Rich Habits Podcast - Q&A: Starting From Scratch, Patents, and WTF is TSLY

Episode Date: October 20, 2023

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz answer questions received on Instagram and Discord.If you'd like to ask a question, DM us @richhabitspodcast on Instagram or email us at [e-mail]!---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, our Q&A edition. We've got a bunch of really good questions in store for y'all. These are dive deep questions. These are high level questions. They're weird. They're funny. They're cute. They're everything in between.

So we can't wait to jump into things. But before that, we just also want to thank you all so, so, so very much for taking us to the top of the Spotify business podcast chart last week. It was an insane moment for Robert and I. We are incredibly grateful. And it doesn't matter if we're number one, number two, number three, number four. All that matters to us is that we're building the most generous, thoughtful, amazing, like-minded community of all time here at the Rich Habits podcast. So with that being said, let's jump into our first question.

Our first question comes from Nico B. Nico asks, I'm receiving roughly 50K on my birthday this year. I am 35 years old, so I'm starting late on this financial journey. So with that as a factor, should I still proceed to invest in the Roth IRA, index funds, high-yield savings strategy, or does my age and late start mean there's a more optimal approach? Nico B, I think this is a great question, and yes, it is not too late. 35 is so very young in your investment in retirement journey, so I wouldn't sweat it one single bit. And yes, I love the Roth IRA index fund high-yield saving strategy.

And on top of that, I would carve out a piece for public.com to get those treasury bills and get you invested in cryptocurrency as well. And then maybe even take a look at one of our favorites. And that's fundrise.com. And maybe look at getting some of that 50K put into Fundrise into the real estate portion. And maybe even the innovation fund, I love both of those. And just to add some additional color to Robert's answer here about the fact that you are not late to your wealth bill. journey, right, at 35 years old, assuming you took all of this $50,000 and parked it into the S&P 500, right, V-O-O, or even another more aggressive ETF like VGT, and from 35 to 67, you earned a 9.5% annualized return on average over that 32-year time frame. Your $50,000 would be $1.1 million

adjusted for inflation at age 67, right? So you are not late to the game. If you do it, right, you will be a millionaire. And that's after, you know, assuming you don't add anything more to this principal amount, right? You are absolutely going to add some more in the future. So don't have that mindset. You're so early, you're crushing it. You're going to do a really good job. And just want to reiterate to what Robert said, right? Make sure you got that maybe a little bit, you know, three to six months in a high yield savings. Make sure you don't have any high interest debt. We don't want any of that. But yeah, go for the stock market. Go for that V-O-O-O-V-G-T, VTI and diversify through T-bills or, you know, music royalties or even in the Funrise Innovation Fund like

Robert awesomely pointed out there. Really good question, Nico. Our next question comes from Yorden. Jordan says, I'm active duty military so I don't have time for side hustles. Yorden, thank you so much for your service. I pray that you stay safe. With that being said, can you explain to me how covered calls work? I'm trying to generate real passive income. Okay, so let's just take a step back for a second. Robert and I are absolutely going to host a covered call focused webinar. At some point, it's going to be a nice live stream. We're going to walk you through the entire process, exactly how to execute the covered calls, what stocks to buy, what just every part of it.

Jordan, what I want you to do instead of actually trying to do these covered calls is I want you to focus instead on covered call ETFs, specifically single stock covered call ETFs like TSLY. TSLY is a single stock covered call ETF that, follows the stock of Tesla, right, TSLY. And they have an annual distribution yield of some 50 or 55% because of the premium collected on those specific calls that they are able to write. And if you instead just play super passive income, all good, don't even care about

learning this stuff. TSLY is a really good alternative as you wait for Robert and I to kind of build out the back end of this webinar that we will absolutely invite you to, right? But if you really want to dive deep, go check out just covered call YouTube videos. Go check out covered call stuff on InvestaPee. If you want to try some covered calls, check out the stock SOFI, S-O-F-I. You can write a covered call in 100 shares. It'll cost you about $900 right now, which is very affordable compared to some others like Tesla,

which are like $25,000 or $26,000. But with that being said, Jordan, look at the covered call ETFs, dabble into those a little bit, TSLY specifically. And once you kind of understand what the premium looks like and how you're able to generate that through the single stock ETFs as you learn more about it behind the scenes, as including from us, then begin to dip your toes in the actual stuff, which we will teach you all about very soon. It's too much to dive deep into just this Q&A episode, but I didn't want to leave you hanging man. So TSLY is your answer for right now. Yes, and that is a great question,

