133: How To Diversify Your Portfolio For Generational Wealth

Summary

Rich Habits Podcast - Episode 133

How To Diversify Your Portfolio For Generational Wealth

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

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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.

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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]

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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.

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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]

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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]

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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]

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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]

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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.

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

Transcript

[Austin Hankwitz]

Shh.

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[Austin Hankwitz]

You're about to make a trade which you do you listen to. Is it get optioning those options or let's do a little research. Learn [e-mail] TradeSmart hey everyone, and welcome back to the Rich Habits podcast, a top 10 business podcast on Spotify brought to you by public.com a now three times per week podcast as of Friday, August 1st. If you've not yet tuned in to our Friday episodes, be sure to do so now. In this episode, we're going to explain exactly how to diversify your investment portfolio to ensure wealth for generations to come. My name is Austin Hankwitz, and I'm joined by my co host, Robert Krok. Robert is a seasoned entrepreneur with lifetime revenues of over 300 million. And I'm a multimillionaire in my late 20s with a background in finance and economics. As the show name might suggest, every episode we talk about rich habits as they relate to business, finance and mindset. So, Robert, what are we going to be talking about in today's episode?

[Robert Krok]

In this week's episode of the Rich Habits podcast, we're going to lay out the blueprint for diversifying your portfolio, no matter the size. We know so many of you are listening right now. With portfolios of 100k, 500k, and I think we even answered a question the other week from someone with a $4 million portfolio. So no matter the size, the strategy remains the same. Now remember, you shouldn't be focused on diversifying your portfolio until you have the 100k or more saved and invested in in the stock market. You always hear us talking about building your base. That's what this means. The reason why we say this is because if you don't have at least 100k working and growing for you in the NASDAQ, in the S&P 500 and other index funds and ETFs, we talk about, you'll never be able to consistently build wealth over your lifetime. You'll find yourself making a ton of money, maybe on a FIGMA ipo. Cash it out and upgrade the car, then build up some more money, then cash it out to upgrade the kitchen. And this vicious cycle repeats. And that ends today with this episode.

[Austin Hankwitz]

Now we're not discounting how hard it is to get your first $100,000 invested. We know that's very hard and it takes some time. On average, it takes seven years to accomplish this. But once it's invested and you're ready to diversify your portfolio, this episode is going to help you take your investments to the next level. So by the end of the episode, you'll know our step by step framework for building a well diversified portfol portfolio from scratch. So, Robert, we've done this in a way where we broke it down by step one, step two, and step three. So if people listening right now follow these steps in order, they should have a pretty clear understanding of how to diversify that portfolio for generational wealth. So why don't you kick us off with step number one?

[Robert Krok]

Yes. Step number one is follow the core satellite portfolio strategy. You've heard us talk about this for years, and today we're going to take a deep dive into into what it is and why it's important. Just like the name suggests, you're going to build a portfolio around two sections, a core section and a satellite section. The core section is defined as the main component of your portfolio. This main component usually makes up about 65 to 85% of your entire portfolio's value. The satellite section is defined as other ideas and diversification measures. This section usually makes up the remaining 15 to 35% of your portfolio. Using real numbers, your $1 million portfolio would have roughly 650,000 invested in the core section and 350,000 invested in the satellite section. Just like we talked about. The magic to this strategy is that it follows percentages. That is key here. Which means it doesn't matter if your portfolio is worth 1 million, 5 million, or even just $100,000. Maybe you're just getting started. You can follow this strategy and stay on track for wealth building.

