Rich Habits Podcast - Q&A: Investing only $20/month, Pressure Washing, and ESPPs

Episode Date: November 30, 2023

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz answer your questions! Fill out our listener survey for a chance to win 1 of the 10 $100 Amazon gift cards we're giving away just in time for the holiday season! Click here!---Be sure to check out Public's new ⁠High Yield Cash Account paying 5.1% APY.⁠ This is higher than anything else on the market and is FDIC insured up to $5M. ---Earn 5.1% APY using a Public HYCA, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here!⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Opt-in and share your email, ⁠⁠⁠⁠click here!⁠⁠⁠⁠Learn more about our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠4-module video course!⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Download our FREE Budget Template, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here!⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠To learn more about Robert: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://stan.store/RobertJCroak⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠To learn more about Austin: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://stan.store/austinhankwitz⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Contact: [e-mail] ---Hankwitz Group LLC has an existing business relationship with NEOS Investment Management LLC. The opinions expressed are those of the author, and the author owns several NEOS ETFs.

Hey everyone and welcome back to this week's episode of the Rich Habits Podcast question and answer addition. We have a lot of really, really exciting questions in today's episode, so let's just dive right into it. Our first question comes from Isaiah H. Isaiah says, I'm in my late 20s and I'm wanting to start investing. I recently opened a Roth IRA on Robin Hood and I hear you guys always talking about maxing it out. However, I'm not in a place financially to do that. I can only afford $20 per month. Is it still worth investing this money into my Roth IRA or should I be investing that money elsewhere? Robert, do you want to take a first stab at this? Yes, I would love to. And Isaiah H, I love what you're thinking. And always remember, it's not about timing the market. It's about time in the

market. And don't listen to the bull crap fake gurus out that they're going to tell you if you don't have $10,000 a month, don't bother getting started because I'll tell you what, $10, $20, $50, $100 a month. in your Roth IRA over time will add up to a tremendous amount of money because you just want to let compounding do its job. So Austin, why don't you put it into the calculator for everyone? And let's take a look at what that $20 a month would look like over time. So Isaiah told us he's in his late 20s, right? So I assume like 28 years old, 29 years old. And assuming Isaiah invests $20 per month all the way up until 65. This guy's not adding a dollar more. He's not getting any raises. we're assuming the bare minimum here.

Isaiah is going to have $170,000 in his Roth IRA from just $20 a month, from his late 20s to 65 of tax-free money that he can now spend and enjoy in retirement. That $17,000 came from only $8,000 of invested principal, right? So the other $162,000 is compound interest. That's the thing we always talk about. It's all about time in the market, right? so the compound interest can do its job. So Isaiah, the answer is yes.

Take your $20, $20, take your $5, $10, $15, $20, $25, whatever that number is for you that you can. And do whatever you can to make sure that you're always inconsistently investing into it. Now, what are we buying in the Roth IRA? Robert and I always talk about the index funds like V-O-O-S-P-Y, Q-Q-Q-Q-Q, V-T-I, things like that. So, Isaiah, I would definitely try and stick to those, especially V-O-O. But if you want to get a little bit more aggressive, perhaps VGT, it's one of the big technology ETFs out there. Robert really likes AIQ. It's a global artificial intelligence ETF. So there are different ways to diversify this, right? You can do even the NASDAQ-100 QQQM is that ticker symbol. But the most

important thing here is not exactly the percentages and the weightings and what you're investing into. It's the fact that you're investing. So that $20 per month turns into $170,000 in retirement, Isaiah. Keep that long-term mindset, bro. I love this question and Austin, you killed that because for me, it's all about getting everyone that follows along on this journey with us to understand you don't need a lot of money in the beginning. Hopefully over time, you're going to start taking from $20 a month, get it to $50, then $100, then maybe $500 or $1,000, depending on where you're at in your financial journey and how well you're doing financially at that time. So it's really just all about the consistency of being in the market and getting started with any. dollar amount so important. Really good question, Isaiah.

All right. Our next question comes from Tyler. Tyler says, hey, everyone, how's it going? Love the podcast. I am receiving RSUs on a monthly vesting schedule at my publicly traded tech company. However, I've been thinking about enrolling into the employee stock purchase plan, allowing me to purchase stock in the company I work for at a 15% discount. What are your thoughts on enrolling into this?

