Q&A: Stock Lending, Power of Attorney, and Buying a Home in Cash
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00:26Preferred.That was easy.Hey everyone, and welcome back to the Rich Habits Podcast question and answer edition.In these Thursday episodes, we sit down and answer your questions as if we were in your own shoes.Robert and I love answering our questions.We get dozens of questions every single day.So if you have a question, be sure to ask it either in the Rich Habits Network, link in thedescription below, email it to Rich Habitspodcast at gmail.com or send us a DM on Instagram
00:54at Rich Habits Podcast.Also, Robert, we're crushing it on Instagram.We got the Instagram reels going, little clips here and there of the interviews, some cool static images of charts and graphs and all the fun things in between.And you guys know we love making some fun Instagram stories for you as we just navigate the week to week that Robert and I always do.So be sure to follow us on Instagram.We very much appreciate it.Yes, I'm having probably the most fun I've ever had on the internet, you know, through social media with everything that we're building for the Rich Habits Network.And I'm just so excited for the future.
01:27we're growing so quickly, and I'm just so proud of the information we're putting out there and all ofthe educational tools and the things that we are doing to help each and every one of you thatfollows along on this journey with us so we can all do really, really well, even though it isSeptember and the markets are a little rocky right now.And be sure to let us know about Monday's episode.We interviewed Paul Rable.We thought it was an awesome, awesome interview.He was just a wealth of knowledge as it relates to the intersection of sports, entertainment,
01:57and money. And if you like us bringing on sort of these more high-profile guests that can talk aboutthings that personally, I didn't know much about sports and money and entertainment and things like that,just let us know. Obviously, we always want to be introducing you all to the coolest people as it relatesto not just analysis and the economy like Black Rock and things like that or Wynab, right?But also some pretty fun people like Paul Rable and others that will soon join us on the show.And before we jump into this week's episode, time might be running out to lock.in the 6.8% yield at public.com. Right now, bond yields are at their highest level since 2009,and you can take advantage of that with a bond account at public. But here's the thing. The Fed has
02:40signaled potential rate cuts in September, and there will probably be more to come this yearand into 2025. But the good news is that with a bond account on public, you can potentially lockin 6.8% yield on your money until 2028. And remember, when the Fed lowers interest rates, your yieldremains the same. That's why we love these accounts. But you must act fast to take advantage of some of thehighest bond yields in years and discover how you can lock in a 6.8% yield until 2028. The new bond account,only at public.com, front slash rich habits. And just so we're on the same page, Robert,a bond account is a self-directed brokerage account with public investing and they are a memberFINRA and SIPC. Deposits into your bond account are used to purchase a set of 10 fraction
03:26investment grade in high yield bonds. Now, the yield we're talking about represents a monthlyaverage annualized rate of return before fees as of September 9, 2024. The yield is subject tochange daily and the yield at the time of purchase may differ. All investing carries risk. This isnot an investment recommendation. And please visit public.com to learn more. All right, everyone,our first question is coming from Paige Mitchell. Now, Paige, before we kick this off, just want to thankyou for being such an awesome member of the Rich Habits Network. You've been a longtime follower of ourpodcast. We're always in the DMs. You're always in the live streams. We're super, super grateful thatyou're along for the journey with us, and we can't wait to answer your question. So Page asks this.
04:05I have a CD worth $21,000 expiring on September 7th, and I'm unsure what to do with it.I could roll all $21,000, though, into a nine-month CD and earn 5%. I don't think I'm interested inthe public bonds because I don't want to be tied up for three years. Am I better off putting all $21,000dollars then in a bridge account with VOO, SPY, KKQAQI, and others, or is there something else youall recommend?For more context, I've built my base and I have my IRA maxed out for the year.Congratulations, Paige.You are rock star.
