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A
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A
And breathe.
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A
1-800-contacts. Hey, everyone, and welcome back to the Rich Habits podcast, a top 10 business podcast on Spotify brought to you by Public.com. by the end of this episode, you will finally understand why you feel behind financially, even when the data shows you're doing just fine. We'll also help you separate that perception from reality. My name is Austin Hankwitz, and I'm joined by my co host, Robert Kroke. Robert is a seasoned entrepreneur with lifetime revenues 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?
- [01:45]
C
In today's episode of the Rich Habits podcast, we're leaning into the mindset side of our business, finance and mindset tagline. We're breaking down why so many people feel behind financially even when the data tells them they're not. And I think there are three big reasons. Skewed benchmarks, survivorship bias, and the fact that most people won't admit what their real financial situation actually is. I feel like almost everyone I talk to, friends, family, people who message me on Instagram, even people who are objectively doing well financially or all say the same thing. I feel behind. I've heard it a thousand times. And feeling behind and actually being behind are actually two completely different things. But we treat them like they're the same and they cause real damage to the mindset and where you actually are.
- [02:37]
A
Yeah, Robert, I know people personally that make six figures, 100, 150, 200,000 a year, and they tell me that they feel broke and they genuinely feel that way. And it's not them being dramatic, but when you dig into a little bit and you ask them more about what's going on, the problem is not their finances, it's the way they perceive their finances. Robert, you mentioned skewed benchmarks. So let me jump into our first topic here. Skewed benchmarks. Most people, they don't even know what they're really comparing themselves to, right? They, they just have this vague sense that everyone else is doing better than them. And I think a lot of that comes from what we see online. You talk about this all the time. This is that social media comparison bias. It's that psychological phenomenon where people evaluate their own worth by comparing them to people that they follow and see online. It's always been a thing. But, Robert, I feel like since really 2019, 2020, it's just got out of control because now you're not just comparing yourself to your neighbors or your co workers, oh, wow, Johnny got a new BMW. Martha down the street, you know, she just upgraded this or whatever. You're not now just doing that, but you're doing it for everybody around the world, simultaneously, on Instagram, on LinkedIn, on TikTok, despite all of these people everywhere else, they're just showing you the highlight reel. It's not the reality of their lives.
- [03:57]
C
Yeah, we all scroll Instagram and you see someone posting about their new Tesla, their vacation in Bali, their crypto gains. You see LinkedIn posts about people getting promotions, starting new companies, raising capital, all of these things. And your brain automatically goes, well, I'm not doing that, so I must be failing. But what you don't see is the debt purchase behind the Tesla, the credit card bill for Bali, or the fact that the crypto portfolio is down 60% from its peak in October. You're comparing your full reality to someone else's carefully curated illusion. And this causes real problems. So here's why things get ugly. Let's pretend you feel behind financially because everyone on social media seems to be making more money than you. So you make the emotional rash decision to take a new job you absolutely hate because it pays more. Or maybe even you invest in something incredibly risky because you're trying to play catch up. Or even worse, you go into debt, buying things to look successful when you're not quite there yet.
- [05:01]
A
Robert, all of this turmoil and angst came about because you felt behind you saw the Bali trip, you saw the Tesla model, you see those things and you're like, oh, I got to go start doing this stuff on Kalshee and Poly Market so I can better. I saw this really cool thing that I could flip a real estate this. Or you start doing these crazy out or I'm going to go take this job that I hate because I got to go make an extra thousand a month. You do these crazy things because you feel behind financially, because your benchmark, that pure benchmark, you're saying what is my life compared to the benchmark is skewed. You're comparing it all to social media. Now the data shows that younger people are experiencing this more than anyone. 43% of Gen Z and 41% of millennials report feeling financially behind. But when you actually look at the data, and I think data facts are friends, right? We hear that all the time. A lot of them are doing just fine for their age. You could have a growing 401k, you could be out of high interest debt, you can be making more this year than you did last year. But because you are comparing yourself to these skewed benchmarks, you are stressed and you don't feel like you're doing well financially. All of that stress, all of that emotion is caused by a headline of some 23 year old tech guru on LinkedIn selling their startup for half a billion dollars to Google or something. Right? You like, you have these unrealistic benchmarks in your head of how far along you should be in your life.