[Austin Hankwitz]

You've got $100,000 invested. You're definitely not just getting started and you're doing a wonderful job. But I totally agree, no matter the size of your portfolio, this strategy is going to be able to work for you because it follows percentages. And that's what's really important. So just to reiterate What Robert said, 65 to 85% of the portfolio is invested in this core component. The remaining 15 to 35% is into the satellite component. Now we're going to walk through what that actually means for you and your money. So as it relates to the core holdings, this 65 to 85%, we want to Ensure that the vast majority of our portfolios. Right. The main core component here is invested in the index funds and ETFs that we love and know have performed well over the last several decades. Think voo, qqq, vgt, VTI and other well performing funds that we've talked about on the show. I like to keep the S&P 500 so voo as the largest position in my own core section of my portfolio. But again, personal finance is personal risk tolerances are all different. Maybe you want QQQ as your largest position or vgt. Right. Everyone's different. But I like to stick to the S&P 500 making up the largest portion of the core holdings in my own portfolio.

[Robert Krok]

Finally, let's talk about the 15 to 35% and how the satellite component is invested. This is my favorite part because it's diversification. That 15 to 35% of your portfolio can now be diversified across different asset classes like real estate, pre IPO companies, precious metals, cryptocurrency and more. It can also be diversified into blue chip single stocks you're particularly bullish on. We talk about those all the time like Nvidia. Or it can be diversified into thematic ETFs that follow and invest in a specific theme in the markets like nuclear, biotechnology, big tech or something else you're excited about. For us, we like URA for nuclear, we like AIQ for artificial intelligence, and GRID for infrastructure and utilities. Here's where it all comes together. On one side, in your core holdings, you have the vast majority of your investments trending higher over time in the index funds and ETFs we love like the S&P 500, the NASDAQ 100 and more. And on the other side, in your satellite holdings, you are opportunistically investing in different asset classes that offset market volatility, expose you to the themes in the market and give you the diversification you need to outperform over long periods of time if you're choosing the right investments.

[Austin Hankwitz]

If you need help choosing those investments, we highly recommend checking out the Rich Habits Network. It is now up to almost 700 people a part of it. We weekly live streams where Robert and I uncover our own portfolios and what we are focused on for that week, month and quarter. Now here's something that's really important to understand. Portfolio rebalancing. Nod your head if you guys know what that means. Okay, here we go. If I had a $1 million portfolio, I would probably put about $700,000 or 70% of it in the core holdings and the other 300,000 or 30% of it in the satellite holdings. Now that doesn't mean it's always going to 70, 30 split. For example, if the 30% is invested maybe aggressively, right? And I have a high risk tolerance, that 30% might rise to make up 40 or 50% of the total portfolio's value. Now, something I like to do twice per year is portfolio rebalancing, which essentially means every six months or so, I reevaluate my holdings, I track their performance, and I rebalance back to the original weightings that I choose for myself every single year, depending on my risk tolerance that year. So tactically speaking, that means, Whoa, that $300,000 is now worth 500,000, because Bitcoin, precious metals and AI just absolutely exploded during this period of time. I'm now going to take some profits, let's call it $200,000 of profits, and redeploy that back into the core holding section of my portfolio. So bringing that back up to that 70%, bringing the 50% back down to 30. And that's sort of how I like to rock and roll on an annualized basis when it comes to building wealth over a long period of time. The reason why this is so important, Robert, is a lot of people have those really cool one off ideas of diversification. If it's a precious metal, if it's a stock, if it's, you know, something happened and it pops off like crazy. And then you look around, you're like, whoa, this one thing makes up 18% of my net worth. It's a little risky, right? What happens if that goes away? 18% of your net worth just evaporated. Now, I'm not saying something's going to go away, but, you know, we've seen UnitedHealth Group, for example, drop by 40, 50% in a couple months. Like, what happens 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. So this is why Robert and I love to preach diversification, proper portfolio rebalancing, ensuring that not only are you growing wealth over several years and decades, but that wealth is going to be there when you're gone, allowing you to pass it on to the next generation.

[Robert Krok]

And diversification doesn't mean trying to time the market and chasing some meme stock or some stock tip. That's a penny stock that, you know, Uncle Bill at the barbershop told you about. It means diversifying With a plan and sticking to that plan. That is why this episode is game changing for so many of you out there. Because we just want to make sure you understand not to get fancy, not to have 30 different individual stocks, 55 different cryptos, because you have to let your winners win, but you also have to have a focused plan. And that is why diversification is so important to build and maintain wealth.