04:37She's crushing it.So, Robert, here's my perspective.I would not keep rolling this, you know, CD money into more and more CDs, 5%, 4%, 6%,whatever you're earning.Like, don't get me wrong, it's great to earn that money and have some of that guaranteed yield onyour money, right? We want to diversify our portfolio into different sort of yield-bearing assets. Itotally agree with that. But having $21,000 tied up, even after you've built your base like that,I just, I wouldn't do it. So personally, I would roll it to that bridge account. And though,
05:05if you are looking for a consistent income, it could be worth considering putting that moneyinto, like what you mentioned, SPYI or QQQQI to get paid a monthly distribution. Make sure, though,that you have your emergency fund completely funded up to six months of spending.as well as being completely out of high interest debt before doing so.Yes, I love this answer.And Paige, you know, you hear us talk about diversity all the time.I'm with Austin, though.I don't think you should roll it over back into the CD.
05:34I think there's just better places to put your money.And I really love the idea of the SPYI and QQQI that you mentioned.These are two Nios funds that Austin and I both own and like.And so I think it's a good idea.And then that way you can set yourself up for better gainsand still get some income out of it.So I'm with you on this one.Our next question comes from Sylvia and Kayla R.
05:56Their question is this.What is the best way to pass down assets to your childrenwithout a large tax implication?Additionally, I want to know the differencesbetween power of attorney, will, and a trust.When should one be used over the other?I'm just starting to think about this for the first timeand I'm excited to learn more.
06:14Robert, I'm going to let you just roll with this.Yes, we could spend hours on this question,but let me take a shot at it and try to keep it succinct.This is a great question,and it really starts by having proper structure in your assets long before retirement,and then not having to worry about passing down the assets.You're on the right track by wanting to learn more about trust,wills, and power of attorneys, and here's why.
06:39Let's start with the trust.In my opinion, the trust is the most important aspect of the three mentioned,because a trust is a legal document that governs your wishes as to how,you want to transfer your assets upon death. This is very important. And the reason being is you don'twant to leave any assets just in a will or even worse without a will because all of those assetswill be subject to probate court, which can be very lengthy and very costly for anyone that'sever gone through it. They know what I'm talking about. So I would check with an attorney or yourfinancial advisor, get with them, and have them look at your estate planning to make sure you have the
07:18proper trust structure set up for your situation. Because remember, personal finance is personal andeveryone is different and you need to understand these differences between a revocable trust,an irrevocable trust, and so on and so on. Number two comes the will. A will is a legal documentsimply that shows how you want your property and other assets distributed after your death.And as a reminder, a will does not keep your assets out of probate so you make sure you have theas well. And wills are important to spell out the details and distributions of any assets and can beused as a pour over account with the above mentioned trust. So what does this mean? This means that let's saywe're talking about a parent and they have their trust set up. They're doing great, but there are some
08:06additional assets that never made it into the trust, but they're in the will. You can then make thoseuse the will as the pour over into the trust to help you avoid that probate court that we talkedabout. And number three, the power of attorney. This is just an authorization to represent or act onsomeone's behalf in private business and other matters of legal nature. Although this can beimportant to make sure you have someone to act on your behalf or your parents' behalf, the powerof attorney is definitely, in my opinion, one of the least important aspects if you're thedirect beneficiary. So keep that in mind. All three of these are important when you're thinkingabout retirement and protection, because I assure you to any of the same.