How should I be thinking about this from a tax perspective? I just don't really know where to start. Tyler, what a great question. And I'd imagine this is something that other listeners have thought about as well. I actually did this myself out of college. I was working for a publicly traded healthcare company. I enrolled in their employee stock purchase plan. I think maybe I bought like seven or eight shares, which they got like 200 bucks a share at the time. And I was like 23 years old. So I was a lot of my salary going to stock. I eventually sold it, right? And they got acquired. But long story short is I was doing this. And I did it because of two reasons. One, the company had a long-term success horizon, right?

I knew that this company was operating in something that I like to call a secular growth trend. Now, for a medicis, it was sort of the silver wave, right? So they offered home health and hospice and personal care services to elderly people. As we know, baby boomers, there's a lot of them. So I was like, okay, this is going to be a business that's around for a while. Now, the second thing I looked at was the company itself had been around for 5, 10, 15, 20 years, and consistently reported stronger and stronger profits, which made their stock price go up over time. And so, Tyler, I want you to think about, okay, if I'm working for this publicly traded tech company,

the first questions I'd be asking myself are how long have they been around for, right? Is it 5, 10, 15, 20 years? Have their revenues and profits been growing throughout that same period of time? Are there revenues and profits projected to continue to grow into the future, right? Because now you're not just being granted these restricted stock units, RSUs, as like compensation, you're actually now taking your money and betting on the long-term health of your employer, right? So, like, that's completely different. So I want to make sure that you're investing your money into a company that you're very

comfortable with. You have a long-term success horizon with and you're really excited about. And the second thing I'm thinking about as well is as it relates to this company, you need to now start tuning into those earnings calls, right? So for all these people listening that might not know what that means, any company trading on the stock market, once every three months or every quarter, they hop on a conference call with Wall Street analysts and pretty much walk through their revenues, their profits, their gross margins, everything that investors would care about. And so, Tyler, if you're an investor now,

a true investor in your employer, you need to be listening and staying active in those earnings calls. So you have the best educated decisions moving forward. Wow. I hope all of you followed along as Austin nerded out in his full regalia and broke that down. That was incredible. I got goosebumps from that. So here, I'm going to back it up a little bit. And we're going to break this down for the layman. So what Austin meant through all of that amazing information is, we think it's a good idea, Tyler, to do this. However, I would not want to see you put too much of your investable capital into this

and then putting yourself in a situation where you're not fully still diversified. So keep that in mind. In my opinion with this, if the company's strong, you believe in the company, you're going to be with the company for a while. Sure, why not put 10% of your investable capital into the stock? because keep in mind with that 15% discount, you're kind of baking in a really good gain on this stock, assuming that it keeps moving forward in the right direction.

We have limited information so we don't know what stock it is, but assuming that it's going to keep moving forward in the right direction, this is a great strategy for you to get in that little extra gain, assuming that the stock does well and the company keeps moving forward. So that's the more simplistic breakdown. And just always remember to stay diversified across other platforms, other sectors. Think fund rise. Think cryptocurrency. Think treasury bills. Really keep yourself diversified because you never want to have all your eggs in one basket because you don't know what

that market sector may do. Really good question, Tyler. Now our next question comes from Lance B. Lance says, I have a question regarding your pressure washing business. So Robert, I guess this was something you mentioned back in the day. Do you need a contractor's license to start pressure washing. I'm looking to add it to my window cleaning business that I had started last November. Thanks so much. Looking forward to hearing from you. Robert, this is all you, man. Yeah, Lance, great question. And the answer is no, you do not need a contractor's license to do pressure washing. But one thing I would make sure you do have is a proper LLC setup to make sure you have your liability coverage there and make sure you have insurance. This is very important that no one gets hurt

or something goes wrong on a job site. So always make sure I'm sure you have it for the window company. But if you don't, get yourself a good liability policy. And then one other small thing kind of relative to this, but a lot of people get this wrong, is make sure if you have 1099 workers, you do not address them to the customers or to them or speak of it that they are your employees. Always keep that separation. A 1099 worker is a contractor. And trust me, you don't want to get yourself backed into a corner saying to a client or saying to the actual worker themselves that they are an employee because they're not. They're a private contractor and you want to keep that separation if they're not on your payroll so you don't get yourself in trouble

later. So that's a big part of this. But also I think it's really smart that you're doing this and adding this division to your window cleaning company because of the fact that everyone needs pressure washing. And the average ROI per hour of profit you can make per man hour is so high in pressure washing because it's one of the least desirable tasks. Any person or any company wants to do. So I love it. I'm actually considering firing back up my pressure washing company down here in Florida since I migrated away from Ohio after COVID because it's just so profitable and such an easy company to run. So Lance, I hope that helps you. And if you need any further help on that, I've been doing pressure washing as a company for 15 or so years. So if you have any questions,

let me know. And that actually goes for everyone listening. If you have any questions, right, we're pulling all these from our Instagram account at Rich Habits Podcast. But you can also send us an email at Rich Habitspodcast at gmail.com. You can join our Discord group in the show notes below. We've got a whole section dedicated to Q&A over there or get in touch with us some way somehow, We are all over the internet. We're always doing live streams on Thursday nights on TikTok. I mean, like, you can definitely get in touch with us if you try. So if anyone here has a question, definitely ask it.

