Rich Habits Podcast - Episode 133

How To Diversify Your Portfolio For Generational Wealth

Hosts: Austin Hankwitz & Robert Croak
Release Date: September 1, 2025

Episode Overview

In this episode, Austin and Robert break down their step-by-step strategy for diversifying your investment portfolio to build, maintain, and pass on generational wealth. They focus on a practical, percentage-based approach that works regardless of portfolio size. Through personal stories and targeted listener Q&A, they demystify common misconceptions about diversification, rebalancing, and real estate investing—providing a blueprint for listeners at every stage of their financial journey.

Key Discussion Points & Insights

1. The Importance of Building a Strong Investment Base

[01:26–03:13]

• Robert opens with a critical foundation: don’t focus on diversification until you have at least $100,000 invested in core index funds or ETFs.
• Emphasizes the “build your base” principle:

  “If you don’t have at least 100k working and growing for you ... you’ll never be able to consistently build wealth over your lifetime.” – Robert [01:56]

• Warns against the “earn, cash-out, upgrade, repeat” cycle that hampers wealth accumulation.

2. Step-by-Step Framework: The Core-Satellite Portfolio Strategy

Step 1: Core-Satellite Structure

[03:13–05:43]

• Robert introduces the core-satellite strategy:
  • Core (65–85%): The “main engine” of your portfolio, typically comprised of index funds and broad ETFs (e.g., S&P 500/VOO, NASDAQ/QQQ, VGT, VTI).
    • “I like to stick to the S&P 500 making up the largest portion of the core holdings in my own portfolio.” – Austin [04:24]
  • Satellite (15–35%): Diversification assets—other asset classes, single stocks, real estate, precious metals, crypto, or thematic ETFs (e.g., URA for nuclear, AIQ for artificial intelligence, GRID for infrastructure).
    • “This is my favorite part because it’s diversification.” – Robert [05:43]

Step 2: Rebalancing

[07:07–09:54]

• Austin explains the crucial process of portfolio rebalancing every 6 months:
  • Reevaluate performance, take profits from overperformers in satellite holdings, and shift back toward original % allocations.
  • Highlights the risk of one holding ballooning to dominate your net worth.
  • Example:

    “If you rode that wave up for the last 10, 15 years and it made up a substantial amount of your net worth and now you just experienced a 50% hit…this is why we love to preach diversification, proper portfolio rebalancing.” – Austin [09:14]

Step 3: Diversification with Intention

[09:54–11:54]

• Robert and Austin stress focused diversification, not “spreading too thin.”
  • Avoid holding “30 different individual stocks, 55 cryptos.” Instead, curate core/satellite assets you understand and believe in.
  • Periodic “cleansing” trims losers and redeploys profits.

  “Too much diversification…you’re never really going to be able to take advantage of the moves of the market if you have it spread so thin…” – Austin [10:54]

Step 4: Strategic Rebalancing (Not Timing)

[11:54–12:33]

• Robert:

  “Rebalancing does not mean you’re trying to time the market…you’re going to analyze one by one how things have performed and do you still believe in that asset or that company…” [11:54]

Practical Summary of the Generational Wealth Blueprint

[12:33–13:41]

• Core-satellite strategy forms the backbone for all sizes of portfolios.
• Regular rebalancing and intentional diversification protect against overexposure.
• Aim for “wealth you can pass on”—not just temporary gains.

Notable Quotes & Moments

• “Build the base first so you’re making money while you sleep.” – Robert [13:41]
• “Personal finance is personal. Risk tolerances are all different.” – Austin [04:24]
• “Let your winners win, but you also have to have a focused plan.” – Robert [09:54]
• “If you find yourself as someone who likes to nibble on a bunch of different things, maybe every three, six, or nine months you kind of cleanse the portfolio…” – Austin [10:54]

Listener Q&A Highlights

1. Flipping Houses — Getting Started

Isaiah from Toledo, OH
[15:22–21:09]

• Isaiah, a 23-year-old with construction experience, asks for advice on house flipping.
• Robert: Start with a clear “buy box,” raise initial capital from family/friends, consider owner financing, and partner with experienced pros if you lack construction background.

  “Some of the best flips from a percentage of profit for me are buying homes for $50k, $60k, $80k…selling for $150k, $170k.” – Robert [17:05]

• Average flip target: 22–25% margin in ~100 days.
  Example: Bought for $95k, spent $35k reno, sold for $179k = $39k profit [19:32].

2. Advisor Underperforming S&P — What to Do?

Duck City USA
[21:09–25:55]

• Listener’s advisor (a fiduciary) underperformed the S&P by 10%, plus fees.
• Austin: May be due to risk tolerance; discuss with your advisor why the underperformance exists.
• Robert:

  “Fiduciary is a good thing, but it doesn’t mean they’re good at their job…don’t just go off family referrals—get multiple opinions!” [23:54]

  • Moving your account is easy; don’t feel “locked in” with one advisor.

3. Roth 401k or Bridge Account?

Anonymous Listener
[27:47–31:47]

• Debates allocating extra cash: Roth 401k (tax-advantaged, but less short-term access) vs. taxable “bridge” account.
• Austin:

  “Match beats Roth, beats taxable. That’s how we go about it.” [28:01]

  • Fill employer match, max Roth IRA, then max 401k, then bridge (taxable) account.
  • Bridge account gives early access cash for flexibility before age 59.5.
• Robert:

  “We love to see people become net worth millionaires, but we don’t want to see you have these golden handcuffs…” [31:18]

Wrap-Up & Reflections

[31:47–32:54]

• Hosts remind listeners: mastering these basics is more powerful long-term than chasing the latest “hot” investment.
• The episode is designed as a “blueprint”—straightforward, percentage-driven, repeatable at any portfolio size.
• “Don’t overcomplicate things. …Here’s what you do if you want to build generational wealth. It’s that simple.” – Robert [32:16]

Handy Timestamps

• Introduction & episode setup: [00:26–01:26]
• Why build your base first: [01:26–03:13]
• Core-satellite portfolio explained: [03:13–07:07]
• Rebalancing & avoiding overexposure: [07:07–09:54]
• Intentional diversification, over-diversifying: [09:54–11:54]
• Strategic rebalancing, not timing the market: [11:54–12:33]
• Full wrap-up of key steps: [12:33–13:41]
• Q&A Section: [15:22–31:47]

Episode Tone

Friendly, direct, and encouraging—emphasizing personal accountability, clarity, and the long view over flash-in-the-pan trends. Both Austin and Robert blend actionable advice with personal anecdotes and a no-nonsense approach.

For more, check out the hosts’ portfolio breakdowns on the Blossom app or engage with them directly via Instagram DMs.