08:47listening, you don't want to end up in probate. I ended up in that situation with one of my parents.It was ugly. It took forever and it was very costly. So just be careful and make sure anyonelistening is thinking ahead on this too because you don't want to wait till the last minute andthen not be able to facilitate these options to protect those assets. So I guess a quick questionfor me, Robert, is back to your example with the parents having the additional assets, not includedin the trust, but like their wishes are shared in the will, why wouldn't the parent just,like, edit the trust, right? Why don't they just, like, write them in? Can you do that with a trust?Yeah, I don't know. I would ask an attorney on that one if you could just make an edit, but it goes
09:27back to the same thing, Austin, if you think about it. How many people just get busy living lifeand forget to update their wills? It happens all the time. Maybe you go through a divorce and youupdate the will, but then things happen over a five, 10 year period and you forget or you come into a lot ofmoney and you start to really make a lot more and have a lot more assets, you forget to do thoseupdates and sometimes that can be very, very bad later on. Got it. Got it. Well, with all that being said,here are the best ways to pass down assets to your children without those large tax implications.For starters, you and your spouse can each pass down $13.6 million to your children without taxesgetting involved. Inheriting a home is not a taxable event. When the property is inherited to your children,
10:13the cost basis on the property is stepped up to whatever fair market value is at the time.So with all that being said, if you have more than $10 million of an estate that needs to be figured out,go sit down with a licensed professional, go sit down with someone that can really hold your handand walk you through every single matter, cross your T's dot your eyes, trust will, power of attorney,everything needs to get figured out. If you just have a couple hundred thousand dollars,then maybe this is something that you could do on your own.Yeah, definitely, and that's a great roundup for this, but I want to add one morething. And that is retirement planning and wealth building is more than just picking stocks and index
10:49funds and what crypto is to buy. There is a lot that goes into it. So please make sure that you do yourown research. You get with a good professional and just have that extra help as you start to buildyour wealth to make sure that you're in the right place because there's nothing worse than gettingup in years and then all of a sudden going backwards financially because you did not have the properstructure in place. So our next question comes from Hannah T. Hannah says,are a simple list or even a blueprint to follow when buying your first primary residence.I want to avoid overpaying and just making any mistakes in general.So Robert and I made our own list.
11:23Robert, I'll let you show yours first.Yes, I am excited and we should probably make a blueprint of this because it is so, so important,but let's just go off of what we think is kind of mission critical.And that is, number one, understanding how much of your monthly take-home pay you canafford to allocate towards a mortgage.Do not be house poor for everyone listening.Don't buy the amount of house that you're allowed to buy.Buy the amount of house that you should buy based on your debt to income ratio and what money you have.
11:54The sweet spot is kind of that 30 to 35 percent in our opinion.Number two, always get an inspection done, even if it seems like a waste of money and they tell you they've already done it and everything is great in rainbows and unicorns.Because guess what?You want to have an independent inspection to make sure that you're getting all the tea on this property.Has there been issues with the underground sewer lines?Has there been electrical upgrades that might not have been done correctly?You need to know this from a third party because remember, that real estate agent is not your friend.They're going to tell you they're your friend.
12:30They're going to put some Costco cookies on the counter and maybe get you a bottle of winewith your name etched on the label or something like that, but they're not your friend.They are there to sell you a property.So they're going to, in most instances, tell you what you want to hear.So be careful.Get your own independent information.Number three, shop your rate aggressively.You have to be able to know and understand, just like with the real estate agent, the mortgage
12:55agent is going to do their best to sell you on this amazing project.You have to be able to make sure that you're at least getting two or three estimates.To be sure, this just happened with a client of mine and a friend of mine.I helped them through it and it was crazy how much money we saved her by shopping around.And don't forget to look at rate buy downs with the seller either.This is a great way to be able to save money in that first two or three years of the home purchase.And then I would say my last thing would be to make sure you work with a local professional.So you completely understand the market conditions and the comps related to this house.
13:30Because you do not want to overpay.You're excited.You want to get that first property.and you just want to make sure that you understand you make your money in real estate when you buy the house, not when you sell the house.I think it was a great breakdown, Robert.A couple points that come to mind for me.Try not to pay more than 1% of your total mortgage and fees to the bank that's lending you the money.Those loan origination fees.
13:54I had a friend who recently bought a house that paid $6,000, $8,000 of loan origination fees.And I was just, no, don't do that, right?You probably pay half of that.Beef up your emergency fund by $5,000 to $10,000.homeownership is fun until it's not.That water heater or that dishwasher, Robert, right?You never know when that thing's going to just go out and just homeownership, man.Let me tell you.