and we will definitely get this webinar out for everyone listening because we have been inundated with people interested in this topic and this investing strategy. So we will get on that right away as soon as we get through our epic week at FinCon this week coming up. So it's pretty exciting. Our next question comes from AQSO. AQSO asks, my girlfriend has amazing drawing skills, and she does this as a hobby while being a full-time teacher. Last year, she found out that there's a massive market for expensive and thematic, personalized school and office furniture such as planners and calendars and stickers, stamps, reward jars, things like that. A few episodes ago, Robert mentioned that you can contact factories directly through Alibaba. How do we do this stuff? Is there

an opportunity here? Is this a business opportunity? How do we even? How do we even? even think about this. I love this question. And if ever there was a question that's right up my alley, it's this one. So thank you for bringing this up, AQ. So yes, the answer is you can definitely use Alibaba. It's a great place to go to find real factories to be able to handle any of these products you're considering. Now, let's get to the important part of this equation. Make sure you don't share your ideas with any factories until you have a manufacturer's agreement in place. So you don't share your designs, you don't share your ideas, you don't do anything until you have that executed. Number two, when you're researching factories on Alibaba on the right in the navigation, when you're looking at the names, just be very cautious if it says limited in the name.

Because what that means it's the technical name for what type of company it is, but it's very limited because it means they are a reseller and they're not the actual factory. So keep that in mind. A lot of what you're going to see is Shenzhen, you know, factory X, Y, Z, limited. So they might not be the actual factory. So then you're paying a middleman. So try to find the correct factory and the actual factory for the product you desire. And number three, another little tip that'll help you a lot is to look at the ranking, the rating of it just like you would see anything else. How long have they been in business? If it says 18 months, you might want to be a little fearful. If you see eight years and a lot of reviews, that's going to be a really good thing as long as they're strong reviews. So just make sure when you're reaching out to Alibaba, you take these items into consideration. I have seen people get $2 million in on their sales for a product that they invented and then all of a sudden lose control of the product because they never had a manufacturer's agreement in place. And the factory that they used was a middleman who was sharing their idea to many others in the business. So just protect yourself early on and make sure you get linked up

with a good factory. I want to double click on that, Robert. You mentioned manufacturer's agreement twice. What is a manufacturer's agreement? How do you find one? Is there templates on the internet? There are definitely templates on the internet, but what a manufacturer's agreement is. We all hear about NDA's non-circumvent agreements. It's very similar to that where you're spelling out the relationship of you sharing your idea with them, but you're making sure that the language reads that it's your product, your invention, your idea, your design, whichever form of that it is, and then you are making sure that they sign and execute that properly to cover you to make sure you don't have to worry down the line. And God forbid if they were to go outside the boundaries of that

contract and start selling your product and your idea to someone else, you would have legal recourse to go after them. And so this is very important. And I do it with every product before I ever even share what the product is with a factory. I make sure they execute it. Really good question, AQSO. So our next question comes from Curtis O. Curtis says, good day from Australia, might. What's up, Curtis? That was a terrible accent. I hope everyone just laughed listening to that. Curtis says my question is, is there a safe way to invest your emergency fund, call it two to three months worth of wages into stocks and ETFs while maintaining flexibility of withdrawing the money and not having to wait days for it to transfer. Okay, so this is actually a mindset shift. I think

that a lot of us need to make. It took me a while to make this mindset shift as well. Your emergency fund is not your investments. Your emergency fund is insurance against high interest debt and making bad decisions with money, right? So let's say something terrible what happened and you need to replace the transmission on your car or go get new tires, something very unexpected happened overnight, and you need $2,000. Well, if you didn't have an emergency fund, you would just swipe that credit card at that 30% interest rate and you'd be in this high interest debt now until you paid that off months and months and months into the future. But because you have an emergency fund of $5,000, $15,000 that was not already trying to earn you interest invested in the markets and big tech or

whatever that is, sure, you can have it parked in T bills or even a high-yield savings account, But if Curtis is a little weary here about like the days to transfer, I totally get that. Just keep it in cash, man. Keep it in a cash checking account or a cash savings account if you like. But I don't want you to think that, oh my gosh, my money, I'm not earning any money with this money. I'm making a mistake. No, like you're actually saving the 30% interest on that potential $2,000 expense, right? Like that's how you should be thinking about it.

This is insurance. This is not an investment. You invest your investments. You have your investments invested. They're earning your money. like compound interest, that's a great thing. This is making sure that you don't have to sell your investments early to pay off a crazy high credit card bill because you didn't have that emergency fund in the first place.