[Austin Hankwitz]

I'm really glad you mentioned that, Robert. I want to double click. So a lot of people, to your point, they say, okay, my core holdings, Maybe I've got three, five, seven different ETFs, right? That makes a lot of sense to me. Call it five or less is pretty good. It's a good number to have there in the core holdings and then the satellite holdings again. Maybe you've got a coup couple blue chip stocks you're excited about. Maybe it includes a couple REITs, real estate investment trusts you like a lot. Maybe it's got three to five cryptocurrencies in there. Maybe you've got some precious metals like gold, silver, copper or platinum, right? So it's like 3, 4, 5 of all of these little asset classes is totally normal, totally fine. But what's not normal and fine is when you have 38 different little stocks and 42 different cryptos and nine different, like that's when things get overwhelming. That is 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 across a bunch of different things. So that I guess can go back into this six month portfolio rebalancing. 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, specifically the diversified section of it, and ensure that you pick out the winners, you either take profits on them and reinvest those profits back into the core holdings, or then maybe you cut out the losers, you take what's left and you put that, that back into the core holdings as well.

[Robert Krok]

And when Austin speaks about rebalancing, please, please, please understand this is done with a reason and it is done strategically. Rebalancing does not mean you're trying to time the market. It doesn't mean you're trying to like figure out when it's going to go up and when it's going to go down and all of this, it means you're going to rebalance and you're going to analyze one by one how things have performed and do you still believe in that asset or that company to keep it for the long term. So please make sure that rebalancing is not trying to day trade, swing trade or time the market. So critical for everyone listening to understand.

[Austin Hankwitz]

So in summary, this is how you diversify your portfolio. For generational wealth, you follow the core satellite portfolio Strategy. That means 65 to 85% of your portfolio is invested into the index funds and ETFs. We talk about making sure that over a long period of time, you're going to move up with the markets and build wealth. The other 15 35% of your portfolio is invested into blue chip single stocks, maybe some real estate, a couple cryptocurrencies, perhaps some precious metals, but things that you are excited about. Maybe it's a theme of the market, maybe it's something that can offset market volatility. Whatever makes sense for you and your risk tolerance. And then of course, over time, every six months is what I do. But personal finance is personal. You want to go in and rebalance, you want to take some profits, redeploy them elsewhere in the portfolio and just make sure that you are always following and staying true to your own risk tolerance and that maybe a specific stock or asset class doesn't balloon in value so much inside your portfolio that you're overexposed to a event or an earnings call or something that could really knock down your net worth if something bad happened.

[Robert Krok]

Our main goal for this episode, because we see so many people get it backwards when they first start investing, they take all this crazy risk. They're chasing meme stocks, they're chasing penny stocks, and they're not building their base. And I think if everyone could focus in on that part of this episode to build the base first so you're making money while you sleep. You always heard that term. It's a famous famous quote from I believe Warren Buffett. But it's so critical to really implement. So I think that is my main goal and takeaway from this episode. Build the base first, then diversify. Get the 100k put away so you're making that money while you sleep. And wealth is inevitable.

[Austin Hankwitz]

Now, before we jump into the Q and A section of this episode, we gotta give a shout out to public.com, the investing platform for those who take it seriously. If you're serious about investing toward your financial future, it's time you learn more about public.com on public. You can build a multi asset portfolio of stocks, bonds, options, crypto and more. Back to this idea of that core satellite strategy. Public's going to help you do it. And that's not all. Public's artificial intelligence isn't just a feature built into the platform, it's woven into the entire experience. From portfolio insights to earnings call recaps. Public gives you smarter context at every touch point of your investing journey.