14:15The next point to me is to make sure you fully understand the bylaws of your HOAand how they impact your wants or desires for renovations to the house.This was something that impacted me.I wanted to sort of build a gazebo outside of my house, sort of like attach it as like an overhang.But I realized, because the bylaws of the HOA, the ceiling of that sort of additionalstructure had to be removable. So we used this like cloth sunshade versus an actual overhang there as aceiling. It was kind of weird, but I didn't understand that when I bought the house. And so only after thatI was doing my research with the HOA bylaws did I realize that we had to scratch the original plans and do
14:50something different. So if you're buying a house within an HOA community, one, be prepared, do yourresearch, do what you can do. But more importantly, two, also know that those fees are going up everysingle year. When I bought my first house, the HOAs were 125. That same house has HOAs now of186, a 50% increase in about five years. Now, the last thing I want to share is to shop your homeowners insurance. This for me was major. I was paying $1,500 a year on that first house. It was actually$1,100, $1,100, bumped to $1,500. I was like, what the heck? Why is it so much money? It went up 50% in a year.That doesn't make any sense. I took the exact same policy. I shopped around, and now I have it from Allstateat $950 per year.
15:32So shop your homeowners insurance.The first quote isn't always the best.And more importantly, and Robert, maybe you can touch on this.Share with Hannah what the homeowners insurance covers as it relates to disaster and destructionof a house.Yeah, that is a great call out.And I was just going to say two things.When talking about the homeowners insurance, make sure you're checking, especially like
15:54in Florida and some of these waterfront areas, make sure you're not in a floodplainbecause you might have to have additional insurance.insurance for that like we do in Florida if you're near the water. And then make sure you understandwhat coverages you do have because you might want to look at additional insurance and umbrellapolicy or something else because not all insurances are created equal. And it's very importantto understand that because you want to read through that really thick document to understandexactly what your coverages are now versus later. And I like what you called out on one of ourother episodes. I like to go and renegotiate my insurance policies once a year because
16:29as they go up, they're just like, yeah, we've got this person dialed in. Let's bump them up 10%, 20%, 30%.And then a lot of people just kind of accept it and go, oh, insurance prices are high and they don't fight back.Remember what I say all the time. You don't get what you deserve in life. You get what you negotiate for.So it's very important to keep that in mind. And then I want to wrap this question up, Hannah, by saying,understand for anyone listening, always understand the total ownership cost of any big ticket asset, whether it's a car,a boat or your primary home. So many people just look at the monthly payment, the insurance,the HOA, and maybe the PMI and a little bit of other fees. And they don't take into considerationgrass maintenance or, you know, maybe you have to do the driveway every X amount of time in your
17:17HOA or whatever it might be. So always try to flush out what the total ownership cost of thatproperty or asset is going to be because most people are really far off from what the totalownership cost is and what they believe the ownership cost is. I love it, Robert. Our next questioncomes from Danish K. Danish says, with the S&P 500, we know we're betting on the top U.S.companies and the strength of American capitalism. But when it comes to Bitcoin, what are we actuallyinvesting in? I've got my money in crypto, but unlike the S&P, it's hard to actually win an argumenton why it's a solid long-term bet. For those who've gone deeper, what's the real bet withcrypto? What makes it worth investing in and how can we justify it for the long-term?
17:58long term. I love this question and I want to take this and take the lead on this one. For me,the real bet with crypto is the disruption that it creates in all of our financial markets as wellas the future adoption rate due to this disruption. So for instance, in Bitcoin's case, I believethe scarcity of it makes it a great hedge against inflation and is another alternative to preserve wealthlike gold. So that's one of the major things for Bitcoin. As far as crypto in general, though,you have to look at all of the categories of our financial systems that are being disrupted.We're currently pivoting from the SWIFT payment system that's been around for decades to the ISO 22payment system. Then you've got Solana and some of the problems it solves. You've got fractional
18:44ownership for real estate and fine art that Austin and I talk about a lot on the blockchain.So there's just so much disruption. So that is why I believe that the biggest wealth transfer of ourlifetimes will happen in the next three to 10 years and why I am invested in cryptocurrencybecause we are changing and making we're kind of leveling the playing field if you think about itAustin with blockchain and the associated cryptocurrency because even if you were to look atmasterworks and buying fine art or some of these other fractional ownership companies people likeeveryday investors can now invest a thousand two thousand five thousand dollars and have fractionalownership in multi-million dollar assets where before blockchain and cryptocurrency, that was just
19:32for the ultra wealthy people. So I think there's a lot we could talk about here, but that's my takeaway.So my perspective is Bitcoin's been around since 2009. It's 2024, which means there's 15 yearsof validity, 15 years of historical price action, and 15 years of trends as it relates toexchanges and holders and adoption and things to just observe from a data perspective that shows that,okay, if something was going to go wrong, I feel like it would go wrong by now. If someone wasgoing to hack Bitcoin, I feel like they would have done it by now. And so in my opinion,I buy Bitcoin to own an asset class that has proven resilience and upward momentum.It's a new asset class, which is why I don't encourage anyone to just bet the farm on it,
20:22But I don't see this asset class going away anytime soon.And it's a way to diversify my net worth into an uncorrelated asset class away from the stock exchange or gold or things like that.Now you might say, uh, that doesn't make sense.The stock exchange is down.So is Bitcoin, Austin?What the heck?They're very much correlated.Sure.