So I'm going to add another wrinkle to that. And Austin, that was an amazing explanation. So my takeaway on this question is Curtis, you don't want to commingle the two and here's why. And again, it comes down to mindset. If you have all of your money invested and you're worried about that two, three day waiting period of getting that money back, Austin is exactly right. going to run it on your credit card. So here's the flip side of it. If you started taking it out of your

investment portfolios, then it's not going to seem like an emergency fund anymore, and I feel you would dip into those investments more and more. I have certain accounts I don't touch no matter what, and I feel that having that separation between these are investments and these are savings for that small emergency fund will keep it that way for years to come and prevent you from constantly dipping into the investments for what you think might be an emergency. Really good question, Curtis. Our next question comes from Bristle Painting Company. What's up?

Bristle Painting Company? I love the name. He says, my wife and I have heard you often recommend how important it is to find a really great tax accountant. However, we don't even know where to start. Do we look at referrals? Do we search Google? What do we do?

How do we find that golden tax accountant? Robert, as someone who probably has had a ton of golden tax accountants, what have you done to find your great people? I love this question, and it is a very, very important one because I think besides an attorney that's very good with documentation, your tax accountant or CPA is probably the next most important person that should be in your life for a long time. So for me over the years, I've been very fortunate. I have found two people that have covered the basis for me over the last 25 years. So I've only had to go through two, but I've had experience with many, many others in the companies

that I have invested in and taken equity in. So for bristle painting, I would say this. Start by with referrals. So look around, ask people in your area, people that have successful businesses where they found someone and who that is. Number two, and this might surprise people, find those firms that have social media

that are making an effort to be on Instagram, to be on TikTok, and put out good content because then you can just peruse all of their content and see how good they really are, based on the answers and the information they provide in that content. And then number three, meetups. I think if you go to some of the local entrepreneur or real estate or housing meetups, you can really have everyone in a room and just start asking around, hey, we're growing. We need this help. Who have you used? Who do use now? And I think you can find that person, but just don't be

afraid to make the move from one to another if you don't feel comfortable. I see so many people. with their financial advisor, their accountant, their attorney, they feel bad parting ways with them because they've built a relationship. Well, guess what? They're not going to feel bad getting rid of you if you don't pay the bill. So you shouldn't feel bad getting rid of them if you don't feel they're keeping up with all of the modern laws and rules and what's happening. Because think about this. Think about how many tax attorneys that are out there that don't know anything about crypto, don't know anything about blockchain, aren't aggressive enough and understand that it's not what you make. it's what you keep. You have to find someone that understands pushing the envelope and doing what's best for you and not just checking a bunch of boxes. This is very important for your future growth. Yeah, I think what's worked for me specifically has been the referral side of the equation and I guess the social media. So I was referred my tax accountant and he's a rock star. His name's Stephen and he is the founder of creative advising out of Montana. No, North Dakota. Somewhere over there. Anyway, Great guy. Also makes great social media content. He is very, very TikTok friendly, Instagram friendly, right?

Always sharing his newest perspectives on if it's some sort of new change to a retirement plan investing, a change to a tax thing with COVID. Right. There's a ton of things that have changed recently. So that's what I think is really important to your point, Robert, right? Finding someone who's, you know, definitely on the younger side, very ear to the ground, they understand what's happening on a day to day week to week basis in the industry and is not just like a tax, accountant, but also has the heart of a teacher, right? You want someone that's going to be able to teach you as to why they're doing specific things and recommending specific things. So if you can find someone who is not just a rock star, but is also a rock star and can help you understand why they chose the things they chose to do or recommend to you, that's the best of both worlds. Yeah, I talk to my tax attorney pretty much once a week and then we do a full on call once a month because we have

so many changing rules and regulations with the IRS and tax codes and everything else. And I want to make sure that we are on top of everything. So we have the best strategies that we can, not only for my businesses, but also my partners throughout the United States. Really good question. All right. Our next question comes from Donnie. Donnie asks, how do I patent or trademark my invention if I can't afford it? What alternatives are out there for me? Well, it depends on how big you think this product or idea can get. One way you could do it is launch the product, get some traction, use that money to then patent and trademark the product, but you're putting yourself at risk because there are so many copycat companies out there that if they see you're growing and you're killing it, they're going

