000 a year right now where you're taking these big shots on companies and technologies and stuff that you believe in, like Austin and I do every single week of our lives. I think that is the next iteration for you to really accelerate your wealth and your growth. So really look at that, understand it. And I would do those two things on top of what Austin alluded to to get you to that next level of wealth. Yeah, you're obviously an accredited investor both from your income and your net worth. So I think buying into these pre-IPO companies as well as startups, right, dabbling in the dark arts of startup investing. I think that could be a really, really good idea for Scott as well.

Starting point is 00:40:35 There's a ton of different funds, rolling funds on Angel list that you can become an LP in. If you're looking to become a LP in one of these rolling funds, just go to Angel List. There's a ton of them that are on there that anyone can begin to learn more about and join, assuming they are accredited and have the capital to deploy every quarter. But this is a really good situation to be in at 34 years old. So congrats on how well you and your wife have done, Scott, and you guys are going to probably have a net worth north of 10 million by the time you're 65, 70 years old. Yeah, I love it. Well, thank you, everyone, for joining us every single week, following along, sharing it with a

Starting point is 00:41:10 friend, getting value because our goal here is to educate and help everyone with all of the tricky little situations that come with running businesses and mindset and building wealth. Because as Austin always says, personal finance is personal. And we are here to help. So always share the podcast with a friend. Make sure you share the newsletter with a friend and tell people about the rich habits network. It is growing. We are so happy. We are adding more modules and more educational tools. And 2025 is going to be a game-changing year, and we appreciate each and every one of you. Thanks, everyone, and have a great rest of your week.

Rich Habits Podcast - Q&A: Investing $200K of RSUs, Buying a Failing Biz, & $1.4M Net Worth at 34

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