[Robert Krok]

And for a limited time, you can earn a 1% match all IRA deposits, IRA transfers and 401k rollovers. Let me say that again. 1% match on all IRA deposits, transfers and 401k rollovers. So fund your account in 5 minutes or less only at public.com rich habits paid for by Public Investing. Full disclosure in the podcast Description all.

[Austin Hankwitz]

Right Robert, we have three awesome questions asked from our amazing listeners. I think all of these came via Instagram dms. So if you have a question to ask us, be sure to DM us on Instagram at Rich Habits Podcast or email us at rich habits podcast gmail.com so our first question is coming from Isaiah on Instagram. Isaiah says hi Austin and Robert. My name is Isaiah. I'm 23 and I'm from Toledo, Ohio. I've been idling out construction as a superintendent and project engineer and I've been saving up my money for a while. I have $50,000 of total assets, $10,000 in a Roth IRA, $20,000 in a brokerage, 5,000 in crypto and the rest is in my high yield savings or my checking account. I have no debt, be, cheap car and a house that I just bought. I'm also about to get married, which I'm super excited about, but she's coming into the marriage with $85,000 of student loan debt. Now my question is I really want to flip houses on this side. I know the process of buying a home, but I don't know where to begin to buy additional homes to flip and sell or what the best approach would be. I'd love to get some advice on what you guys would think the best thing for me to do is because I'm young, I'm hungry, I've got some construction knowledge, a little bit of cash, a little bit of debt, but I'm ready to get to work. I admire the no BS approach you guys take and I'd be super grateful for any wisdom or resources you could share. Thanks for what you do. Your podcast is changing mindsets like mine. P.S. i love the new Friday episodes and PPS. Robert, if you ever need help on any of your home flips, I'm in the area and I would love to help you out Robert, this is your question.

[Robert Krok]

It is an Isaiah, you shot your shot and your life is about to change. We always need help for Ohio projects and we're so excited. And you and I will link up in the coming days, see what you're all about and see if we can put you into the mix and maybe you can help us out on some of our flips and learn along the way. But to answer your question, how do you do it? Well, first and foremost, you have to pick kind of your buy box. What price range are you looking to be in? For me, it kind of varies, but some of the best flips from a percentage of profit for me are buying homes for 50, 60, $80,000, putting 20 or $30,000 into them and selling them for 150, $170,000. Now you can go through all different price ranges, but I think the key for you is start small, try to do a family and friends raise so you can get the capital put together for this first project and really make sure to understand. Can you do it as a side hustle? I absolutely think you can. Because as long as you can find some good workers to help you and you can get entrenched in no, what things should cost, who to have work for you and all of that, I think you can crush it because you already have construction experience. Too many people want to get into house flipping because they hear it's easy. It is not easy for anyone out there. If you're not from the construction trades and you're thinking about house flipping, find an operating partner that has experience in the game. Other options you can look at if you don't want to do a friends and family route is find maybe something where you can do owner financing. Maybe you find a home that needs a total renovation. The person is moving, selling, whatever. You go in and you offer them a 10% down payment. You get payments over time, maybe for five years and then have a balloon at the end. This is a great way to get started as well. It's what I did to get started because I didn't qualify for a loan back at that time. But those are the keys that I would say you could follow to really crush it in flipping homes. And you happen to be in one of the best markets in America, according to Wall Street Journal, for flipping homes and buying investment properties. So I wish you the best of luck. Isaiah, make sure you DM me on Instagram and we can link up and talk about how we can get you in the mix and you can help me out on my flips.

[Austin Hankwitz]

So I want to piggyback on this and dig a little bit deeper into some of the margins, some of the numbers. So in Toledo, you know, you're flipping a couple homes right now. They are incredibly affordable. Can you walk us through, like a recent flip you did, how much you paid for the home, total cost of materials, total cost of labor, what you plan to sell it for, and what that return looks like on that time period.