20:41I mean, if you want to look at it like on a day to day, but if you zoom out and look at it over the last 10, 12, 15 years, the price action is very uncorrelated.It has a very low beta in relation to the S&P 500.Jay Jacobs talked about that when he was on the show a couple months ago.I think for me it's just a way, just like I've got real estate, just like I've got farmland or whiskey or whatever else to diversify my net worth.Owning Bitcoin specifically is a way that I've been able to diversify my net worth into an uncorrelated asset class with now 15 years of historical data, price trends, and resilience.That is a great take, and I really love that perspective.and I look at it this way, and this is why we get to enjoy this 30-year age gap between us,is I've been through all the ups and downs of all the different markets.
21:27And if you take the Great Recession of 2009, I watch so many people that argued with meeven back then about diversifying because I've always been diversified because I don't ever want to go brokeand be homeless.And I saw people that had their lambos and their big portfolios of real estate all go brokebecause they were over leveraged and under-diversified.this is so important because some people are saying, you know, they're going to tell you,you should be all in on one thing. I just disagree with that. I think diversifying once you haveyour base built is the magic of being able to sustain the ups and downs of the markets, whether
22:01it's in cryptocurrency, the stock market, or the real estate market. And that is why people likeAustin and I talk about it and educate about it because it's so important to understand withdiversity, you have that insulation that if any one sector goes bad for a couple of years, you're going tobe okay and I think it's so important for everyone listening to understand that. And if you want to godown the rabbit hole of crypto, read the Bitcoin standard. Now before we jump to the next question,I got to give you guys a heads up. Time may be running out to lock in your 6.8% yield on public.com.When you invest in a bond account, you can lock in your rate until 2028. But with potentialrate cuts on the horizon, you might want to act sooner than later. So discover how you can lock in
22:41a 6.8% yield on your money until 2028 through the new bond account on public.com only at public.com forward slash rich habits and just so we're on the same page robert a bond account is aself-directed brokerage account with public investing and they are a member finra and sipc deposits intoyour bond account are used to purchase a set of 10 fractional investment grade in high yield bonds nowthe yield we're talking about represents a monthly average annualized rate of return before fees as ofseptember 9th 2024 the yield is subject to change daily and the yield at the time of purchasemay differ. All investing carries risk. This is not an investment recommendation, and please visitpublic.com to learn more. Our next question comes from Rebecca B. Rebecca says, this is my situation.
23:28I'm 45, I'm debt free, I'm single, and I've got three children all in college full time. I'm an emptynester. I sold our family home and am building a new home at a great price considering the market.This is my downsizing. Now I have the profit from the home I sold sitting in a high-yield savings account.I'm also properly invested in my retirement accounts and have an emergency fund in place.I also have a small amount of investments in a bridge account.Should I pay for the house with cash?And if not, what should I do instead?I'm a travel nurse and I work by contract.
