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- [00:00]
A
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'll understand how Robert and I are earning a 12% dividend yield on our precious metals like gold and maybe even silver in the future. Yes, these double digit yields are real. My name is Austin Hankwitz and I'm joined by my co host, Robert Kroke. Robert is a seasoned entrepreneur with lifetime revenues of over 300 million. And I'm a multimillionaire in my early 30s 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 talking about in today's episode?
- [00:42]
B
In today's episode of the Rich Habits podcast, we're going to take last week's passive income focused episode to the next level. You all love last week's episode so much, we decided it would be appropriate for us to reach out to NEOS funds to host their managing partners on the show to learn more about not just their SPYI etf, but but also the innovative work they're doing in commodity ETFs like gold, silver, oil and more.
- [01:07]
A
If you told me that you could earn a double digit yield on gold five years ago, Robert, I would have said you are crazy. I would have called you insane. But that's exactly what NIOS has built today. So joining us is Troy Cates and Garrett Paolella, the managing partners at NEOS Funds, and they are of course friends of the show. So many listeners after last week's episode were demanding more information on NEOS funds and more insight as to how the these new boosted funds work and maybe even fit into their own portfolios as well as these commodity ETFs. So now you guys get to hear it from the horses. Mouths Garrett, Troy, welcome to the show.
- [01:44]
C
Thanks guys. Really happy to be here today and the opportunity to talk to everybody.
- [01:47]
D
Yeah, happy to be here. Looking forward to it.
- [01:49]
B
So today's episode is the following. We'll get a state of the market from Troy Garrett. As nearly $30 billion fund managers, we'll learn more about the commodity focused high income ETFs and we'll wrap up the episode talking about their boosted ETFs that that as of a week ago were outperforming the S&P 500 and the NASDAQ 100. So let's kick off the conversation with a state of the markets Update. We started 2026 in a hot fashion. The Fed was supposed to cut rates three times this year and oil was under $70 a barrel. Now the Fed likely won't cut rates and I think poly market has it currently at 69% rates won't get cut. We've endured a war with Iran and oil, it is at around $100 a barrel causing inflation to spike. The market sol crazy in Q1 and have rebounded in a crazy fashion here in Q2. Garrett, walk our listeners through what you're seeing on the Fed and inflation front. And Troy, maybe follow up on that with some earnings insights or economic data you found interesting as of late.
- [02:51]
C
Yeah, thanks Robert. We're really talking to a lot of investors watching what's going on with the Fed, seeing what inflation is ultimately doing. And I think you're right. There's a lot of, you know, headline risks that are out in the marketplace as we think and just got some reports this morning on inflation, obviously consumer price index, you know, ticking up. It's interesting where the resiliency here is investors really want to take the opportunity to buy the dip. You could definitely tell that with these V shaped moves that we're seeing in the market. But there is a lot of uncertainty going on and I think, you know, what we're hearing is you got to stay durable in your portfolio, you got to stay diversified and use those opportunities when the market does sell off to dollar cost average. But ultimately you need a portfolio that's going to get you through those troubling times to where you're not freaking out, you're not concerned that the world is ultimately going to come to end and you're down 40% in your portfolio as we're looking at it. I think inflation's naturally ticking up here given what's going on with commodity pricing. Obviously as you had mentioned, oil north of $100 a barrel with our geopolitical risks, people are definitely starting to see that pain at the pump. I mean I know around here in the Connecticut location, I mean we're upwards to almost $5 a gallon for regular gasoline. That's a significant uptick. Going from paying $50 maybe to fill your tank to 80 is obviously going to be a pain point for a lot of investors and a lot of people. So I think we're to it. Of course this administration would love to cut interest rates. So a bit's going to be, you know, jobs dependent, inflation dependent. But I think it's really worth taking a more day by day. But if you can keep at a long term pace for your portfolio, the shorter gyrations and those sell offs and concerns within the market should be more opportunistic opportunities to add, you know, to your portfolio as opposed to be concerned, to punch out and try to, you know, time the market, you know, every time something happens.