[Robert Krok]

So my goal is usually to try and do a flip in a hundred days from purchase to end. That's what I try to do. And we have multiple flips going at all times. So it's not like you're doing one flip waiting and then have to buy another flip because you'd have too much downtime. But the margins I would like to see in Toledo, in the price range range that I do. Our goal Is have a 22 to 25% net margin to myself and if there's investors, them as well. Some of these flips, like one of them we're doing right now, I believe is going to bring us more of a 30% margin, but we'll see what the market does because interest rates are high. So it's not like there's a lot of bidding wars right now. But I believe that in this market in Toledo, and through my experience is if I'm going to buy a home for, say I did one a couple years ago, I bought it for 95,000. I put in, I think it was 35,000. So we were all in for 130, plus some fees. And I think we were all in for 137. So let's call it 140,000. And we sold it for 179. So we made 39,000 on 140,000. And it was a really good return for myself. I didn't have any investors in that one, so that's kind of how the numbers work for me. And you can can find homes where you have to spend less on a renovation. We call it a lipstick remodel, where maybe you're just painting and landscaping, maybe some new blinds and drapes, but generally I like to find the actual fixer uppers because it provides more margin, but it also we can create really nice homes for people at an affordable price.

[Austin Hankwitz]

Isaiah, we say this all the time on the show, but I think Robert just proved it. You are one dm, one coffee chat, one conference, one meeting, one whatever, away from a completely different life. And hopefully you are now Robert's new project manager and construction Superintendent as he flips 3, 4, 5, 6 homes all the time. So congrats on that and wishing you all the best. Our next question comes from Duck City usa. Duck City USA says hello, Austin and Robert, I'm a long term follower and I'm grateful for what you guys do. My financial advisor, who is a fiduciary, underperformed the S and P this year by at least 10%. And then of course I have to pay fees on top of that. I could have done substantially better had I just put the money in voor. Oh, what are your thoughts here? So I'll kick this one off. Robert, you mentioned that your financial advisor is a fiduciary, which is a really good thing. That means that they have to act in your best interest, right? They're investing your money in your interest, not in their own. Which tells me if they underperform the s and P500 by 10%, it tells me that you are either very risk averse and you do not like to take risk. And that advisor might have you in a lot of bonds or perhaps in, you know, a lot of things that are pretty steady, like treasury bills and things of that nature, which obviously do not appreciate in value like The S&P 500 does when meta and Microsoft have stellar earnings, right? So it tells me that you either underperformed because you are truly risk averse and you like your money to be going up 4% a year with treasury bills, or maybe you misunderstood their fiduciary obligations and they parked you in some stuff that was maybe some weird small caps that underperformed or international stuff that might underperform. Like, I'm not too sure what would I do in this situation? I would have a good conversation with and say, hey, why is my portfolio underperforming the S and P over this period of time? They're either going to say one of two things. One, they're going to blab about how they've got you in the right stuff and it's going to be better next year and they want to keep you in, well, like whatever. Or two, they're going to explain, well, remember when we first met, you said that you didn't want to take on that much risk. Therefore we put you in things that were not risky and things that are not risky don't go up in value that much. They just pay a consistent distribution like a Treasury bill or some sort of bond. And right now treasury bills and bonds are doing 4%. The S& P went up by in this instance, let's call it 14%. Therefore, you underperform dramatically because you didn't want to take on the risk. That is fiduciary. That is totally normal. I mean, they're not scammers by any stretch of the imagination because they followed your instructions and were trying to invest with your best interest. Now maybe your interests change over time and you need to be a little bit more communicative about that with them. But they're either going to do one of those two things, hopefully it's the one where you're just risk adverse so you can maybe take on more risk next year.