24:00There is plenty of work out there for me, but I do like to have a month or two off in betweenthese three-month contracts.I'm tempted to pay my builder in cash so I have a minimum monthly expense because my end goalis to find financial freedom as soon as possible.Robert, I'll let you kick this one off.Rebecca, Rebecca, Rebecca.No, I don't think you should pay cash for the house.I just look at it this way.
24:23If I can borrow money for less than what I can make with my own money,I'm always going to borrow.And that is why the wealthiest people in the worldgenerally will have mortgages and payments on their yachtsand all of the above,because even though they can pay for something 10 times over,they know that they can make more money with their money investing it than they can by borrowing.So in this instance, I get where you're at. You want to be financially free as soon as possible,
24:49but I feel like the key part of this question is where you say I have a small amount ofinvestments in my brokerage account. If you have a small amount, why are you considering payingcash for a home? You should take all of that cash you have, get it invested, make sure you havewell-balanced portfolios, and then that way, you're going to make a lot more money with your moneythan just paying cash for a home. And then the other part that's problematic for this is by sayingto pay the builder up front this contractor for the house, I wouldn't do that either. I mean,obviously there's going to be a draw structure of how you pay, but you have to look at it. If youstarted building the house right now and you secure a mortgage, by the time you're ready and the
25:33house is finished, let's say it's finished in 18-19.months or two years, you're likely going to be in a situation where you can right away refinance to aneven better rate than what you could get right now. So keep that in mind. I always want to keepmy cash working for me rather than somebody else. That's my opinion. That's what I would do.I appreciate that perspective, Robert. And Rebecca, I have no idea what a small amount of investments inmy brokerage account is. I agree, probably need to have that up, just grown. I'm also properlyinvested in my retirement. I don't know what that means. Maybe you have a lot in retirement. Maybe you have a little.Happy to hear it's properly invested, though, right? We don't want to be investing into underperforming funds. So maybe this is an opportunity to get even more money invested. Now, in my situation, I have hundreds of thousands of dollars invested into retirement accounts, brokerage accounts, everything in between cryptocurrency, whatever you want. And so I plan to pay off my mortgage early. In my situation, I think it makes sense. And here's the math behind that. My interest rate on this mortgage is 6.7%. My annual payment to live in this house is 30,000.
26:34a year. That's how much leaves my bank account every single year to live in this house. I put down$90,000 to buy the house. First off, that was in August of 2022. If I had invested $90,000 in August of2022, it would now be worth $150,000 because the markets have gone up. So opportunity cost number one.The second reason being is this $30,000 that I pay every year to live in this house. Let's say Ikept the mortgage for 30 years. That would be $900,000 of cash taken from my bank over thethe next, you know, call it 28 years or so in total to buy this $410,000 house. So if we take $30,000 ayear and divide it by the $320,000 left that I have on the mortgage, that is a 9.4% cash on cashreturn annualized. And so what that means is by paying off my mortgage early, I will be making
27:259.4% on my $320,000 by saving that as an annualized mortgage payment. So Rebecca, I want you tothink about it the same way. If I went out and I had to take out a mortgage or, you know, have thissituation with the builder, one, how much of tens of thousands of dollars are you putting down as thedown payment? For me, it was 90,000 for you. It might be less or more. I don't know. And then two,I want you to now think about, okay, if my monthly payment is $3,000 a month, that's $36,000 a year.If I have a $36,000 a year payment and the mortgage is $700,000, well, that's not too bad because that'sonly a 5% sort of cash on cash return if you would to pay off the mortgage early. I would keep themortgage, right? Pay 5% or go earn 7, 10, 13% in the markets. But if it was a $250,000 mortgage and
28:16you had that same $36,000 leaving your bank account every year, that would be a 14% cash on cashreturn by paying it off early. So there's a lot of ways that you can think about the mathematicsaround do I keep a mortgage payment, do I pay off the house early? Obviously, you said your goal isto find financial freedom as soon as possible.which means to not have the mortgage.So maybe you do want to pay it off anyway.But as Robert and I say, we just want to make sure you've got your ducks in a row from anin investing perspective.