- [04:38]
D
Yeah. And to kind of follow on to that. You know, Garrett and I talk to a lot of advisors every day. We talk to a lot of investors. And it's not so much what do earnings look like here, what are specific numbers? It's really that sentiment and the resiliency of the market that Garrett was talking about sitting here in early May. We've seen this huge rally in the second quarter after kind of going sideways and then selling off in March as the war started. But now here we are rallying through that with an S and P up, you know, almost 9%. The NASDAQ and Russell almost up 16%. So we've seen this massive rally in the markets in a very quick timeframe. And as Garrett was kind of walking through that V shaped recovery, people always looking to buy the dip. But sometimes that dip happens maybe too quickly for some people. If you don't have some money sitting on the sidelines and you, you, did you miss it? Should you get in now? So those are a lot of the conversations we're having with advisors and investors thinking about how do I build my portfolio for that durability. So when we do have this sharp sell off, I'm not as concerned or I know the portfolio can weather it and then when it does rebound, making sure I don't miss out on all of the upside. So that those are really the conversations we're having. Of course we're talking about the Fed. We're talking about a new Fed chair coming in, what that's going to look like and will those numbers that Robert talked about earlier, you know, change as we get the new Fed chair in there, are we going to get any more cuts? But of course, a lot of it relies on these inflation numbers and job numbers. But when you think about what's going on in the world, we'll have to see where, you know, if we can get oil back below 90 or $80 a barrel and figure it out from there.
- [06:07]
B
Yeah. One of my biggest takeaways from that is even at your level managing billions of dollars for NEOS funds, you still have to talk about people thinking they can time the market and buy the dip. It's just so crazy to me that we can't get people to just understand at a massive level, don't buy the dip dollar cost average, stay the course and stay diversified. It's so crazy when I hear you guys talk about it as well.
- [06:32]
A
Well, I think what's so fun too about what you guys have built here is, you know, if you reflect upon for a second what we've experienced, you know, we're filming this, you reflect upon what we've experienced this year. The year started with, you know, rate cut expectations, which means the Russell 2000 is like going to outperform, which it's done pretty well here so far year to date. So think iwmi. And then we experience this turmoil in the Middle East. War broke out, which means energy is going to outperform, gold's going to outperform, things like that. Some, some sort of safe havens. And you have MLPI and I aui and then now as we sort of rally out of these March 30 lows we've seen, I think the Nasdaq rallied 25, you know, things of that nature. And then now you guys have these boosted ETFs to offer that too. And so what I'm trying to say here is you all have built such an incredible suite of ETFs that no matter the market timing, the market condition, the market, anything going on in the markets, you all have a solution for investors to lean into in their own portfolios. If they want a little extra energy, they want a little extra gold, they want a little extra bitcoin, want a little extra, you know, boosted a little bit of leverage against. Because they think we're rolling up to a bull market. Right? I mean, geez, Louise. So I, I think that's what's so exciting about what you've built here. Which brings us into, you know, really reflect upon last week's episode. You know, we did this deep dive into SPYI and how it consistently pays this tax efficient monthly income in a true passive income fashion. But your suite of ETFs extend beyond equities into things like commodities. Commodities have been very top of mind, I'd say in the last six to nine months. You all have built I A ui, which is your gold high income etf, mlpi, which is that sort of oil and energy high income etf, iwalki, iri, which is the real estate high income etf. Right. Things that aren't just the stock market. So can you maybe walk us through what caused you all to build these sort of commodity focused ETFs and how maybe these commodity income focused ETFs might fit inside of someone's portfolio today, middle of May 2026.
- [08:37]
C
Yeah, would love to. I mean, I think the way we've always viewed NEOS is to focus on the investor, right? And we know that every investor situation is unique, every risk tolerance is different. Cash flow, passive income, you, levels are different for everybody. And so when we think about it, we want to be that solutions provider. We want to allow investors to be able to invest where they're comfortable, what fits their estate planning goals. And so that might not just be the s and P500, it might not be just the NASDAQ 100. And so what excites us about the ability to be in this position at NEOS is to really focus on letting investors pick what fits their portfolio best or a mix of those. As we talk a lot about diversification, durability, consistently on these types of conversations, and as we think about commodities and alternatives, which is kind of where we bucket this group, right? Whether it's, you know, IUI and our gold high income, whether that's energy and infrastructure and mlpi, real estate and you know, iyri, we want to give the ability for investors to expose their views, diversify their overall portfolios, or even take allocations to what might interest them more in their portfolio. Somebody might be more from south or Texas and have always grown up very much more in, you know, the energy side of the sector, you know, where somebody else, maybe in California has not, right? It's been in a little bit different. So you're able to expose the views for your own portfolio and also diversify. So you don't need to take concentration in just one of saying, Great, I loved Spyi and I'm in the S&P 500 and it kicks me off this passive income. But you know what, Like I don't want 100% of my portfolio in all S and P exposure. I'm not saying spyi, we never suggest anyone invests all in one, as we know you talk about a lot on, on the podcast. But to have those types of products and those alternatives gives you that differentiation within your portfolio, lowering correlations and risks, but keeps you invested. And so that there's areas of your portfolio that are going to produce for you in certain times, while others might not, given geopolitical issues, administration changes, macroeconomic random headline risks of a tweet for no apparent reason that you wake up to on a Tuesday morning at 8 o' clock and realize the market's now down 2.5%. So it's those reasons to make everyone the ability to pick what fits them appropriately.
