Rich Habits Podcast - Q&A: Vacation Rental Co-Ownership, Selling a Biz for $3.5M, & Retirement Contributions

Episode Date: May 8, 2025

In this week's episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz answer your questions!---Sign up for the ⁠Rich Habits Newsletter⁠ and join 52K+ likeminded investors in receiving weekly market updates, ⁠click here!⁠---Trial the ⁠Rich Habits Network⁠ for 7 days completely for free and see why 600+ other podcast listeners love the community we've built, ⁠click here!⁠---Sign up for ⁠Public⁠ and take advantage of their up to $10,000 bonus when you transfer an existing portfolio to their platform, ⁠click here!⁠---⭐ Download our FREE Financial Planner –⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Download our FREE Budgeting Template –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Earn 4.1% on your savings with a High-Yield Cash Account –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Trade stocks, options, music royalties and crypto on Public –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Automatically buy stock where you shop with Grifin –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Protect your family with term life insurance from Suriance –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Use code “Spotify” for 15% off our 4-module video course –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⭐ Optimize your portfolio with Seeking Alpha –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠---👤 Explore everything Austin does –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠👤 Explore everything Robert does –⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠click here⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠❓ Ask us questions for our Q&A episodes – @richhabitspodcast on Instagram📬 Inquire about working together – [e-mail]------Disclosure: A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. As of 5/8/25, the average, annualized yield to worst (YTW) across the Bond Account is greater than 6%. A bond’s yield is a function of its market price, which can fluctuate; therefore, a bond’s YTW is not “locked in” until the bond is purchased, and your yield at time of purchase may be different from the yield shown here. The “locked in” YTW is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. Public Investing charges a markup on each bond trade. See our⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠Fee Schedule⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. See⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠https://public.com/disclosures/bond-account⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to learn more.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.

Spotify, it's Jay Shetty. Are you one of those media strategy people? Scrolling through spreadsheets, searching for an audience that pays twice as much attention to your ads than they do on social? Let me introduce you to fans. And they're here with me on Spotify. Trust me, I know fans. They don't skip. They stay for hours.

They don't move on. They manifest. They're not a demographic group. They're fans. Spotify advertising. You're among fans. Now before I hear any of you all say, Austin, what's wrong with your voice? You sound like an 80-year-old smoker.

What's going on? The deal is, I'm sick. But we haven't missed an episode of this podcast since we started it over two years ago, and we're not going to start missing them now. So with that being said, welcome to our Thursday, Q&A episodes of the Rich Habits Podcast, brought to you by public.com. We're glad you can join us, and we're so excited to answer. I think we've got seven or eight really wonderful questions teed up for this episode.

a lot of questions about moving some debt around, some questions about selling a business for over $3 million. We have another question coming from someone who's like, hey, I don't even know where to start. This is going to be a fun episode. We're answering questions from all across the gambit, and I'm pumped to jump into this, Robert. Yeah, definitely.

Over time, it just seems the questions are getting better and better, and there's more of them. So we really love the fact that so many people are engaging with us on a weekly basis. So make sure if you have questions, ask us those questions. on Instagram, in our DMs, on Spotify, wherever you find the podcast, ask those questions because I think it's so important to get it answered, especially if it's something that's a little tricky, like some of the questions in this episode. That's a great reminder, Robert.

So if you want to ask us a question, you can email it to us at richhabitspodcast at gmail.com. You could DM it to us on Instagram at Rich Habits Podcast, or you can ask the question inside of the Rich Habits Network. and we'll definitely get back to you over there. So before we jump into the episode, though, want to give a nice little plug to our episode sponsor, public.com. If you're looking for an online broker that was actually built during the century, you got to give public.com a try.

On public, you can invest in almost anything. That includes stocks, bonds, cryptocurrency, options, and more. And if you're like us and you keep an emergency fund, you can take advantage of their 4.1% APY offered by their high yield cash account. super simple to use and it's like just waking up and getting that mailbox money once a month deposited right to your account. Discover why NerdWallet gave public five stars for its ease of use and investment selection. Fund your account in five minutes or less and earn up to $10,000 when you transfer your

investments over to public. And for a limited time, public is offering a 1% match on all IRA contributions. So if you're finally investing towards a Roth IRA this year, do it. on public and earn an extra 1% match on all contributions. Paid for by public investing and full disclosures are in the podcast description. I want to make sure everyone understands those two things that are happening right now. Every dollar that you deposit and contribute to a Roth IRA on public.com, you get a 1% match. And if you move over existing investments to public, they will give you a bonus of up to $10,000,

depending on how big the investment is that you're moving over. So go check those out. Again, that's public.com forward slash rich habits. Or there's a link in the show notes below. So our first question is coming from Greg D via email. Greg says, what's up, guys? My name's Greg, and I wanted to see what you thought about Picasso offering early investors an opportunity to invest for a limited time at $2.80 a share.