28:41You are not going to make cash by paying off your house early.You're simply going to lower your monthly expenses.I'm already making cash by investing hundreds of thousands of dollars into the markets.That's why for me and my situation, personal finance is personal, I think it makes sense to payoff my mortgage early.I've got all the money invested already.I'm rocking and rolling.I don't have to worry about 300,000 here.
29:03I've got so much more invested in the market's working for me.By paying it off early, I'll unlock the ability to invest more.For you, if you only have 50, 100, 100, 150,000 invested,you're only making 5, 10, 15,000 a year in your investments.Maybe it's a good idea to beef those up, right?So, again, personal finance is personal,but you now have the blueprint to make an educated decision with your money and our opinions.We need to get some promotional mic drops that we can just have on our desks.
29:30Yeah, so we can do this. That was beautiful. We need to do that. I'm going to buy those. There's got to be something online. We can just drop on the desk. I love it. All right. Our next question comes from Jacob. Jacob says, what is your take on stock lending? I notice that this is an option now available to me on Robin Hood. Would love to hear your thoughts about it. Is it worth it? Okay, Robert gives it the thumbs down. I'm kind of indifferent, to be honest with you, Robert. So let's define what it is. Stock lending is exactly what it sounds like. You're letting Robin Hood lend your money out to.other traders on the platform. The reason other people want to borrow your stock is for short selling.When someone sells a stock short, essentially they're borrowing your share of Tesla stock at,let's say, $215 a share right now. They sell the stock on the open market for that $215. They wait forthe stock price to go down to 200 and then they buy it back at 200 a share and they give you thenthat stock back that they borrowed from you. So they borrow it, they sell it for $215, they wait forthe stock price to go down. They take that $215. They take 200 of it to go buy the stock back.They keep the $15 for themselves, and then they give you back the stock. You guys remember
30:37what happened with GameStop and the hedge funds and the short selling? It's the exact same concept.So if you do want to lend out your stock on Robin Hood, here are some considerations. You canonly lend out whole shares of Robin Hood stock. Fractional shares do not count. If your stock is lentout, you're paid monthly for the loan, a sort of way to earn some passive yield and sort of arisk-free way, considering Robin Hood does hold 100% collateral against your stock on yourbehalf, which is good. You can still trade your stock. It still looks the same in your account.You're going to trade it, buy it, sell it, it's all good. You don't have to worry about havingto hold it longer. You can still collect dividends on your stock. The only thing you cannot do
31:15is participate in shareholder voting. You will not have shareholder voting rights when yourstock is lent out. So, Robert, I saw you give it the thumbs down. Why do you think stocklending is probably not something everyone needs to be participating in. Yeah, I think that's what I'vebeen waiting to say is that I feel like so many people, and I love the question, Jacob, and thesentiment, but I think so many people listening try to get fancy early on in their investing careers.They're like, oh, I'm going to start options trading. I'm going to do this stock lending. I'm going to dothis and this and this. And it's just really, for me, it's a little tricky. I would rather people earlier intheir careers, let's say prior to having $250,000 to $500,000 working for them while they sleep,
31:58I think they should focus more on keeping it simple in their investing like we talk about,having that basket of index funds, having the Roth, having the bridge account, maybe having aportion in crypto, but keep it simple and focus more on improving your skill set and makingmore money. So many people, I have it every single day that have $34,000 to their name, andthey're asking me these super complex investment questions about, hey, I'm thinking about trading futures,or I want to stake my crypto on this site. It drives me nuts because they should be focused on gettingthe money, making more money, and getting more invested and not getting fancy with it out of the gate.So, Jacob, this isn't addressed just to you, but your question definitely opened the coffers of me thinking
32:42about this. Don't get fancy in the beginning. If you can find a way to make more money with your money,great but make sure you understand it. But in the beginning and middle stages, your goal should beaccumulation and diversification to get your money working for you as hard as you work to get it.I love that answer, Robert, and it kind of pulls us into our next question here from Carson.Carson says, my dad and I love the show when we listen to it every week. I'm a 19-year-oldcollege student beginning my investment journey, and my first step was opening a Roth IRAand contributing to that every month using the ETFs you guys talk about. Was this the correctplace to start. What would your first three steps be in my situation? Now, Robert, the reason why I thought