- [10:56]
A
And Troy, I want to pass this next question your way because we were chatting earlier today on an X space, which appreciate you joining those, but I'd ask you, you know, what was maybe a sector that was interesting and you said that the mlpi, you talked about MLPI coming out in December, and I'm looking up right now here on Morningstar, and I'm seeing MLPI's total performance year to date is north of 18%. How have you guys been able to reimagine? Because I know K1s and taxes, it's, it's all very like, confusing sometimes with MLPs. So maybe can you explain to our listeners how you all are not just offering, to Garrett's point, you know, exposure to these specific sectors of the market, like commodities, but also kind of reimagining them and making them a little bit more tax efficient, as you guys are known for when it comes to some of these new ETFs.
- [11:43]
D
Yeah, it's a great question because one of the biggest questions we get when we're talking to people, when they think about, you know, MLPI and they think about the underlying holdings, there's MLPs in there, there's energy infrastructure names, they say, okay, am I getting a K1? Because I've done that in the past. I don't want to do that again and explain to them, no, it's an etf. We, you know, have structured the ETF to hold only a certain amount of MLPs to fit within the Rick requirements to make it a 40 act fund. And we follow those rules and doing that, it's an ETF where you're just going to get your 1099. So, yes, you're still getting some of the income that comes off of the underlying holdings. But on top of that, we added an option strategy like we do with all of our other products. With that, we're, you know, harnessing the volatility of the underlying, you know, MLP and energy infrastructure names, and we're taking that and providing that premium that is distributed out on a monthly basis. So you're getting that again, that passive income that you were saying earlier. So with this type of product, you're getting that exposure to this sector. And obviously this has been a tremendous year. We were talking about it earlier today. We launched this product in mid December. We've seen tremendous growth and of course, the performance has been amazing. And I think that's what has attracted a lot of people. On top of what's going on in the world right now. All the headline risk, all the geopolitical stuff going on in the Middle east with where oil's going over $100 a barrel, I think that's really drawn it. Even though it's a newer etf, people understanding what we do as neos on the option side and what we could potentially do with, you know, that underlying holding I think has made it very attractive for people. Even though it's, you know, an ETF that's only been out for a few months.
- [13:14]
A
I think that's what's so exciting is when you all introduce a new ETF like an MLPI in December. You're really thoughtful about how to make it as simple as possible because no one wants to deal with K1s and talk to their accountants with it and share all the. It's so, it's so crazy. And I, I really appreciate as a shareholder of mlpi, how easy you've made it. So that's awesome.
- [13:34]
D
Happy to build these, these products. And I think, you know, even if you look back almost a year ago now, we launched the Gold product and you said thoughtful. Garrett and I try to, you know, and the entire team try to bring out these products in a thoughtful manner. We're not just trying to bring out a ton of products at once. Like we said, we have 19 ETFs, but we thoughtfully bring out each one or you know, sector like the boosted ETFs, you know, one by one if we can.
- [13:56]
B
And I want to click back just for a second of. Could you explain to our listeners the tax advantages of having built this MLPI without having to have the K1 instead? It's a traditional ETF wrapper to avoid having to provide that K1. What are those tax advantages? Just for a second.
- [14:14]
D
Sure. So tax advantages within any etf. It's, you know, an ETF is a very tax advantaged wrapper in itself, just through the in kind creation, redemption process. But when you think about what's in mlpi, you're holding all these underlying names as this market appreciates. As you know, Austin was going through before, it's obviously rallied a lot, but that's mainly coming from those underlying names that we're holding in there. So there's a lot of unrealized gains. What we're doing on the option side is we're trying to generate premium off of the volatility of that underlying portfolio and then distribute that out. So the tax advantage comes through for us in being able to potentially, which we talked about before distribute any kind of return of capital which we won't know till the end of the year. But that's a potential just like our other products. And wherever we can, we look to harvest losses within those option portfolios to be able to have a portion of it be return of capital at the end of the year. So for us, it's continuing to do what we've done in some of the larger indexes, but bring it down to a more sector focused or commodity focused process.