Yes, bring it on. We love, love, love your questions. That is why we have these new episodes every Thursday, fully dedicated to answering your questions because we want to know as much about you as we can because then we can bring further value in our content and in our podcast to help all of you become financially free. So our next question comes from Valerie D. Valerie says, hey guys, I love the podcast. Thank you all so much for what you do. Valerie, thank you so much for listening. We appreciate it. She says she's brand new to this investing world and listening to this podcast lit a fire under her butt. She says she has $20,000 in a checking account just sitting there. And it has been for the last 10 years. And she's very mad that she wasn't investing it or putting it to a high-old savings account. Now, Valerie says, though, that she's a registered nurse at a hospital and they offer a 403B. And a pension plan that she contributes toward. She's made a public account. She's added the recommended ETFs to her portfolio. And she has also put some money into T-bills. Now, her question is, she does not

have a Roth IRA. She says, should I open up a Roth IRA and max it out with this $10,000 that I've set aside throughout the year? Or should I put that money into a high-yield savings account or kind of do a little bit of both? Robert, this is an easy one. So I'll let you answer this. Yes, this is a slam dunk. Great question, Valerie, and we're going to get you moving in the right direction. Yes, yes, yes. Get the Roth IRA set up right now as soon as you hear this come out of my mouth. Go to one of these platforms that you like. We like Schwab, M1 Finance.

You can go to E-Trade. Wherever you want to go, get that Roth IRA set up and then invest into a basket of these funds that we talk about. The V-O-O-O-Q-Q, A-I-Q, M-O-A-T, V-T-I-I. there's a whole list of them that are in the show notes that we like and we talk about all the time. And yes, you want to max it out. So that's $6,500 for this year. So you're still going to have $3,500 left. And I would think with that money then, I would use that, put that in as your emergency fund into a really good high yield savings account.

But yes, your goal every year should be to max out that Roth IRA and enjoy those tax savings for life. Couldn't agree more. At the end of the day, we just shared with Isaiah, right, $20 a month in the Roth IRA turns into $170,000. Imagine what your $6,500 in 2023 is going to turn into by the time you are 65, right? And if you consistently stick up with this, right, that is millions upon millions of dollars in retirement, Valerie. Really great question. Get the Roth IRA going. Have the high yield savings.

Have that three to six months of expenses. Don't make the mistake again of keeping all of that in a checking account, right? Want to earn a little bit of interest. just want to be investing our money, things of that nature, and moving in the right direction. Really good question. This next question is brought to you by Grit Capital. There is a link in the show notes for their newsletter. It is awesome.

I read it every time or check them out at gritcap.io. Their mission is to democratize Wall Street insights, making the knowledge held by the 1% right on Wall Street, accessible to their 99%, aka you and me. So their newsletters read by 270,000 investors all around the world, including Robert and myself. So if you want to go get smarter, five minutes every day, go give them a read, show notes below, or again, gritcap.io. This question comes from Jojo. Jojo says, I love your show. I listen to the podcast religiously.

We appreciate that. Now, he says, I wanted to ask a question regarding the name of the 5% down multi-unit property mortgage. Robert, I think you mentioned this a couple weeks ago. What is that? Yeah, so it's the new Fannie Mae program that was launched November 18th of this year. It's incredible for anyone getting into real estate investing. And basically, it doesn't have a name that I'm aware of. It's just called the Fannie Mae 5% Mortgage Program.