Picasso claims to be the market leader and vacation home co-ownership with only 1% penetration in over a $1.3 trillion industry. Their website says you can see returns via IPO or acquisition. This is not by any means my forte, rather just something I came across on my timeline than I found interesting. Thanks, guys. Love the podcast. Robert, you want to kick this one off? Yeah, I've been doing quite a bit of research on Picasso.

And I guess the way I would look at Picasso is make sure you understand what you're getting yourself into. Because yes, it is less expensive to invest in. Yes, you can buy these fractional shares, which is fantastic, but just understand one thing. It says that you're a co-owner, but this is a collaborative voting system with these properties. And that scares me a little bit in itself, but you also have to look at with these luxury rentals. You don't know what the HOA is going to do. You don't know what the local administration's going to do.

Are the rules going to change? So I think it's a little high risk and a little low liquidity for me of how I like to invest in real estate. but if you want to have like this newfangled timeshare ownership in a property, then I think you could consider it, but I wouldn't start out there. I think Picasso is more for people that are already wealthy, looking to spread some money around because the fees are high as well. If you do some digging or you were to message the customer service team and ask them, what are the total management fees that Picasso takes?

I think you'll find them they're little egregious and expensive. for my taste because I want my money to work hard for me. So for that reason, Picasso is not a good fit for me and I don't think people should necessarily use it. There are a lot of other better ways to invest in real estate fractionally with less fees and more upside and more liquidity. To specifically answer your question, Greg, as it relates to investing into the company Picasso themselves, you're totally right. I looked up, you know, this offering. You can go to like Picasso.com slash invest or something about that. It's got a landing page that shows you, you know, limited time, invest for only $2 and 80 cents a share by the end of May and you get in with your

$1,000 minimum investment and all these profits we have and things like that. In my humble opinion, if a company is offering shares to the public for a limited time, that just doesn't sound right to me. Don't get me wrong. It's cool that companies get to offer private, you know, equity, essentially, of their company to the public for a couple thousand dollars. I think that's amazing. We should all have access to this specific asset class that is sort of these private markets. I'm a big believer in that. But to me, I don't think that I would be participating in this. In my humble opinion, a couple boxes need to get checked for me to want to invest into a privately held company. The first box is, is, is, is this company actually making a lot of money? And Picasso checks that box. They are claiming they made $100 million in gross profits during the first half of 2024. That's pretty cool. The second thing is, am I investing alongside of a lot of other really smart venture capitalists and private equity firms? Maybe Picasso checks that box. I'll have to look more, but I want to make sure I'm investing alongside of the world's smartest investors and capital allocators because I know I'm not that.

I know at times that I miss things, but if I'm investing alongside of people who have had immense returns in their own portfolios over their tenure of investing, that gives me confidence. And the final thing here is like, Gregory, my friend, know that every dollar that you put into a private investment, like a Picasso, has opportunity cost. There is no liquidity, and you said it even in your email. You know, their website says you could see returns via IPO or acquisition. Who knows what an IPO is going to happen for this company, if ever, and who knows if an acquisition's ever going to happen. So what does that mean? It means that you need to be taking seriously that $2.80 per share and saying,

should I instead put this in Berkshire Hathaway? Should I instead put this in Amazon or Google or Microsoft or META or Tesla? Because, again, you have complete liquidity on all publicly traded companies. You could put in your $2.80, have it go up or go down, and take it back out the next day on public or any other online broker that you choose. So at the end of the day, I want to agree that, like, Robert laid out a lot of wonderful points around co-ownership of real estate investing through these types of platforms. There's a couple of them out there that are really popular, including this one. But then as it relates to investing into a privately held company, you all need to understand the importance of opportunity cost, investing alongside tenured and very successful investors, as well as understanding the business model, how they make money, path to profitability, path to IPO, things of that nature.