to knock you off very, very quickly. And that's a very slippery slope for you. But you can also take this risk, test the market, see where it ends up, see how sales are, see what customer acquisition cost is, and then do the patenting and trademarking later. Couple things you can do. With your patent, instead of doing a utility patent, a much more affordable way is to do a design patent. You can get this done for much less money. It's not going to be as hefty to protect you in the long term, but it will at least dissuade others from copying you

because you do have a patent in general. Number two, you could go to tailorbrands.com and do the trademark on the name and the logo. This would be very inexpensive and a way to get some protective nature on the logo and the name and also the design patent for the name. the product. But like I said, if you want to start out and take the risk, go for it, start building the sales and come back to the patent and the trademark. Yeah, I actually don't really

have much of a perspective on this. I think the first place I would just start, right, is on Taylor Brands. I think maybe Dula has some stuff like that. I would imagine it's not that expensive. I mean, and if you really needed money, I'd imagine you could perhaps even start a crowdfunding campaign like a Kickstarter or an Indiegogo, have a whole idea around it and maybe you get featured on their front page if it does well and then you'd raise a bunch of money really quick and then you could use that money to go patent the idea as well as build out the prototype and stuff like that but good question donnie i just robert's the uh the cpg guy and he knows what the answers always are our next question comes from ivy j ivy says i've recently been gifted

five hundred dollars to start investing what do i do where do i put the money really good question ivy so here's what i don't want you to do what i don't want you to do is to just go straight to a public.com or Robin Hood or one of these, you know, online brokers that you see in the headlines and just deposit the money. That's not what we're going to do. We're going to be more thoughtful. We're going to be more strategic. We're going to be thinking about retirement, right? What I want you to do is I want you to head over to a vanguard.com, a betterment.com, wealthfront.com, or really just type in Roth IRA on Google search. There's going to be a bunch of different results that pop up. They're all the same. I want you to open up a specific investment

account called a Roth individual retirement account. Now why this is important, Ivy, is because the money you contribute, this $500, you seem pretty young in your profile picture. I'll give you mid-20s. That money is going to grow tax-free throughout your life when it's invested into V-O-O, which we'll get there in a little bit here. But that money is going to grow tax-free throughout your life. So by the time you're 67 here, right, assuming you're in your mid-20s, that $500 will have grown to $27,000 after accounting for inflation, and then you can take out that $26,500 profit that you made throughout your lifetime tax-free, right? The reason it's tax-free is because you put it and invested it inside of this specific account. It's very important to use this

account, right? Roth IRA. So once you open the account and you deposit the money, so money leaves your checking account and is now deposited into the investment account, you have to invest the money. So what are you going to invest it into? The S&P 500. through the ETF called V-O-O. It's the Vanguard S&P 500 ETF. The expense ratio is pennies. It is incredible. And you do that for your life.

You're going to end up with an extra trip, $27,000 in retirement. Amazon presents Jeff versus Taco Truck Salsa, whether it's Verde, Roja, or the orange one. For Jeff, trying any salsa is like playing Russian roulette with a flamethrower. Luckily, Jeff saved with Amazon and stocked up on antacids, ginger tea, and milk. Habaniero? More like habanier, yes. Save the everyday with Amazon. IvyJ, glad to see you're getting started on your investing journey, and let's hope with what Austin just spelled out, you will also start thinking about getting that side hustle, getting that second job,

and taking those funds and also adding them to your Roth IRA so you can build tax, free wealth over time. Because remember, it's not about timing the market. It's about time in the market. And just to double click on that real quick, Robert, let's say that IvyJ did start that side hustle. She starts walking dogs. Maybe she's delivering for Uber. Maybe she's got a really cool crafty business. Like, something's going on. And let's say that $500, you know, that was the stepping stone. But throughout the next 12 months, she ends up accumulating $5,000. And she's still in her mid-20s at this time. Well, that $5,000 is now worth $250,000 in retirement, right? Compound interest is beautiful and tax-free retirement money is even prettier, right? We love that. So it's not just about the small $500 here, $200 here, but the larger grand scheme of things of where things are going. It might seem small now, but it's going to turn into hundreds of thousands of dollars in retirement. You just have to get started. Love it, love it, love it. Just always be consistent. Don't make investing a secondary thought. Make sure.