- [15:15]
B
Amazing breakdown. Thank you. I just know I want to make sure all of our listeners understand the magic behind what you guys are building. And that was a key part that I wanted to make sure we touched. So Austin mentioned at the beginning of the episode, you all have taken this high income investing to the extreme. Now with these boosted series ETFs, essentially you're delivering even more monthly income to our investors. And it's been exciting to see your boosted ETF series participated in this most recent rally from the March 30 lows. So explain to our listeners how do these ETFs work and why the heck don't I own more of them?
- [15:50]
C
So let's walk through through how that works in a boosted etf. You're taking leverage, right? And so I think everyone needs to know, right? Leverage works on the way up and it also works on the way down. So you're getting more exposure to the underlying investments within our boosted product, which I'm going to explain in a second and so that you're enhancing the overall return participation on the way up, but also on the way down. So let's talk SPYI for a second as the example because we'll talk boosted spyi, which is our boosted S&P 500 high income. So as you guys walked through in the last episode, right? We're in spy. You're long all the equities in the S&P 500 and you're selling an S&P 500 index covered call, right? So you're looking to generate income by selling away a bit of your upside potential return over a monthly basis. And what you're doing with Boosted is you're going to enhance that. So you're going to take the same concept. You're going to own the S&P 500 names. We're going to also do an option strategy that adds an additional 50% leverage to your exposure in the S and P. So now you're one and a half times the S and P. However, you're also going to be selling that One and a half times the covered call amount. So that same additional exposure. So let's just say in, in spyi, you invested a dollar and you added a dollar worth of exposure. If you invest a dollar in xspi, you have a dollar and a half worth of exposure in our covered call strategy. So it's not that you're just levering the S&P 500 exposure, you're adding to the additional short covered calls as well. So if you think about the idea behind that covered call in spyi, the core version, you're getting slightly lower volatility, slightly lower performance relative to the underlying S and P. And you're converting a lot of that into, right, a tax efficient income for the boosted, you're doing the same thing, but you're making the enhanced exposure to one and a half times with the leverage. So if Spyi was down 10% percent in a month, these would be down 15%. If Spyi was up 10% in a month, it's seeking to be up 15% for that month. So the idea is that adding that leverage gets you back some of that upside that you are not getting in a covered call strategy. And I love the audience always ask great questions, right. In covered calls, you're not getting all that upside. How do you get more upside capture than what we already are doing today? You have to take more risk. And so it's not just the ability to try to start trading options around like crazy. It's really the concept that if you're selling away some of the upside, you got to add some leverage back into the portfolio to get that upside back. There's no way to perfectly have your cake and eat it too by generating the income, you know, without using leverage to get more upside. So just that thought in summary is you're taking some leverage to get about 1 1/2 exposure to the core covered call of Spyi, or you pick the SPYI version. And then of course, we also have a hedged version that we won't go through today, but it's allowing investors to pick what their risk return level is that that fits them best.
- [19:02]
A
Okay, so as we talked about in last week's episode, I give an example of selling covered calls against my Tesla position. You buy shares at 220, you have a strike price at 250. I get the ability to earn some premium income to sell my shares at 250, but if it blows past that 250 and it's trading at 300, that 50 per share gap, like that cap on the Upside. And what Garrett's alluding to here is that you all have sort of built in using a little bit of leverage here, 50% leverage, where the cap, I guess, has a little bit more flexibility and how you can really participate more into the upside there with what you've built. So like maybe. Troy, walk us through. Do you have like real numbers or real example we can use? Because as you think about the lows of March 30, if you sold a covered call, you know, call it 5% above like we blew through, I'm sure what that cap would have been. Which means, you know, these covered call ETFs might have left a lot of money on the table relative to their underlying indices. But I'm curious how the boosted ETFs maybe participated in that upside more.
- [20:06]
D
Sure. Now I could give you a real example. So thinking about the S&P 500 from the. We'll use numbers from the, the March 30th low to May 11th. And looking at that data, so the S and P was up just under 17%. So massive rally in the S&P5 during that time frame. Spyi, the core product that Garrett was walking through, was up 12.6%. So nice upside capture still moved higher, but had to give some of it away because of that quick, sharp rally.