Yeah, the number one takeaway for me, and that was a great. great, great other half of this question. But for me is, what are they charging me to use my money? And if they're making more money off of the fees to operate this platform, then that's a no for me because I want them in the trenches with me using my money. But I want to make sure that I'm making good profits from my money as well. And that's why that's the first thing I always check is what are the fees that they're charging to use my money and all the investor money. So make sure you look that up and understand it before you get into it. And as a reminder, if you're looking to invest into privately held companies, companies that Robert and I are investing into ourselves, be sure to join us

over at the Rich Habits Network. We're still offering a seven-day free trial. We present new opportunities every about four to six weeks or so, and they are pretty incredible. So just go check that out in the show notes. Our next question comes from Mike. Mike says, hey guys, my name is Mike. I'm 58 years old and I have no plans to retire. That, however, is my choice. Every year, I bring in about a $101,000. I owe about $158,000 on my home at a 3.1% interest rate. My mortgage payment is $1,000, but I pay $1,000 so I can pay it off sooner. I have two credit cards, but I plan to pay them both off before interest begins to accrue because I got a 0% interest rate. After my bills are paid every month, I've got about $2,000 to $2,500 left over. So here are my two quick questions.

The first one is, should I continue to pay extra on the house so I can pay it off faster and then begin to invest the difference. And two, since I don't plan on retiring, where's the best place for me to put my money in case the unfortunate should happen? My work has a 401k, but it's grown really slowly. My annuity account is growing at about $21,000 per year. Robert, you want to start digging into this one? Yeah, I love this question. And, you know, I want to start first with the house payment. Right now, you have a 3% interest rate. And the big rule that Austin and I always speak about, and we preach it to the mountain tops every single week is that if you can borrow money for less than what you can make with your money, you always borrow. And that is why the wealthiest people

on earth have mortgages and car payments and yacht payments and everything else because they can borrow the money so inexpensively. And you did this for your house. So I would say absolutely do not pay anything extra every month because you have that 3% interest locked in. I personally would take all the extra money every month. I would get it invested into a bridge account because then you have full autonomy on that account. I would get a basket of those index funds we talk about and really kind of spread it out so you have a very well-balanced portfolio. That's first and foremost what I would do with that money. Secondarily, for question number two, since you don't plan on retiring, the same thing happens. Match the 401k. Everything else goes into the Roth and to the traditional

brokerage account and set yourself up for later on in life since you're not retiring and put yourself in a way where you've got some tax deferred, you've got some after tax income later, and you're just really well balanced. But just don't pay more on the house because at the end of the day, you're borrowing that money so, so inexpensively and you want to arbitrage all the positive difference. Like if you look at the S&P 500, on average, year over year, decade over decade, it makes about 10% a year. So if you're paying 3% on your house and you can make 10% with your money, that's why all the extra money should go into something like the S&P 500, because then all of those extra earnings are yours and not someone else's. I love the ending there. The extra

money is yours and not someone else's. That's 100% the way to think about it. So I did some math for you here, Mike. At 58 years old, assuming that you take this $2,000 left over every single month, and you deposit it into a public.com online brokerage account and it is invested in the S&P 500 and over the next let's call it seven years or so it continues to go up by that call it 10% average that it's done over the last several decades you'll have about a quarter million dollars extra sitting in this brokerage account for you i totally agree you said you have a 401k and you should be able to contribute up to the match to get the free money we have this phrase it's match beats roth beats taxable, go get that free money, max out the Roth IRA, and then put it into your taxable

brokerage account, whatever brokerage account that you use. That's the order you should be thinking about this in, because it optimizes for free money, it optimized for taxes and growth and everything in between. I think Robert did a wonderful job laying all that out, and I totally agree. Don't make extra payments here on the mortgage. You'll have this paid off very soon regardless, and I think the big thing to consider is you said you never want to retire, and I hear you. I never want to retire, and I don't thing Robert ever wants to retire either. With that being said, though, the unfortunate could happen, right? Maybe you are disabled when you're in your 70s. Maybe something happens to your health when you are in your 60s. We can't predict the future. But having hundreds of thousands of dollars, if not

millions of dollars now in these retirement accounts for you that you can rely on if something does happen to your income, God forbid, is just a really good place to be. So our next question comes from Chuck M. Chuck says, hello, my name is Chuck. I've been a long time listener. Thanks for providing great advice on building long-term wealth. I'm in the process of selling my business, and if all goes well, I'm going to get $3.5 million. Part of the terms of the sale is that I have to stay on for five years as part of the sales team. I want to be financially independent by the end of this term and have the option to retire. Right now, I'm 36 years old, which means by the time this five years will pass, I'll be 41 years old.