And what it says and what it states is you can buy up to a million three price of property, up to four doors or four units. So you could buy a duplex, triplex, or four units. and it has a lower criteria barrier to entry for your credit and your financial wherewithal to be able to qualify, and it's only 5% down. So different than the FHA because you don't have to be a first-time buyer, it's an incredible program. Everyone should Google it. Everyone should try to take advantage of it because to be able to buy that big of a property of that much value or even a $100,000 property with only 5% down, just really is a great program for the beginning investor, the mid-level, or even the sophisticated

investor because you're keeping more of your money in your pocket rather than putting it out there at 20 or 30% down. Now let's talk a little bit more about that, right? So let's say I was someone who was looking for a multi-unit property. Where's maybe like the first or second place I would go on the internet to find that? Is it just Zillow or Redfin or like how do I find those? Yeah, that's a great question, Austin. So yeah, you can go to Zillow and start looking at for multi-families. You want to try, though, if you're really serious about getting into real estate investing. You really want to do the old school things, and that is door-knocking. That's how I find most of my deals is through door-knocking, driving around, finding an area that I'm interested in that

has really good quality products and properties that I could look into investing into, but also getting to know the local realtors that work with a lot of investors. Go to the meetups. I'm going to tomorrow in Tampa just because I want to meet more people in the investing field of real estate rather than just real estate brokers or real estate agents. And so it's really all about just getting yourself out there, meeting up with people, getting to know people, tell them your story and what you're trying to accomplish and get in the mix because if you can get those off market pocket deals before they hit the MLS, you're going to be in a lot better shape, especially as the market improves in being able to find deals. Because remember,

remember, if you're looking at a deal that no one else wants, it's the old saying, if you don't know the sucker in the room, it's you. So you have to be careful because if you find a property, you're like, oh my God, this is a dream come true. Why did no one else buy it if it's already on the MLS and thousands of agents are looking at it? So just keep that in mind that you want to find those deals. It's kind of this saying of when there's a little hair on the deal where it's like not a great situation where maybe there's, you know, a bankruptcy in the past or there's other issues that have occurred with this property. Maybe it's in probate or whatever. You want to find those deals that are a little more tricky that no one's looking at because that's where all the profits are.

And so from a profit perspective, let's say Jojo here's like, all right, I got my 5%. I qualified for the loan. I'm going to go buy a Triplex for like $800,000. I don't even have just pulled up my butt. I have no idea if that's worth it. But like let's say those are the numbers, right? 800 grand, 5%. So he's He's putting $40,000 down. He's paying closing costs as well. He might probably borrow those. What type of, you know, cash flow, cash on cash returns, like what kind of returns and profits could someone expect to make with like a triplex in that sort of like range? Is it the, you know, seven, eight, 10 percent? Is it more of a diversified play where it's maybe four or five percent? Like, how should someone be thinking about that when they're like going through the different

types of deals to figure out if it's worth it or not? That is an incredible question. And I hope that everyone takes notes on this and is really researching that question. Because it's so important because every market's different. If you're in a market right now that maybe has really good capital appreciation, so then you know you're making money year and year out, but maybe the cash flow is it super great per door. Maybe it's only $400 per door on your investment. But you also might be in a market where the capital appreciation is really good, but the cash flow isn't there. That's why a lot of people are sitting on the sidelines right now and not buying multifamily investment properties because they're not cash flowing because of the interest rate levels that we're at

right now at the 8, 8.5%. So it's really kind of a tricky question. My opinion is buy what you can buy now using something like this Fannie Mae product and then refinance later if you can refinance now that you own the property and you're up and running for a lower interest rate. But the key is, is to know your numbers because the 1% rule doesn't work really right now in too many markets because of the fact that interest rates are so high. So you really have to look at it and say, what am I trying to accomplish here? Am I looking for the cash flow? Because that shouldn't be your first priority. Am I looking for the depreciation? Because you can do a cost segregation study if you're a high earner. Or am I looking for the capital appreciation to where I'm buying these properties

so they go up in value and I make the money over the long term? Because there's so many different ways to make money through real estate. So that's why you have to know going into it, what is your land for that particular property and that mortgage program to give you the best result. Good stuff. Hey, shout out to Jojo. Great question, Jojo, and awesome answers, Robert. So our final question comes from Curry M. Currie says, I often hear you guys talk about time in the market, not timing the market, but with AIQ or VGT reaching new all-time highs, wouldn't it make sense to sell your investment, lock in your profits, and then reinvest the money back into those same names after they've sold off so you can make more money in the long term. I'm having difficulty

understanding or seeing the upside at this point. And I think a selloff might be coming. Really good question, Curry. So here's my answer. Can I borrow your crystal ball? Like, please, like just let me borrow it. Like two days, I'll be a billionaire overnight. It's going to be awesome. Because I then will know, like you apparently know, when the stock's going up, when it's going down, when the selloff is coming and when to time it at the bottom and try and reinvest the profits on You see how this isn't really making sense, right? So here's the deal, man. If you want to sell, don't get me wrong.