33:24it was a good sort of segue here is, Carson, do exactly what Robert just said. A lot of people, especiallyat 19 years old, they think that they can outsmart the best. They think they are the hedge fund. Theyfind some guy on YouTube talking about options, futures trading with a billion X leverage and they weregoing to make it over and all these crazy things on Twitter or whatever else you find. Don't get me wrong.That stuff is cool. Go look it up. Go learn about it. I'm a student of the markets and I encourageeveryone else to learn things, but at the end of the day, none of that stuff matters. What matters is,are you living on less than you make? What matters is, are you investing into index funds on a consistentbasis? What matters is, are you being intentional with your money? Do you have a budget? Right,
34:02these are the things that actually matter. So kind of tactically speaking here, you've already got the Roth IRA.That's great. I want you to keep that same energy. I want you to max it out every single year.However, the best way to build wealth, again, especially at a young age, is to have the ability to earn moneyto even invest. You got to get the internship. You got to work that summer job. You got to do what youcan to actually earn money in college to invest it. Now, when you graduate, what's important is to havegood grades so you can get that high paying job of 70, 80, 90, maybe $100,000 a year right out of thegates, and be responsible with your money every single month. Back to what I said about living below yourmeans, do not go into high interest credit card debt. Do not go out and buy that new car. I made that mistake.
34:41Do not go out and get the bottle service. Do not fall into the trap and go into the bars everythere's a Friday, Saturday, and Sunday. You need to have a plan for yourself. You're 19 years old. You'revery impressionable and we want an impression on you that consistency and intentionality is what's going tohelp you build wealth. The sooner you realize that, the better. 100%. Carson, great job gettingto where you are now. So excited that you're here in the Rich Habits Network. You're followingalong. You're learning. And Austin nailed it. I will tell you for a fact, most people fall into a veryvicious cycle that rarely ever ends. They start out early. They start saving and investing money. As soon as theyget 20, 30 grand together, they go buy the motorcycle or the cool car or the jet skis. Then they drain their money.
35:25Then they build it back up again and they get it to 50,000 and they go buy the luxury car. They drain it again.Then they build it back up and now they're in their 40s and they get it to 150,000 and they upgrade the house.It is a vicious cycle of never ever putting away enough money for your future and your future andyour retirement so you don't have to work until you're 75 or 80 years old as a Walmartgreeter. So Carson, follow along. Make sure to implement these strategies and you'll be way better offthan all of your friends when you turn 25, 35, 35 or 45. I promise you. What a great episode.These questions are getting better and better. And I love it because, you know, I think back tothe mistakes I made. I remember being so proud of myself saving every dime I could to buy my first
36:12fourplex and it was a big achievement for me I grew up in a poor family I had no financial literacyor help and it was just I was so proud closing day I couldn't believe it I went over and it was acrappy property but I knew I could fix it up and make it great it worked out for me but I still shouldn'thave save save save save for three years only to then put it all into one property I should have builtmy base first let that go for life because you don't want to borrow against your future for things nowAnd I learned along the way, and that's why I love being an educator in this manner, because I can just take all of those references and go, yeah, that's where I screwed up and pass it along to all of you.So that's why I enjoy this so, so much every week.And everyone, don't forget, we have over 400 people now inside of the Rich Habits Network.
36:58This is the place to get your questions answered, to join our weekly live streams, to watch six hours of video coursework, to connect with other avid listeners of the podcast.The Rich Habits Network is the place to be.It's exactly what it sounds like.It's a network.We can't wait to see you in there.And once you're in there, send me a DM and we'll chop it up.Well, thank you all for stopping by.And always remember, if you find value in what we talk about,
37:22please share with a friend.Tell them about the podcast.Tell them about the Rich Habits Network.And bring them along as well because we are here to provide as much value as we caneach and every week for all of you.Thanks, everyone.And have a great rest of your week.
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