My pre-tax income after the sale of my business for the next five years will be $450,000. a year plus augit benefits and annual expenses of about $200,000. So total compensation of about $650. I currently have three duplexes and two commercial properties that generate $43,000 a year in profit and their equity is valued at about $1.2 million. I have $142,000 in my 401k, $137,000 in a brokerage account primarily made up of the NASDAQ and VTI, with another 20% or so being in Salesforce, Bitcoin, Ethereum, Nvidia, and Tesla. I also have about $200,000 in a high yield cash account. And finally, I have a mortgage on my primary residence of $900,000.

I have a personal loan that I used to run my business at $600,000 at a 5.5% interest rate with about 12 years left on the loan. I have no credit card debt and I want to have about $250,000 a year to live off of when I retire. So I'm estimating I need about $5.3 million in investments to really feel comfortable. I'm young. I'm a high earner. and I have a high risk tolerance. But I do not want to mess up this opportunity by not being appropriately conservative. How do you suggest I invest the $3.5 million from the sale of my company so that I hit the target of being financially independent?

Would you suggest that I get a financial advisor? Should I pay off my personal loan? Or should I invest the money in continue making payments as the 5.5% interest is not that high? Robert, I'll let you kick this one off. Chuck, I love the fact that you're being considerate once you get this windfall. of what to do with it. And it reminds me of when silly bands went crazy and I had millions and millions of dollars coming in. And my cousin Tim came in and he said, write me a check for five million dollars right now. And I said, what for? He said, because I know you and you could be in a situation

where you never have to work again and you never have to worry about money again, but you will over leverage yourself and you will be too risk on. So I really appreciate how you laid this question out. You're obviously crushing it. You're in a really good situation, but when that money hits that $3.5 million, if you don't handle it appropriately and grow it the right way, you could go backwards financially, and I don't want to see you do that. So what would I do? First and foremost, I think you're sitting on a lot of cash right now. Having 200K in a high-yield cash account, I think is a little bit too much. I would probably lower that down to 50 or 60,000, get the rest invested. But I think the number one key here is setting yourself up for how can I grow this

three and a half million dollars on top of the money that I'm assuming you can put away financially every month right now because you are a high earner. And I don't want to look at it that the $3.5 million is coming in and everything else is a free for all because you still want to be putting away 15 or 20% a month to add to the $3.5 million. And through that, all of that money, I'm would make sure of the 3.5 million, I would put it somewhere very safe. It could be in a traditional brokerage account that you already have. I would get yourself set up with some VOO, some more QQQ. You mentioned VTI. We love VTI, maybe some VUG, and really just have that balanced and set up as your I'm never going to touch it again money until it's time to retire in that five to seven years. That's what I would do first and

foremost. Then I would look at, okay, what are some of the lower, smaller debts that I could start to chunk away at? You mentioned the business loan that you have with five and a half percent interest. That is low enough to not be considered high interest, but high enough that you might want to start chunking away at that and get that paid down some, because by the time you're ready to get out of the position that you have the five-year window with the company, you want to make sure that that loan is paid off, or you could look at paying it off right as you get the settlement for the sale of the company. You have a lot of options. I like all of them for you, and the main thing is understanding, don't do what I did when SillyBans money just kept coming and

coming. And that was I over leveraged and I overinvested because I felt that those millions and millions of dollars would last forever. Luckily, I was smart enough that I made a lot of really good investments. But some people, when they get a windfall like this, they go a little crazy with their money. They buy too big of a house. They buy too many Lamborghinis and they spend a lot of it. And then they have to retract and figure out how to move forward from there. So I love your mindset. Congrats on crushing it. And that is what I would do. Chuck, here's my perspective. If you just took the $3.5 million and you put it into a brokerage account that earned 8.5% for the next five years, it will be worth $5.345 million, right?

$5,345,000, assuming a perfect 8.5%. The markets go up or down, you know, close to that 8.5 and that's what the historical average is. I can't predict what the next five years are going to be, right? This is a long-term average, so maybe this isn't the perfect scenario for you. But I do want to show you that your money will grow to your financial independent number of this 5.5 million or so that you're targeting naturally. You don't have to contribute all this extra money to get there.