[Robert Krok]

Yeah, I want to click it back on this. And I think that's a great breakdown because a fiduciary is a good thing, but it doesn't mean they're good at their job. And remember, they're supposed to have your best interest in mind, but it doesn't mean that their portfolio selection is necessarily good. And the way I look at finance and people having a wealth manager, we have croak capital. My family's been doing it for 40 years. We're a fiduciary. But we also are very in tune with making sure that they talk to every single client quarterly. They readjust like Austin always talks about, reevaluate what the performance is to make sure it's going in the right direction. And so I look at it this way. Most people will find somebody, a friend of a friend to handle their money and they will literally hand off everything they own to some stranger. But you wouldn't do that if you were going to get eye surgery or heart surgery. You would get multiple opinions in most cases. This is the same for finance. Go get other opinions. Any real company that does this for a living is going to give you a free consultation and help you figure out your risk tolerance where you're missing out. Why are you underperforming so well? But I think in this case, like Austin alluded to, it really starts by you having a real conversation. I'm not happy. I want this to be better. Can you make it better? If not, I'm going somewhere else. And then you move your money, because remember, remember, money is digital. It's literally an hour's worth of work to move from one fiduciary to another. It's all done online and it's a very simple process, but you need to make sure you're in the right place. So many people take a blind eye to this and end up underperforming for years and decades because they were like, well, my dad Used them or my uncle used them. Don't do that. They're not your friend. No matter how kind they are to you, they work for you. And their job is to maximize the potential of the growth of your money over time based on your requests and your risk tolerance.

[Austin Hankwitz]

As a follow up to that, they should have the heart of a teacher in the sense that they're not talking down to you. They're not saying, oh, well, you don't. You. You won't understand this strategy. Just trust me. Like, I do not deal with that. No way. I. I need you to explain something to me. If you've got my hundreds of thousands or millions of dollars, you are walking me through every single bit of this until I understand it. And I'm going to on this table until we figure this out, because this is my livelihood. I know I'm just one of your 92 clients, but you are my one financial advisor. And so that's. That's the type of mentality you want to have with these people. Now, before we answer this last question from an anonymous listener on Instagram, got to give you guys a heads up about Blossom. You're always asking us, what are you all investing into? And we don't exactly like to gatekeep.

[Robert Krok]

But we also don't like to blast our portfolio all over the Internet even either. You want to see it, you got to follow us on Blossom.

[Austin Hankwitz]

You guys know we're big fans of the Blossom app. It's a free social investing platform where people actually show you what they're investing in. And just to be clear, Blossom's not a brokerage. It's like a social network for investors. Think Instagram meets investing. And what we love the most about it is the transparency. You can literally see our portfolios, track changes in real time, and learn and discuss different strategies with other retail investors.

[Robert Krok]

And the best part is the community on Blossom is long term for focused. Not typical of what you see on other social platforms, which tend to revolve around trading, FOMO and whatever's hype at the moment. So if you're curious of how to build wealth or you just want to level up your own investing habits, download Blossom now. It's free, it's easy, and we're both on there. Just search AustinHankwitz and at Robert Croke official and the huge news. As highly requested, Blossom is now available on desktop. You can head to blossomsocial.com to join the investing community that everyone's talking about about now on the big screen. And of course, totally free.

[Austin Hankwitz]