- [06:31]
C
Yeah, I couldn't agree more to this sentiment and this whole point because we see it every day on Instagram and TikTok where this person says, well, you can do this in five minutes a day and make $20,000 a month. And you've got people like Grant Cardone saying if you don't make $400,000 a year and you're a man, you're a loser. Everyone needs to put away all and get rid of it. Because the key point here is the benchmarks. We're using that comparison. That idea of what we should be doing is broken. We're comparing ourselves to highlight reels and outlier success stories, not the reality of life. And that's just the biggest problem I see. So that leads us to survivorship bias. We only hear about the winners. The person who bought Bitcoin in 2011, the entrepreneur who startup went viral and they made millions of. The real estate investor who timed the market perfectly and now is a real estate mogul. But for Every person who posts on LinkedIn about a job promotion or a viral product that made them millions of dollars in month one. There are a thousand other people who are skipped on the promotion and couldn't get their viral idea to work. The difference is those thousand people aren't posting about it because success looks common when it's actually very rare.
- [07:44]
A
Whereas the average outcome, the person who works a normal job saves consistently retire comfortably at 65. That doesn't make headline news because it's not sexy, but it's what many financially successful people actually do, including myself and Robert. Right? That's the playbook. And it's the playbook that's as old as time. Which brings us to the actual numbers, right? This is most important because I want you guys to really tune in here and think about how do I benchmark myself against the actual numbers. The Federal Reserve does a survey every three years and the most recent data we have here is from 2022. And that survey shows the median net worth. America by age. We're using median, not average because average gets skewed by billionaire tech bros and billionaire tech people like I just. So we're not going to do average, we're going to do median. I'm median, right? We're all median here. So let's just, let's roll. So if you're under the age of 35 in the United States, the median net worth is $39,000. That's it. It's not a hundred thousand, it's not 500,000, it's not a million. Oh my gosh, you're 33. You're not a millionaire yet. Like, what's wrong with you, Susan? No, it's $39,000. That number is actually up 143% from 2019 to 2022. Which tells you that younger people are actually doing a lot better now than they were just a few years ago. Which means if you're a 30 year old human being in the United States with $40,000 to your name, you are by definition above the median. Right? You're above average. Right. Whatever you want to call it here. You don't need to feel like you're behind financially at 30 years old with $40,000 to your name because you are by definition doing better than the masses.
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C
So let's dig into the people in their 30s and 40s and I've got some really good stats here to help you guys, so please take notes. Age 35 to 44, median net worth is 135,000. Age 45 to 54 years old, it's $247,000. And age 55 to 64 is $364,000. Now, remember, 30% of Americans currently have a negative net worth. 30%. So if you have no debt and $100 in your pocket, you are ahead of 30% of Americans already. Take away all of these great stats. So keep that in mind, because these are real numbers. And what's wild is 73% of adults report they're at least doing okay or living comfortably financially. According to this Federal Reserve data, three quarters of people, which means people that are retired at 63 with 364k to their name, collecting their Social Security, are feeling comfortable. But take that with a grain of salt. I don't want you to retire comfortably. I want you to retire wealthy, which is why you listen to the show. But you wouldn't know that from social media, that's for sure.