You don't have to do anything fancy. You don't have to go flip real estate. You don't have to go private equity. You have to do anything. Just the stock market will take you there naturally. So to Robert's point, you don't have to be too fancy with this. It's very boring, very simple stuff. Now, let's talk about this loan.

You have about a $600,000 loan at a $5.5% interest rate with 12 years left. If I did the math right, you're paying about $7,000 a month to service that debt. 7,000 a month for the next 12 years is really going to negatively impact your, I want to retire early type mentality. So here's what I would actually do. You could actually use a financial advisor for this. I'm totally cool with that because they're going to be able to talk you off the ledge next time we have a tariff tantrum like we did over the last couple weeks here. So get the 3.5 million invested. Let it grow to this 5.5 million over the next 5 or 6, 7 years.

The $450,000 a year pre-tax income. I want you to start using some of that money over the next five years to pay off this $600,000 debt that you have personal loan to run your business. I think five years' worth of income is enough to help you pay aggressively down this $600K debt. Because to Roberts point, 5.5% it's not bad, but it's also not that great. And if you really do want to retire in five years, being able to take a $7,000 a month monkey off your back is going to make you get there much fast. and feel a lot better about the $250,000 a year that you need to spend to live off of. You're in a wonderful situation. I wouldn't do anything with the duplexes and the commercial properties.

I love the single stocks you've got. 20% allocation to that is music to my ears. I mean, you're doing everything correctly. The only thing that you really now need to do is one, make sure that you're shopping financial advisors very carefully. You want to make sure that they have the heart of a teacher. They're not just looking at your investments, but they're looking at your total picture if that has to do with taxes, estate planning, all that stuff.

You want to make sure you're working with someone that can help you with that. And then two, that they're investing your money into things that are correct. They're not putting it into target date funds. You're not using high, you know, expense ratio mutual funds. Like they're just, they're getting your money working for you. They're taking their half a percent, one percent, whatever it is. Hopefully not much more than that. And they're helping you stay focused on this goal of $5.3 million.

And then again, you're using your salary to pay off. the $600,000 debt over the next five years. Amazing. Before we get into our next question, though, listen up, folks. Time could be running out for you to lock in a 6% or higher yield at public.com. You can lock in a 6% or higher yield with a bond account right now, but remember, your yield isn't locked in until the time of purchase, so please act fast if this is a good fit for you. Lock in a 6% or higher yield with a diversified portfolio of high yield

and investment-grade corporate bonds only at public.com forward slash rich habits. Again, that is public.com forward slash rich habits for all things. Public, rich habits related. Like the bond account or high-yield cash account or the options or anything else. It's a really cool landing page. You guys are going to love it. So our next question comes from Heather M. Heather says,

My husband recently took a job that doesn't offer a 401k until he's been with a company for a year. As soon as he starts his 401K though, he will be completely. So in the meantime, what should we do to make up for the lost year of contributions? He's 62 and I'm 57. He was also unemployed last year, but doing some side hustles, so it might actually be two years of lost contributions by the time his year is up. We talked with the financial advisor and he said that we're doing great with our retirement accounts and he would be fine if he had retired now.

But he plans to work until he's 65. We also own real estate and have rental income. We have no credit card debt. The only debt we have is a he lock at $33,000. and a $100,000 mortgage on a rental with 15 years left. We have an emergency fund of $26,000 in my account, and $16,000 in his account. We're also fully funding our Roth IRAs, and yes, the money is invested. So I'm curious about the different avenues to invest what would normally be going into a 401K.

I think I want to set them up with an automated investment plan on public, but I've also heard of solo 401Ks, double finance, Freck, M1 Finance, and I've been using Schwab for investing for a while now myself. Can you maybe explain some of these programs and help me figure out what would be a good option? Heather, I love that you're being so proactive about this. Let me also be very clear. Your husband not contributing to any retirement accounts or any investment accounts for the next 12 months will not inhibit your ability to retire.