Like, it's a good idea to take some money off the table, especially if you're one of those investors that likes to diversify into new single stocks or new specific ETFs that you're passionate about. You know, you think maybe a name might be overvalued from a historical valuation perspective when looking at cash flows or EBIT or things like that. I'm on your page on that one, right? Valuations matter for sure. But with ETFs and things like that, call it VGT or AIQ.

or VOO, write some of these other names, I can't time these. I don't think you can either respectfully. I think it's all about time in the market, not trying to time the market. And if you want to try and, you know, time them and sell the top and buy the bottom, like, be my guest. Let me know how it goes. I've tried it for years. Roberts tried it his whole life. Doesn't work. We never really made money that way, right? 90-something percent of people aren't able to do that. I think that's the statistic is 78 percent of day traders lose money within the first year of day trading, right? So at the end of the day, I'm very bullish on artificial intelligence. So I'm just going to keep putting money into AIQ. I'm very bullish about these technology names inside of VGT. So I'm

just going to keep putting money in there, right? I'm not going to try and worry about the ups and the downs, and I'll be buying the dips. So that's my perspective. Robert, what do you say? I love this. And I've got a funny story around Crystal Ball. So my cousin Tim that runs Crope Capital, he has a saying that he's been using for probably 40 years in the business. And whenever a client talks about trying to buy the dip and timing the market, he says, Bill, Tom, whatever your name is, Mary, Lucy, we are not in the crystal ball business here. So if you could let us use your crystal ball, we would enjoy that. So I am with you on that. We are not making fun of you by any stretch of the imagination. We're just saying that statistically trying to time the market is almost impossible.

Because if you look at it right now, everyone's talking about the markets. Are we going to have a Santa Claus rally for December? And the answer is probably yes for one reason. So many funds sat on the sidelines all year because they've been saying we're in a recession this entire year. So they didn't enjoy the huge upside that Austin and I and anyone that listens to us has enjoyed. So keep that in mind that if the best and brightest and biggest funds on earth can't time the market, I don't see why an individual person without all of those tools would be able to do it. That's why it's all about time in the market, not timing the market.

Trust me, you can try it. Maybe you get lucky a couple times. But generally, you're going to miss the runs because of the fact that you weren't in the market at all times. Yeah, Robert, I forget the actual numbers here. I remember we mentioned it in an episode maybe like two or three months ago. but we talked about if you weren't invested into the S&P 500 for like eight of the best performing days over the last like 20 years you like didn't make any money eight days like curry I'm telling you bro like don't do this don't do this to yourself man stay in there well the number one thing that

I've been working on in getting people to understand things from a macro long term you know thousand foot view is every time so let's talk about September October October when the markets were correcting. And everyone was panicking. What are we going to do? What are we going to do? What are we going to do? I'm like, guys, we're going to keep going because dollar cost averaging is key in staying in the market. And so what I've been telling people, it's so rudimentary, but I think it works, is every time you get scared when there's a pullback, simply click on that VO or that Tesla stock or meta or QQQ and then go over and click to the one year button and then the five year and then the 10 year. It'll shock you of what it'll do for your mindset when you go, okay, wait a minute.

Now I've zoomed out and VOO is 173.5% over the last 10 years and you go, okay, I'm going to be fine because you can't time these hiccups in the market. They're always going to be there. I couldn't agree more, Robert. Curry, again, we're not making fun of you, man. We're just saying, have some perspective and be consistent and diligent and stay the course. Everyone, thank you so much for listening to this week's episode of the Rich Habits Podcast. If you have a question to ask us, don't forget, Instagram, DMs, Discord, Rich Habits Podcast at

Gmail.com is our email address. And you can't expect to hear from us here in the next couple days. We'll announce on Monday the first winner of the $1,000 holiday gift card giveaway. It's again, it's an Amazon gift card for $100. We're giving them out to 10 different people. There's actually a survey in the show notes below. It's going to put you in some. that same giveaway drawing. So go check that out. It's essentially a survey that lets us better understand our listeners where they are, what their interests are. If they're married, do they have children? Stuff like that so we can better know what to talk about on the podcast. So again, go check that out in the show notes below. And as always, we appreciate each and every one of you

watching the podcast, listening to the podcast, sharing the podcast, rating the podcast. It helps us so much. And from the bottom of our hearts, we're so thankful every week that you guys are following along on this journey through the Rich Habits podcast. Thank you all so much. And have a great rest of your week.