- [10:33]
A
You certainly wouldn't. And I just, I love kind of reflecting upon stats like this. Right? So think about that again. 35 to 44, median net worth in America is 135,000. 45 to 54, it's about a quarter million dollars, 247,000. And ages 55 to 64, median net worth is $364,000. And you threw in the stat that essentially a third of Americans have a negative net worth. So if you have a positive net worth, no matter what that is, congrats. You're ahead of a third of Americans, which is great. And if you're coming in above these actual real Federal Reserve benchmarks, you are above the, like, you are doing better than your peers. And I would argue you listen to the show. I'm sure a lot of you are actually kind of running the numbers now in your head, and you're like, wait a second, I'm actually doing pretty good for myself. I thought I was behind because I saw this LinkedIn post about my friend who got promoted, and now they're a VP where I'm still a manager. But you know what? I am doing pretty good. And that's the purpose of this episode, to give you guys hope, to help you understand that you're doing pretty good. You guys are taking notes, you're taking action. You guys are taking control of your financial futures. I mean, you are doing so, so well. We'll get more into that, into a second. But, Robert, before we jump into that, we got to talk about the disconnect, because that's where a lot of people fall, right? They fall that the disconnect between feeling and reality. Because even with these numbers, people are still feeling behind. And I think there's a few reasons for that. So half of Americans say that they're happy or even very happy with their finances, where on the flip side, half of Americans are living paycheck to paycheck. But the thing here is, Robert, is, is living paycheck to paycheck doesn't automatically mean you're failing. It means your expenses equal your income, which in my instance, when I certainly was living paycheck to paycheck at 23, 24 years old, before I became an entrepreneur, it just meant I didn't have that much money to move around because I was maxing out my Roth IRA every year. Right. So maybe you're someone who's contributing to their 401k, you're maxing out your Roth IRA, you're saving every single, you know, month and things like that, and you're like, oh my gosh, I'm living paycheck to paycheck. But like, under the surface, once you kind of open up the hood, you see just how well you're doing and the data backs that up. I know we've been dropping a lot of data on you guys in this episode, but it's important because facts are our friends. 72% of young adults are actively taking steps to improve their finances. They're saving more, they're cutting their costs, they're paying down their debt, they're trying to make progress, but they don't feel like they're making the progress because they're comparing themselves to these impossible standards.
- [13:09]
C
Yeah, I remember when I was in my 30s, I was making good money, I was growing businesses, I was buying real estate, I was building wealth. But I was also very lucky because I wasn't constantly comparing myself to the barrage of highlight reels that we see nowadays on social media, like everyone now has to contend with. And I'm sure if that was the case back then, for me, I might have felt uneasy as well on my wealth building journey. But going back to this, and this is one of the key points from what you just stated, is so many people, they might still be making six figures or higher six figures. But because they don't get their expenses in order, because they're trying to keep up with the Joneses, that is a key takeaway that everyone needs to understand what is the reality and what are the feelings. Because the reality is you're living beyond your means and that hurts your feelings. But you could fix it if you get your affairs in order and get your debt to income and your budget in order. You can fix all of this. But this is a great distinction for people to understand. Yeah.
- [14:07]
A
The big idea we're really trying to get across here is that feeling behind financially and actually being behind financially are not the same thing. And most people feel behind not because they're failing, but because they're using the wrong benchmarks. And your perception of your financial situation is shaped by what you see, not by what's true. And what you see is skewed in three major ways.
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C
Yeah. Number one for me is social media highlight reels. You're comparing your full reality to other people's carefully curated illusions. And number two, survivorship bias. In success stories, you hear about the viral entrepreneur, the early crypto investor, the real estate flipper who made millions of. But you don't hear about the thousands of other people who tried the same thing and failed.
- [14:55]
A
And the third major way you're skewing your benchmarks is the headlines that are everywhere focusing on economic pain. Right. Credit card debt record highs. Most Americans can't afford this. Emergency housing market crushes young buyers. Right. These stories are emotional. They're supposed to bring out your emotions because they need to get clicks. They get paid on clicks. They don't get paid when they say, hey, you know, there was this guy in Montana or this woman in Nebraska that had a great retirement because she was a teacher and he was a plumber, and they saved and invested 15% of their income for the last 40 years. Like, that doesn't get headlines. But what does is the housing market is crashing and buyers can't afford anything. Right. So when you put these three things together, social comparison, survivorship bias, negative headlines, you get this warped perception where it feels like everyone else is either crushing it financially or completely broke, and there's no in between.
- [15:54]
C
Yeah. Walk down the neighborhoods and see the Jeep Cherokee and the BMW in the driveway and all the cool stuff. And most of those people are broke. And that is why you have to stop comparing. Live your life. Live within your means. Do all the right things so you can retire with wealth and financial freedom. So, Austin, what do we do about this? And what can everyone do to follow along? I think it all starts with questioning the benchmarks we're using. Like, if you feel behind, ask yourself, behind what? Behind who? Is that benchmark even realistic? Is it based on reality or is it based on social media? And be honest about survivorship bias. When you see a success story, ask yourself, how many people have tried the same thing and failed. When you see a headline about someone making millions, ask yourself, is that the exception or the rule? And I'm sure you'll find yourself in a much better mindset.