Right? So like you could do nothing for the next 12 months and still retire, according to your financial advisor, just fine. Because if you can retire right now, you can retire. in 12 months, you can retire in 24 months, like, you're going to be just fine. So I just want to, like, give you a sense of relief, take a deep breath, like everything's going to be cool. So you wanted to break down of some of these different types of accounts, I'd be happy to give it to you. A solo 401k is for a self-employed individual. You said that he was unemployed, which is different than

self-employed. So I'm going to assume that a solo 401k is not a part of the equation here. However, I have a solo 401k. Robert has a solo 401k. We're self-employed guys. Therefore, we're, we take advantage of this retirement account because we don't work for a company that affords a 401k to us. We have to go contribute and make one or our own. So that's a solo 401k. So now let's move on to double finance. J.J. Maxwell is the founder and CEO of that company. We actually had him on the show a couple months ago, I want to say. It was a great conversation if you've not yet listened to that episode. He's essentially built a platform that allows people to build their own S&P 500. So if they want to be a little bit more overweight on technology because of AI, or maybe

a little bit underweight on energy because they don't know what's going on with OPEC, right? You can build your own strategies around your portfolio. It's more of portfolio investing versus like stock investing, if that makes sense. They've got a bunch of different strategies pre-built that you can select from. It's just like a normal online broker, but they give you the strategies versus you building them from scratch. The next platform you mentioned was FREC. Frec is great because they do tax loss harvesting for you automatically.

Robert and I have an account with FREC. We put, I think it was $20,000 in the S&P 500. We've tax loss harvested thousands of dollars so far in that account completely automatically, and their fees are super, super cheap. Really enjoy FREC. That's probably the one I would recommend you check out if you're really trying to find some extra momentum during this period of time. M1 Finance is just another online broker like Public or Robin Hood or Schwab that you had

mentioned. Nothing too special about it. Long story short here, two or three big takeaways. The first one is, you're going to be just fine regardless. If you're investing, if you're not investing, if your financial advisor tells you you could retire right now, chances are you've got hundreds of thousands, if not millions, in these retirement accounts already, and you're going to be fine. The second thing is, if you're looking for maybe something to do during this next 12 months, doing it inside of an account and building an investment plan around it, like you had mentioned,

with public, is a wonderful idea. And what's important about all this is automating the process. So similar to how you might have been contributing every paycheck to a 401K, If you build out an investment plan on public every other week or once a month, you can contribute to their brokerage account and invest that money similar to how you would have automatically with a 401K. I think that's the most important takeaway here. Yeah, and I want to piggyback on that. I think so many people that are going through transitions where they may not be with a company with a 401k or they're switching jobs, they have that vesting period. The most important part to remember is just because you don't currently have this eligibility to invest in a 401k, it does. doesn't mean you should stop investing. You should just right away pick up the pieces and say,

all right, the new job starts in a month. Then in 13 months, I'll be able to add to the 401k there and be invested. And I just think it's important to understand, invest and put that same amount of money you'd be putting in the 401k into that public.com account because then you're keeping the train moving, you're building your net worth. And just don't take those long breaks just because you switch jobs or you pivot away from a position. Because at the end of the day, the more consistent you are with your investing, the better off you're going to be long term. So our next question comes from William L. William says, Hey, Austin and Robert, I'm 21, and I just reached my first $10,000 invested.

Let's go, dude. Congratulations. That's amazing. We all got to start somewhere, and William's starting with his first 10K. He says, I have a CD with $5,000 in it that's also about to mature. So here's where my question lies. I have roughly $8,500 remaining on my car payment. Currently, I'm paying $220 a month and the interest rate is just under 5%. I don't have any major credit card debt nor student loans. With this in mind, does it make sense for me to just pay off the car? My savings account isn't very deep right now, so if I were to pay off the car, I'd have to sell out of my investments. Currently, I'm investing about $400 a month into my brokerage and paying $220 a month on my car payment. Is this sustainable or doesn't make sense to just tear off the band did pay off the car? My monthly income is

about $2,500. Robert, you want to kick this one off? Yeah, it's one of my favorite types of questions. And William, great job getting the first 10K put away. That is a huge, huge hurdle. So congrats on that. But I would say, don't do anything different. I would keep paying the car payment, the minimum car payment, pay it on time, build that credit because you have to look at one thing.

The car is going down in value every single month you own it, which is fine. But if done correctly, your investments are going to go up every month over time, over a long period of time. So at the end of the day, because you have a favorable interest rate, I would do nothing different. It's just a good place to be having a reliable car, but having such a low payment. So I wouldn't change the thing. Keep the car payment. Pay the minimum and invest everything else you can to keep getting you to the next points of getting to that 20,000, 50,000.