- [20:35]
A
Yeah.
- [20:35]
D
Now when you think about as how Garrett walked through what the boosted version would look like. So X SPI that during the same time frame was up 18.7%, so even exceeded what the underlying S&P 500 did. So if you think about from a total return perspective, what that could do potentially for your portfolio, portfolio, if you're willing to take as Garrett walked through that extra risk because the leverage works both ways. But thinking about it off the lows to where we are today, it's a, you know, significant upside capture and even surpassing the underlying reference in this, in
- [21:07]
A
this example, something I hear, and I don't know the answer, which why I'm asking it right now, something I hear a lot when it comes to using leverage and ETFs is like NAV erosion. Right. Like over time the price just like goes down or like there's like drag or volatility drag. There's these weird, like terms and erosion. Are you guys optimizing for that? How does that play into what you've built here? Because if you're telling me that I can have my cake and eat it too with just a little bit of leverage, that sounds like fun, but I feel like there's something I'M missing.
- [21:37]
D
So we built these a little differently than you might look at a lot of levered products out there that are more built with swap contracts. And that's where you might kind of see some of that decay that you're talking about. We did this with all option strategies. So it's very easy to kind of open, open up our holdings, go into our website or anybody's ETF website and seeing the underlying holdings. But if you go into our website and you pull up the holdings of one of these products, you'll see as Garrett walked through all 500 plus names of the S P500, you'll see the short calls and then you'll see that long call short put combo that gives you that synthetic long. And you can kind of understand how that works. And we built it more thinking about that long term leverage, not thinking about it for an overnight trade trade. We build all our products to think about more what they could look like over the long term for your portfolio.
- [22:22]
B
And I just have one more question on this. What is this product for? When we're talking to our audience, we have hundreds and hundreds of thousands of followers that trust us to give them the best information. But they're all at different levels of their financial journey. So who would these boosted products be for? Because we don't want to tell people, hey, it's your first 20,000 you're investing, go to Neos funds and do these boosted products. But then also we need to know where along their journey and where should they be before they start entertaining these boosted products over the other ones like spyi.
- [22:55]
C
Yeah, it's a great question, Robert. These are typically from the more sophisticated investor or the investor that has much more experience in their investment careers.
- [23:06]
A
Right.
- [23:06]
C
And so as you think about that, understanding leverage is a really important part because like I used the example before, right. If, if the S and P is down, you know, 10 and spyi was down, you know, five are boosted, could be down between seven and a half and 10.
- [23:22]
D
Right.
- [23:22]
C
So you're going to take more risk. So these are for the investors that understand having more pure equity exposure or even slightly greater exposure than just investing in that core S&P 500. So as you think about it, it's, it's higher octane, it's going to fit in that more risk on part of your portfolio. Yes, it's producing income. But these are driven off of, you know, total return and income as opposed to maybe spyi.
- [23:48]
D
Right.
- [23:48]
C
That's really seeking a slightly lower volat profile than the equity Markets, you know, monthly distributions, a little bit of downside protection from the income you generate. So if you're newer in investing, stick more with an SPYI and definitely a diversified portfolio to understand that you're not putting too much of your portfolio in any one investment. And as you get comfortable with how the markets move and what the risk is, always feel comfortable. You can track an investment, right? You could watch an investment and see how its history has performed and just make sure that that's matching up with your expectations during different market cycles. I would definitely tell and this is more sophisticated or if you're more comfortable with investing, then take a look at it and see if it fits your own individual financial profile.
- [24:29]
B
That is incredible. Thank you so much for that insight. I just want to make sure we're clear on each sector of your products to make sure people know what fits within their risk tolerance and their buy box. Thank you.
- [24:41]
A
So let's now wrap up the episode talking about the title of the episode which is this gold high income ETF that actually won an award from ETF.com congratulations again on receiving that award. Walk our listeners through through how you're able to pay double digigit yields on things that don't actually pay dividends to investors like a stock would. Right. Apple pays me dividends, so I understand how that looks like. I get my cash deposit to my brokerage account. But you all are creating dividends distributions for things like shiny rocks like gold or Bitcoin or oil. Last time I checked, oil is a liquid that's not paying me a cash distribution. Right. So how do you guys do that? Because I think it's really fascinating that you've been able to enable and I do this strategy myself. I can implement now a strategy of buying IAUI or btci. I get those monthly distributions, I reinvest it back into the ETF itself and now I'm buying more shares of these ETFs for more distributions. And now it's just this really cool snowball effect. So walk us through how you all are creating yield for things like gold and maybe even talk about your new silver filing for for a silver etf. That could be interesting as well.