- [16:46]
A
And don't forget, get grounded in your actual financial situation. Not how you feel about it, but what the numbers actually say. Are you saving money month over month, year over year? Are you reducing debt month over month, year over year? Are you making more here in 2026 than you made maybe last year in 25 or maybe even 2024? Because you don't. Maybe not everyone makes more money year over year. Maybe it's a little, you know, 1824 months promotion, 1820. But are you making progress? Are you building the skills to increase your income over time throughout your career? Like, you have to what you can control. And you can control your savings, you can control reducing debt. You can control your skills to make more in your career. Those are the things to focus on, because if you measure those things, everything else is going to fall in order.
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C
And if you're actually struggling financially and you're not making progress, if you're going backwards, that's real, and that needs to be addressed. But most people who feel behind aren't in that situation. They're making progress. They're doing fine. They just feel terrible about it because they're using these broken benchmarks we're talking about in this, this episode.
- [17:54]
A
Robert. What an awesome episode here. I'm so grateful that we get to come back every week and share these strategies and perspectives and sort of reality checks with a hundred thousand people that tune into the show. If you're someone that is trying to figure out, like, wait a second, my net worth says I have $79,000 to my name. I'm in my early 30s, or maybe I've got 186,000 to my name. I'M in my late 40s. Like, whatever it is, like, that's what you should be focused on on, right? We talk about this all the time, which is, again, you can only control the controllables. You can't control what the stock market's doing or, you know, things like that. But what you can control is, did I save a little bit of money this month? Did I invest a little bit of money this month? Did I pay off a little bit of debt this month? Right? Like, just. That's what you got to focus on. Because it's not the crazy crypto real estate, tech, bro, AI, like all this stuff that you see in the headlines of some guy Raising all this money or some woman go buy a condo and she's, he's building up a whole empire like it doesn't matter. None of that stuff affects you. You're on your own journey, you're on your own path. And the sooner you realize that you are on exactly where you need to be in your life, the better. You're off. You're going to be like, I'm exactly where I need to be. Robert's exactly where he needs to be. And you are exactly where you need to be 100%.
- [19:09]
C
I've been saying it for years. And to me, this episode really reflects a lot of what I believe in that life. And leading a financially free, mentally free and a fulfilling life is about what you do for yourself. Because everyone is different. Personal finance is different. Life gets in the way. We all have setbacks, but so much of the outcome is based on your mindset. And that's why we're always bringing this up. And I love this episode for that. To just give everybody a little bit of a reality check, a little bit of bump in the shoulder to get them to understand. Stop worrying about the highlights, stop worrying about all the fake stuff on the Internet and worry about what you can control in your own house and in your own habits and finances.
- [19:54]
A
Yeah. One of my favorite phrases, Robert, is don't worry about the White House, worry about your house. Right? And that goes whoever's, you know, president's going on. Right. Like you can't control that house, but you can control your house. I love that. So, Robert, let's now jump to our Q A section of the episode. If you have a question to ask us, be sure to email us at Rich Habits podcast gmail.com or send us a DM on Instagram Rich Habits Podcast. Actually, before we answer a question, let's give a shout out. Let's give a shout out to public.com the investing platform for those who take it seriously. Because on public.com you can build a multi asset portfolio of stocks, bonds, options, cryptocurrency and now generated assets which allow you to turn any idea into an investable index using AI.
- [20:42]
C
And it all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year. You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S P500, all with just a few clicks.
- [21:03]
A
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- [21:22]
C
Full disclosure in the podcast Description so
- [21:25]
A
our first question comes from Uriel O. On Instagram. Uriel says, hey, Robert Noston, I've been a Day One listener and I've learned so much from your show. Thank you. I want to know your thoughts on my work. 401K. You guys say the rule is match beats Roth beats taxable. But my new job has a funky retirement rule with Merrill Lynch. They only contribute up to 3% of contributions. So essentially if I contribute 3% of my salary, I'm only getting a match on 1.5%. So 50% of my contribution. It's not dollar for dollar. Should I still invest into it knowing that I have no autonomy to pick my allocation, all I have is a target date fund. Or should I not invest to it and use that money to max out my Roth IRA since the contribution limits increased this year? Really good question, Robert. I'll let you kick this one off.