And then having your total base built of $100,000 in the coming years. I couldn't agree more, Robert. William, it is so important for you to invest as much as you possibly can and keep the money invested for as long as you possibly can, right? So like you worked so hard to get this first $10,000 invested. At 21 years old, I didn't have $10,000 invested. I don't know a lot of 21 year olds that have $10,000 invested. It's amazing. So what I'm trying to say here is I am a big believer in getting as much money as possible invested at a young age before you consider paying off. large amounts of debt. We talk about this with student loans all the time, right? My girlfriend, for example, has like $30,000, $35,000 of student loans. The average person graduated in college from the University of Tennessee where I went graduated with things like $38 or $40,000. People have student loans. Before aggressively trying to pay off those student loans, we always encourage people to have the same amount of money invested, right? So let's call it $38 or $40,000 invested in some retirement accounts, and then keep the money invested. And then if you wanted to aggressively pay off the debt, go for it that way because the biggest thing to remember here is debt can only go to zero. Investments theoretically could grow in perpetuity for the rest of your life. So William, having this first $10,000 invested, if you were to sell all that and then use it to pay off the card debt, you're pretty much back to where you started, man.

Like you're just now getting to the point where compound interest can really begin to take hold considering the amount of money you have. 10,000 quickly turns to 15, quickly turns to 28, quickly turns into 47, quickly turns into 78, and then 100 before you know it. So just really want to encourage you to stay invested, keep investing, and do not stop investing, especially at your age. The other thing I want to call out a couple things here. First one, you have a CD that's of $5,000 that's about to mature.

Because you have the equivalent amount of debt, right, you have an 8,500 debt and $10,000 invested, don't sell the investments. But maybe if you wanted to take this $5,000 CD and use that to pay off some of the car payment because it's just eating at you, wouldn't be maybe. at that, but what's happening is you're not selling your investments to pay off the debt. The CD is essentially cash. You could use that. If you also want to throw that to investments, I like that idea as well. But the biggest thing I want you to take away from us answering this question for you, Will, is do not sell your investments to pay off low interest debt. Not a good idea.

100%. People need to learn, and I'm not going to name names here, that good debt is good. Low interest debt is good. That is why wealthy people leverage their money and leverage their credit with good debt. And in this instance, at under 5% interest on that car and a low payment, I think it makes great sense to keep investing, leave it be, and move on and then just come back to us in a couple of years and let us know where you're at. And the other thing I want to mention too here, Will, is you know, you're currently making $2,500 a month at 21 years old.

What's the plan to go from $30,000 a year to? to 45,000 over the next three or four years. You need to have a plan if it's a certificate, if it's extra education, if it's trade school, if it's like mentorship, like have a plan to increase your annual income from 30,000 to 40,000 to 50,000 to 60,000 over the next three, five, seven, 10 years. You're a wonderful place to be right now at 21 years old making 30K, but I don't want to see you at 30K five years from now, right? I want 26 year old will to be making 50K, 60K,000, 75K, right?

that'd be amazing. Figure out the different ways that you can begin to build upon your income, because it's one thing to say, hey guys, I have a $220 a month car payment and I'm taking home $2,500 bucks. Yeah, it's about 9% of your take home pay. I hear you. And you can only invest $400 a month. I hear you. It's another thing to say, I have a $220 a month, but I'm bringing home $5,000 a month, right? Now the numbers and the ratios are completely different. And that $400 a month that you're investing quickly turns into $800, $1,200, right? There's a major unlock that can happen in your personal finances when you begin to make a little bit more money. So just make sure that you're thinking about that on a day-to-day, week-to-week, month-to-month basis

in your own career. I think that's the biggest unlock that I'm so glad you mentioned. And that is so many people, they get the decent job, they get the good job, and that's it. They kind of chill. And I think the number one thing most people can do for themselves to continually level up is to continually learn. I think I read something recently, and it said that after 30, 30 years old, over 70% of U.S. adults never read another book.

And it just blew my mind because it was like some crazy stat. And I was like, there's no way this could be right. But I started digging into it. And I think it's just because people start to live that status quo life. And I'd really like to see, like you mentioned, Austin. And I love that takeaway that people just continue to improve their skill set. Like you said, get that certificate, learn a new trade, learn a new side hustle, because you want to always be leveling up your income

because then it offers you so many more opportunities for financial freedom down the road. So our last question comes from KDP. Katie says, hey, Austin and Robert, first of all, I just want to say, I love the podcast and look forward to Thursdays each week for your new episodes to drop. I used to shy away from asking questions

or having any involvement in my retirement accounts because I didn't know much about them. But since listening to your podcast, I've maxed out my Roth IRA contributions for the last two years and bought my first few ETFs, all thanks to you. I'll be forever grateful. Thank you, Katie.