- [25:55]
D
Sure. Now love talking about shiny rocks. Thinking about our gold product that we launched just almost a year ago. So coming up on the one year track record there, so very excited about that. But this was something as you were saying, we talked to a lot of advisors who have these static 1, 2, 3% allocations to gold and they'd love to be able to figure out how they could do more than just hold that position and maybe earn some income off of it and turn what is, you know, a non income producing product into potentially an income producing product. So Garrett and I and the team spent a lot of time looking at the options market around gold, the volatility levels around it, understanding what kind of premium you could source from selling calls on some of the ETPs that are out there. And we designed IAUI to do just that, where you have this long exposure to gold via some of the ETPs and via an option strategy. And then we're selling those calls calls. And the nice part about it is while we're using flex options, which we've talked about before, and using those different ETPs that are out there, we get that 1256 treatment, that tax efficiency from having it be 60% long term and 40% short term cap gains from that option strategy of the selling the call part. So that was important for us as we kind of designed it. And now we're able to source that distribution, that income come from the volatility around gold and be able to distribute that out in a monthly basis. And so for us it's very exciting. And we saw the adoption very quickly for it. We talked to a lot of people around these products and continue to see growth there. And so it was a kind of an, as you mentioned, the silver filing. So we just filed for a NEOS silver high income ETF kind of using the same strategy and the same thought process behind the gold product. And we wanted to kind of move over to another commodity and continue to grow our alternative space. And when you think about our solutions that we provide here.
- [27:43]
A
Yeah, I mean, like seriously, famously, gold right between the end of 2013 and the beginning of, you know, 2018 did nothing. Right. It just traded sideways for a long period of time. And if you had 5, 10, 15% of your portfolio in this thing for that five year period of time, four year period of time, you would have not made anything. Right. And so I think also the stat is like 70% of the total return from the S&P 500 since World War II has come, come from, you know, dividends and reinvesting that money back into dividend reinvestment plans and things like that. And so being able to create an iaui, I don't, I'm not even going to guess what the silver one is. But like creating those things and allowing people to have exposure to these commodities that don't pay, historically speaking, like any sort of, you know, distributions because it's not a business, right. It's a commodity. But being able to generate that income and allow your investors to reinvest that income or do whatever they want with that income, I think is so, so powerful.
- [28:39]
C
Yeah, Austin, you're right. I mean, it's really exciting for the opportun to produce income on really what has historically been non income bearing assets. We're talking about gold here. We're excited about our silver filing and bringing out another product on precious metals. And it just allows investors to take advantage of those times that you had brought up. It was really just around, you know, trading sideways, not really going anywhere for year after year. And as you think about kind of historical portfolio diversification, usually you have these non income bearing asset classes or investments like gold, like silver, like oil. And now you're able to leverage the opportunity of generating income from the volatility that it gives you. Right? If people think volatility is a risk. Here at Neos, we're trying to harness volatility as a means to help aid your income, part of your portfolio. So excited with IUI and obviously, you know, new products to continue to expand the suite in these non income bearing, you know, investments for individuals.
- [29:31]
A
Incredible conversation, gentlemen. Again, thank you so much for joining us this week. After last week's episode, I mean, literally our comment section was flooded with top five episode. I love Neo's funds. I make 120 bucks a month from Spyi. It's the coolest thing ever. Like all of these incredible comments we got from everyone and just being so eager to jump on the show and further explain what you all are building and how it's not just the equity component, right? Not just the index funds, but it's also the gold, the energy, the, you know, real estate, the bitcoin, btci. It's the boosted, right? It's all these cool things that you all are building. So no matter what type of portfolio someone wants to build, what they want to optimize for, if it's for less volatility with the hedge products, if it's for commodities. And what you all think about with that is like you all have built suites of ETFs here for people to really tap into and lean in on for whatever they believe the market's direction might be. And so again, thanks so much for joining us.
- [30:27]
C
Yeah, thanks for having us. Appreciate the opportunity as always and great to see you guys.
- [30:30]
D
Thank you.