- [22:23]
C
Yeah, I wish we knew Uriel's age, but let's just assume 35, 40 years old or something like that. I would say I would probably not max out the 401k because you're not getting that one for one match. And if you don't have any autonomy and they're just going to slap you in a target date fund, I think your money would do better elsewhere. You mentioned maxing out the Roth ira. I think that's a great idea. So that would be my takeaway because if we assume that they're giving this 50% match for every dollar and they're going to put you in a target date fund that's going to underperform the benchmarks of the regular market. You know, the S and P or the nasdaq. I would rather see you at least get that Roth IRA maxed out every year in the funds we talk about all the time. So you at least have the autonomy and hopefully stronger gains than any of the target date funds they're going to put you in.
- [23:13]
A
Yeah, that's a good perspective. And I wanted to include this question because it's a fun thought exercise, right? Because if you're getting a dollar for dollar match on your 401k contribution, like, yeah, go get your free money, like 100. I don't care what it's Invested in. Congrats. You just got literal free money for contributing to your retirement account. You can go switch things up later. But if it's a 50 match now it's like, okay, so I've got to invest half my money into, like, it just doesn't get a match. And that has parked into something that I don't have autonomy over, where the other 50% I do get as a free, like 50% return on my contribution in a one year period of time. So like, that sounds pretty good. But something though that just kind of continues to linger in the back of my head here that you said, Uriel, was since the contribution limits increased this year, which is true, Roth IRA contribution limits increased from 7,000 to 7,500. Something Robert and I really believe in is the Roth ira. And we want to make sure that you are maxing out your Roth IRA contributions every single year. If you certainly can, if you can afford that. We think that is something everyone should be doing. It's the most powerful wealth building account, in my humble opinion, that anyone has access to. And so Uriel, like, I want to make sure you're maxing out that Roth ira, knowing that the contribution limit's a little bit higher. And if you do want, like, can you do both? I guess that's kind of like my, my question back to you because I don't have the perfect answer here. Like, it's, it's a math question, I'm sure, and we can figure out and extrapolate different types of scenarios, what the markets do, whatever, because like 50 return is, is material, that's great. But like, can you do both? Like, can you maybe go up to 3% or maybe 2%, you know, get some sort of match there, but then also more importantly, max out that Roth IRA because you have complete autonomy over that investment. I mean, it's kind of boring and not that advantageous. If you contribute up to the match in this 401k, they put you in a target date. Half your money Is in bonds, 22% in international, and 14% is in some small cap value fund. And you're like, what is my money even invested in? It hasn't grown at all in the last three years. Like, cool, got this match. But like, I just left so much on the table if I had autonomy. And so like, that's kind of what we're trying to prevent. There's no perfect answer to this because like, again, it's a math problem. But I wanted to include this question to give you guys kind of a Inside into how I, I'm thinking about this and, and sort of just this thought exercise on, you know, balancing a partial match with a maxed out 401 and not having autonomy and just, it's, it really comes down to your personal preference. But I would love to see you max out that Roth ira.
- [25:44]
C
Yeah, and I want to click back on this just one second because there's a stat that really sticks out for me and that is less than 19% of US adults currently have a Roth IRA. Austin and I are huge believers, as he stated in the Roth IRA as one of the greatest wealth building tools out there to give you all of this growth over time, tax free. And so I just really want to put it out there for everyone else on top of your burial to understand the importance of the Roth ira. I think everyone that has kids, that should be their 18th birthday gift to get them a Roth IRA opened up or migrate a custodial IRA into the Roth IRA for them at 18 years old. But everyone should own one. And I just wanted to click back on that for everyone that's following along.
- [26:27]
A
All right, Robert, so our next question comes from an anonymous listener on Instagram. This anonymous listener says, I love the podcast. I started listening to it about a year ago and ever since then I've just, just binged all your episodes. I've learned a lot, but I need some serious help. I'm 43 years old, I live in South Florida. I own my condo and I don't have a mortgage. I make about $2,500 a month. With association fees and some other bills. I roughly pay 2,000 to 2,300amonth. So I'm only left with a small amount of money for the rest of the month. I don't have any debt and my credit cards are getting paid on time. I've never been educated on investing, so I started late. I opened a Roth IRA on public.com about three years ago because of you gu guys. But from what I've learned from you, I think I need to do some serious rebalancing in my portfolio. What ETFs should I include in a long term retirement investing account to maximize my growth over the next 10, 20, or even 30 years? Thank you so much. I really appreciate it. Robert, what's your take on this? Obviously, I think people should keep it super simple when it comes to these retirement accounts. I don't like to have a lot of like active management with my Roth or my retirement accounts in general, just index funds things. But what's how, how do you sort of approach it?