We appreciate that. That's amazing. So here's my question. My employer contributes 5% to my traditional 401k, regardless if I match it or not. I have been contributing 10% for the last few years, but I just had a meeting with my company's retirement manager, and he told me that I could switch and contribute to a Roth 401k instead of a traditional

401k. What are your thoughts about contributing to a Roth 401k, or taking the 10% I was? contributing and putting that money into a bridge account instead where I might have more autonomy. Since I received my company's 5% contribution regardless, I don't need to necessarily contribute to either my traditional 401k or this potential Roth 401k. This is a really good question, Katie. If I were in your shoes, I would keep all the money that's already in your traditional 401k, make sure it's invested as appropriately as possible, which means index funds, ETFs, S&P 500,

things like that. Make sure that you are just S&P 500 as much as you can. Let that money go in perpetuity. Let it ride. Then I would say, hey, Mr. HR person, I would love to open up a Roth 401k with you all as well, not convert, right? Because that's a taxable event. Converting from traditional 401k to Roth, you're going to pay taxes on that. But what you're not going to pay taxes on is new contributions going to a Roth 401k. So if you say, hey, I'd love to open up this new Roth 401k, because remember, Robert and I are big believers in the Roth Variable. If you can get a Roth anything, it is a great place to be because we do not know what the tax rates are going to be in 2030, 40, 50 years. So say, hey, I'd love to open up a Roth 401k, and you can contribute that same 10% into that vehicle instead. They'll put in 5% of their own. So now you're contributing 15% of your annual salary toward a Roth 401k.

I'm in love with that idea. And then if you're also able to max out that Roth IRA alongside of it, you're now probably close to 20 or 25%. you are setting yourself up for long-term retirement success. I love that takeaway. And I think it is kind of the secret sauce. So many people still do not have a Roth component in their investment strategies, in their retirement strategies. And I think it's a huge mistake.

And so for anyone out there that doesn't have a Roth IRA or you have children that are going to get ready to turn 18 years old, instead of getting them some dumb gift that they're going to ride or use two, three times and it's going to go sit in the garage, open the Roth IRA for them and put in that equal amount of money and get that invested because, like Austin said, I think any Roth component you can have in your investment strategies is going to give you the blueprint to financial freedom down the road. And I think the biggest takeaway for you, Katie, is to make sure that you are investing 15, 20, 25%. Right? You mentioned that they're throwing 5% in. You're already doing 10. You want to make sure you're doing a Roth IRA. You mentioned the bridge

account where you might have more autonomy. I love that idea. If you have the money to max out the Roth IRA and still invest toward a bridge account, you have my permission. But the most important thing here is that you are taking advantage of the Roth variant for these retirement accounts because nobody wants to enter retirement. And for whatever reason, income tax rates now on some of this money is close to 25, 35, 45%, 45%, depending on where you live in the country or maybe around the world. So just making sure that you've got the tax portion of this already figured out and accounted for when you're doing your retirement planning is paramount. Well, thank you all for joining us this week on the Q&A episode. We love these episodes and we're so excited to keep doing them and appreciative that you guys over the years have grown to love these episodes as well. I like it. We just take it right off the dome, give our opinions, and really build this community and build the followers around our

all of our actionable advice. And so it's so much fun. And we appreciate you stopping by each and every week. And always remember, if you find value from these episodes or any of our episodes, share it with a friend. There are a lot of people out there that are struggling or they maybe don't have the financial literacy and the chops build up yet. And they just need to figure out their own situation.

We always say personal finance is personal. So share these episodes with a friend if you know someone that could use the help. And if you haven't yet subscribed on Spotify, make sure you are, as well as answer the poll that's below this episode and leave us a comment. Make the comments about something fun. Tell us what you did this week. Tell us your plans for the summer. Anything and everything is welcome to the comment section, as long as it's positive and nice, right? Want to make sure we have good vibes here.

I love reading the comments, the feedback, all the positive things that you guys share with us as it relates to our episodes. We're super, super grateful. And don't forget, too, we have a newsletter. It's called The Rich Habits Newsletter. is about 60,000 of you that are subscribed at the moment. It comes out every single Thursday morning. So chances are, it's already out by the time you're listening to this episode. So if you want to read that newsletter, there's going to be a link in the show notes below.

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and we look forward to seeing you on Monday.