that you know where your money's going every single month and get it invested and you will find your way to really good wealthy habits. Great question, Ivy. All right, our last question comes from SNEH, so maybe SNEH. She says, I'm really interested in real estate. I want to start buying and selling different types of properties, but I lack the knowledge of getting started. I don't know where, who, what to do. I'm so lost. How do I go from where I am, where I'm, where I'm, right now to a real estate investor. Really good question. So the first thing I want you to do is I want you to listen to, I think it's episode 16 of the Rich Habits podcast, becoming the first real estate investor in your family. We walk through a bunch of different loans that you might be able to

qualify for to help you buy that first property. And investing in real estate doesn't always have to mean physical real estate. It could be investing through an online platform like Fundrise, who has $7 billion of real estate under their sort of umbrella from other investors like yourself here. Hundreds of thousands of people use their platform, including myself and Robert, and they do all of it for you, right? You just give them the money, they buy the real estate, they include you on the big projects, and you make a return. So investing into real estate is a lot less intimidating now than it was back in the day. Fractional shares exist. There's a bunch of education online and a bunch of different types of loans that you can qualify for to really start

moving you in the right direction. Robert, what's your take on this? Yeah, I love where you started and it's really just all about learn, learn, learn before you dive into your own project. So many people think, oh, how hard can this be? I'm just going to go buy a duplex or a quadplex. I'm going to hire a bunch of contractors. I'm going to renovate it. And guess what? You get your heads knocked off. It's just so hard to do in the beginning. And I'm not saying I don't want you to do that because everyone should have their foot in the door on real estate. But like Austin said, maybe start out with a reet. Look into some syndications that are nearby. The you could jump into that allow a smaller investment to get started.

And then as you learn the category more and more, you know how to negotiate with the contractors. You know what kind of flooring and countertops and HVAC you should have. You know what to look for when you're engaging with agents or looking on Zillow of how to even price out a property. You understand the 1% rule. All of this, when you gather all that information, then I would feel confident that you could go out on your own. There are a lot of great programs out there for beginning investors. And one of the new ones that everyone should be aware of that's listening is the new Fannie Mae 5% loan.

This is brand new to the market. It launches middle of November. And basically you can buy up to a million dollars, up to four units in one property, so four doors, with 5% down. And the qualifying criteria is less than the FHA. So if you're an advanced investor listening right now in real, estate, this gives you another way to buy property in a really affordable way to increase your investment holdings. But regardless if you're starting or you're advanced, learn the ropes, figure it out, do it with a partner, find a good contractor, but don't do it alone to start out

because I just fear you'll lose your money. This is a good call out. I just Googled this in real time. It says in a significant policy change, Fannie Mae has announced that starting from the weekend after November 18, 2023, it will accept 5% down payments for owner-occupied two, three, and four-unit homes. This marks a departure from the previous multifamily financing requirement of 15 to 25% down payments for duplexes, triplexes, and fourplexes. This is a really good call-out. This is cool, man. I had no idea this existed. Yeah, it just was announced a few days ago, and of course, you know, I have my ear to the ground at all times trying to find those nuggets to share with our audience. And what I love about it is if you really look at the math, we're becoming this renter nation,

owning a home is so expensive now. Do the simple math. Think if you bought a fourplex for a million dollars, and you put that 5% down, so $50,000 down, you live in one unit. The payment would be like $8,800 or $8,600 on the million dollar property. But if you rented each unit out for, say, $2,200 a month, that would be $6,600, only leaving you with like $2,000 to $2,400 that you would have to pay on a million dollar property. It's game changing for those that are trying to build a real estate portfolio and are willing to live for one year inside that property. And just we're on the same page too, right? How real estate works is, you know, it appreciates by Carl up three to four percent a year. So it's $30,000 to $40,000 a year of equity.

You are like building now inside of this new fourplex. That's so cool, man. And this is, yeah, I'm going to have to like talk about this during our next TikTok live. This is huge. I didn't know this happened. Yeah, it just happened the other day. I'm glad I can share it. And everyone, that's why you listen to the Rich Habits podcast because not only do you learn stuff in real time, but so do I.

All right, everyone, thanks so much for hanging out with us on this episode of the Rich Habits podcast. Hope you're having a great Thursday and hope you have a great rest of your week. As always, please share the podcast with anyone you think would benefit from the information. Don't forget to leave us a five-star review. If you've not yet asked us a question, we got all. all these questions from our Instagram and our Discord. So go check out Rich Habits Podcast on Instagram. You'll click the link in the description below for the Discord channel,

and we can't wait to see you Monday morning. Again, thank you all so much for coming along on this ride with us through the Rich Habits podcast and all of our Discord and our other channels. We're just so happy and proud of where we've come, and we couldn't have done it without you, so thank you so much.