- [27:44]
C
I agree 100%. My Roth account and my other retirement account I do not really get fancy with at all. So in this case, I think QQQ is great. I would have Voo in there. I would maybe look, since he's only 43 years old at maybe having some AI Q, maybe some spyi to get a little bit of income. But I would have it down to four or five of these funds we talk about all the time time, maybe some VTI in there. But that's what I would do. I would keep it simple, get it spread across those four or five index funds every single month and let it rock and roll for the next 20, 25 years to build as much wealth as possible given the 100 monthly contribution. Now the other thing that I would say right now, because he is living beyond his means with the relative income to what he's paying for the condo, I would go get that side hustle we're always talking about. Make that 3, 4, $500 extra a month and in invest all of that into these funds we're talking about to jumpstart that retirement and get it further along. But either way, keep it simple, do your thing, use the funds we mentioned and you'll be set.
- [28:54]
A
Yeah, Robert, I'm right there with you. And I think the big takeaway here is at least this is how I think about it, right? It's like I again, I do active management in my bridge account, right? Right now I'm kind of leaning toward energy, I'm leaning towards some international stuff. Like I have active management in these sort of brokerage accounts. But when it comes to my retirement, an account I'm not going to touch for 30 years because I don't have access to it. Voo, QQQ, a little bit of Bitcoin, a little bit of Spyi, right? And just ride the wave. AIQ is a great example. Maybe you want VTI instead, but just these big boring index funds and ETFs now, Robert, before we jump to our final question, we have a special announcement to make. We built the Rich Habits Money map for both personal and business finances. Shout out to the side hustlers out there because we know those business matter. It's a plug and play setup that reflects exactly how we think about money, which is save first, invest consistently, and let systems do the work for you. The name of our podcast is Rich Habits for a reason, because knowing what to do with your money is only half the battle. The real key to building wealth is making sure those money habits actually happen consistently without relying on willpower alone. Robert that's why we partnered with GetSequence IO. GetSequence IO is how you turn your money habits into automatic systems so your money saves, invests and works for you in the background. With GetSequence IO, you create simple rules for your money and when something happens like getting paid from your employer or revenue hitting your business bank account, those rules execute automatically. Saving, investing, taxes, debt. It all gets handled automatically without you even having to think about it.
- [30:44]
C
We at Rich Habits teach you what the right money moves for your money are. GetSequence IO makes you follow the system without relying on memory. GetSequence IO takes your entire financial life, personal accounts, business accounts, credit cards, loans and organizes it all in one clean money management app. From there, Sequence actually helps you set everything up for you and tailor it to your situation. Want to save first every paycheck? Done. Want to invest consistently without timing the market? Done. Want to automatically set aside money for taxes or optimize debt repayment? GetSequence IO can do that for you too. And if you're a business owner, this is huge. You can automate taxes, expenses, payroll and cash reserves without spreadsheets or manual transfers. If you want your rich habits to actually happen automatically, likely check out the Rich Habits money map at getsequence IO front/rich Habits Podcast and take the stress out of managing your money.