That's right, hit the link in the show notes below to join us on Blossom or head to blossomsocial.com so we can begin to build rich habits together. So our final question comes from an anonymous source here on Instagram. They want to stay anonymous and we respect that. So our anonymous listener says hi Austin and Robert, thank you so much for all you do. I've been able to get out of credit card debt and build my bridge account to $8,000 since I started listening to you earlier this year. I'm 32, 38, I'm married, and my question has to do with my Roth 401K. I have $22,000 in my Roth IRA, $270,000 in a traditional IRA and $21,000 in a 401K, and $8,000 in my bridge account. My employer matches 5% of all contributions and I elected to go with the Roth 401K when it comes to getting that 5% match. Now my question is, should I be maxing out my Roth 401k as opposed to putting money in my bridge account so it can grow about $30,000 of an emergency fund? And I'm struggling with the idea that whatever profit I make in the bridge account will be taxed when I can avoid those taxes via a Roth 401K. Let me know what you guys think. Looking forward to hearing from you. So here's my quick take on this Match beats Roth, beats taxable. That's how we go about it. So up to the match with your employer's 401k or Roth 401k in your instance, then max out the Roth IRA because you have full autonomy over those investments and you can put it in the core satellite portfolio strategy we just talked about. And then if you still have money to invest and you have Autonomy in your 401k, you then go back to that 401k. You max that out, making sure that it is invested correctly. You're not in a bunch of target date funds and underperforming strategies, right? Your 401ks invested correctly. And then if you still have money, then it goes in the bridge account. Now, just to remind everyone why we talk about the bridge account and why it's so important, a lot of people find themselves in their late 40s, their early 50s, 50s. They got a bunch of equity in their home, they've got several hundred thousand or over a million dollars in these 401ks and they are technically speaking millionaires. But they don't have access to any of that money to get the equity out of their home, they either have to borrow against it with a HELOC or sell the home, something they probably don't want to do. And to tap into their 401ks early, they'll have to pay fees and all these taxes and things that don't make sense. So the bridge account is the money that's going to bridge you from your early 50s to your late 50s when you can finally tap into retirement money. If it's a couple hundred thousand dollars that you're, you know, leaning in on for three, four, five, six, seven years because you want to retire early or whatever it might be, the bridge account is your way to retire early, assuming you've already got all your nest eggs covered when it comes to that 401k and, and your equity in your home and everything else. So in your instance here, anonymous person, I absolutely would max out the Roth 401k, assuming it can be invested in the S and P, the NASDAQ and all the things that we talk about until again, you're 38 years old. You do this for the next 10 years till you're 48, it now grows into 500, 800, a million dollars. And now you're like, wait, I, I've got all this money, like, maybe I should start getting a little bit more serious with my bridge account so you can start having a little bit of flexibility when it comes to an early retirement. I know the strategy is kind of confusing, but like if you follow this match beats Roth, beats taxable, and you go back and you max out that 401k, if you have autonomy, like it all makes sense and comes together well. It's a strategy that myself and Robert have both followed.

[Robert Krok]

What a great breakdown. And the reason this is so for all of you is we love to see people become net worth millionaires, but we don't want to see you have these golden handcuffs because you don't have that money in the bridge account and you've got all this equity in the house and you've got all this money in the 401k or the Roth 401k, but you can't access it just yet. That is why the bridge account is so important in your wealth building journey. So I hope everyone understands that.

[Austin Hankwitz]

Robert, this has been a really cool episode because it's one thing to talk about like crazy cool investing strategies and I feel like the sexy thing here and there is to always talk about that, whatever. But it's also fun to go back to basics. It's also fun to talk about the things that are going to be these normal basic investing strategies that anyone can follow, no matter the size of their portfolio, throughout their investing careers, to ensure that they've got a ton of money to pass on to the next generation in their family.

[Robert Krok]

Well, we always say personal finance is personal. But also learning these basic strategies is so critical for people along the way because so many people that we talk to and that people that have joined the Rich Habits network even, they're just kind of bouncing around trying to figure it out on the fly. So I love this episode because it lays the groundwork for the blueprint. Here's what you do if you want to build generational wealth. It's that simple. You don't have to overcomplicate things. So I think it's a great episode and I'm super excited to see what the people feel about this episode and if they're taking notes and taking action action. We'll get to see those results over the long term.

[Austin Hankwitz]

And don't forget to leave us a comment here on Spotify of what you think about this episode and our new Friday episodes. Got to tune in every Friday now. We're having a blast with them and we can't wait to see you on Thursday and then again here on Friday. Regardless, thank you so much for tuning in to this week's episode of the Rich Habits podcast. Please, if you learned something, consider leaving us a five star review and sharing the episode with a friend. The referrals mean the world to to us. So many of you guys do it. You let us know you do it and we're so, so grateful. With that being said, we'll see you here very soon.