- [31:42]
A
Our final question comes from Adair P. Via email rich habits podcastmail.com Adair says. Hi Rich Habits Team. I love the podcast and always find your discussions very practical and insightful. I'm riding with a real world situation and would love your perspective. My 82 year old mother in law has entrusted me with $50,000 to invest in stock market. She doesn't need the income right now, but we want the money to grow over the next five years. My big priorities are to preserve capital as much as possible. At least target a 7% annual return, keep the investment relatively simple and understandable and if possible, generate modest income without high risk. Given her age in this five year time horizon, what are stocks, ETFs or other investment strategies you would recommend specifically? We love your actionable ideas, not just general principles. Robert Robert how It's so funny man. I want no risk, I want 7% returns and I want to make sure I keep all my money. Okay, cool. Let me know where to find that. How do I do that? Right? It's like no, that's not any. Like that is a scam if someone says you can get 7% with little to no risk and modest income like run the other way because it's not real. So a dare. I'm not being mean, I'm just setting expectations. Expectations. The stock market adjusted for inflation has returned about 8 to 9% over the last 90 years. And that's an average. Some years it's up a whole lot, some years it's down a whole lot. And it comes with a ton of risk. Right? But that's the average and that is really close to your expectation of 7% annual return. If you want a risk free return, you put all 50,000 of this into a high yield savings account account, you go earn three, maybe three and a half percent on that money or maybe you buy some municipal bonds or something else of that nature that allows you to earn 3, 3 and a half, 4%. Depending on the strategy that is real, you can earn low single digits risk free right now with treasury bills and bonds and things like that. When you now start talking about mid to mid to high single digits like 7%, you got to take on risk to earn 7%. That's not just a walk in the park. That is volatility comes with that for sure. It's really hard to give you any advice here because I'm not a financial advisor. This is not financial advice. I'm not going to tell you where to put $50,000 of your 82 year old mother in law's money. But I do want to help you set expectations and understand one, it's very hard to consistently for five years in a row deliver 7% returns that preserve capital without high risk. That's, that's hard. The next thing I want you to understand is you are in a situation where the time horizon is very short. If this a 10, 15, 20 year time horizon and you could ride the wave, then yeah, just park it in the s and P500 and get that 7, 8, 9, 10, 12% return average over that period of time with the ups and downs that come with the stock market. If I were in your shoes, I would probably put half the money in a high yield Savings account earning 3 to 4%. The other half I would likely park into the NEOs hedged equity ETF that is, let's call it Spyh or QQQH or there's another ETF called H E D G that I'm still learning more about. But I think it's, it also might be something you, you should learn about as well. It's, it appreciates with upside in the stock market while also being less volatile than bonds. So there's a, There's a couple ETFs out there to choose from, but a lot of them are not gonna like a 7% return here is great, is very, very hard to achieve with I think the lack of volatility you're looking for.
- [35:31]
C
I think it's a great takeaway. And the only thing I would add is maybe you look at a blend of voo, SCHD and maybe vtv, which is a little bit more stable, you know, for some of the companies that have had longer stable returns over the last 10 years. But because it's a five year window. Window, you're asking us to give you actionable advice based on a five year window. And we don't know where that five year window falls into that 50, 60, 70 year time horizon of those average returns of 8 or 9% that Austin was talking about. So that's very, very difficult. But if you looked at schd, you get some decent dividends from high quality companies. If you did voo, you'd be betting on the US Stock market, which I bet on every single year year. And then if you did VTV or something else of that nature, you could be betting on a different portion of some of these companies that aren't the big high flyers but are still pretty stable. But it's really tough in such a short window with an expectation of 7% or greater. So also look at high yield savings, maybe look at treasury bills. There's some other things you can add in there. They're going to not give you 7% by any stretch of the imagination nation, but they are going to give you low risk and high stability.
- [36:48]
A
And I also think it's important to make sure we're on the same page about the task you're asking. You're trying to generate an extra $292 a month of income for your mother in law. $292. Well, when you zoom out like that doesn't seem like that much money, right? Like maybe there's something that your fingers crossed, healthy 82 year old mother in law can do that would help her, that would help supplement income like the $292 a month that she's looking for. For that's not putting, you know, $50,000 in the markets that could go down by 10 or 12 or 28% like it did in 2022. Like I think there's more solutions than just investing the money. If the problem is to generate 3, 500 a year, everybody. Thanks so much for joining us on this week's episode of the Rich Habits Podcast. We are super appreciative that tens of thousands of you come back every single week to listen to the show. We've got nearly a thousand people now inside the Rich habits network. Nearly 60,000 of you have subscribed to the Rich Habits newsletter and we could not be more grateful. Please have yourself an awesome week and we will see you on Thursday for our Q and A episode.
- [37:57]
C
And always remember, if you find value from the information we provide, whether it's the newsletter, the Rich Habits Network, or here on the podcast, share it with a friend. Especially an episode like this. Everyone has their blind spots. Everyone has their weakness. Everyone has things that they need to work on in their financial and mindset lives. And we're here to provide value. So always remember to share with a friend if they need a little bit of help and spread the word of the Rich Habits Podcast.
- [38:25]
A
Thanks everyone and we'll see you on Thursday. Sam.