- [30:31]
A
What a top tier conversation with Troy and Garrett. Super excited that they're so willing to jump on the show. It's such a quick notice to, you know, add more color to last week's episode. Again, we talk about passive income and it's literally like it's this phrase these people say online and, and, and you get so excited about the idea of just existing and earning money. You know, we had this episode, Robert. I think it was 168 our personal seven streams of income, right. The seven different ways our money works hard for us. And one of those is dividends, right. You make passive income as, as an investor and having a portfolio and things like that. But the hard part about having consistent dividend income is a lot of these stocks pay quarterly. Think Apple and Nvidia and Microsoft. And the Yield is like 1%, 2%. Sure, you can get a VE in that pays maybe 5 or 6%, but that's not going to grow over time. And it's also buying the stock, it goes like crazy. So having these covered call ETFs that truly pay passive income to my portfolio. Like I've said before, Robert, I've got six figures in NEOs funds. I'm so grateful to making thousands of dollars every month for my NEOS funds investments. They are Incredible covered call ETFs that are so tax efficient. And it's so impressive to have people like Garrett and Troy on the show to talk about how it's not just the equities, it's to going gold, it's silver, it's oil, it's real estate, it's bitcoin, or if you want equities, it's boosted equities. So when it comes to that cap, right, talking about like the strike price and sort of the cap, you know that, that we talked about with like Tesla at 250 versus the 220 and things like that, and it goes to 300 a share. They've got a little bit of sprinkle of leverage inside of that. So when we do have the markets rip like we experienced between March 30 and May 11th 11th, you see outperformance in the S P out performance against the NASDAQ and things like that. They, they're so thoughtful with how they built these and I'm so excited to have so much in these funds.
- [32:21]
B
Yeah. One of the cool things I see with NEOs for, for ourselves and for the audience is just how quickly they get these products out. Every time there's this new idea or sector or growth trend, it seems like they just have a product ready so quick, quickly to let us take advantage of it. And that's what I love about everything they're doing. And now they've added these boosted products and all of these other things, these commodity ETFs. It just seems like they've got everything covered for us and our audience.
- [32:50]
A
Completely agree. And funny enough, the the sponsor of Today's episode is public.com the investing platform for those who take it seriously. And if you go on Public and you try and purchase or Invest in an ETF, ETF Spyi is a top 10 most popular ETF on their platform, which is really cool to see as well. So a lot of you are not only using Public, but you're buying Neo's funds on Public, which I think is so so exciting because on public you can build a multi asset portfolio not just of Neo's funds, but also stocks, bonds, options, cryptocurrency and now generated assets which allow you to turn any idea into an investable index using AI.
- [33:31]
B
That's right, and it all starts with your product 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&P 500, all with just a few clicks.
- [33:52]
A
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- [34:10]
B
Full disclosure in the podcast Description so
- [34:12]
A
Robert, our first question comes from Riley on Instagram. Riley says, what is the most tax efficient withdrawal strategy? When I have IRAs, 401ks and taxable brokerage accounts. So let's think through this one really closely here, Robert. I'm assuming Riley's talking about about withdrawing money from these accounts in retirement, which means they're over the age of 59 and a half and they don't have to pay a penalty of sorts to freely withdraw however much money they want to withdraw from these different accounts. Now considering you mentioned IRA 401k and bridge accounts, taxable brokerage accounts, I did not see the word Roth anywhere. And that makes sense because Roth IRA, Roth 401k. Any Roth specific retirement account is tax free withdrawals. You already paid the taxes before the money went in. So taking money out of a Roth account, you don't pay any taxes. But the Opposite is true. With a traditional IRA, your traditional 401k and things like that, you actually are able to write off your contributions to these traditional retirement accounts against your taxable income, saving you taxes when you contribute to them. But when you withdraw money out of them, you have to pay that ordinary income tax. Now people say, and it's kind of hard to really justify any of this, but what people like to say is, oh, I'm earning a lot of money now in my 30s, 40s and 50s, my peak earning years. So my effective tax rate is higher than what it might be in retirement. Maybe in retirement I'll only live off of 80,000 or 100,000. And now I'm making 250,000. So it makes more sense for me from a tax perspective perspective, to contribute to these traditional IRAs, traditional 401ks, then a Roth component, a Roth variant of a retirement account. And I guess, yeah, technically that could be true, but we can't predict what the tax rates are going to be in 20, 30, 40 years from now in retirement. So the most tax efficient withdrawal strategy is to ensure that whenever you are withdrawing the funds out of your retirement accounts, you're looking at those tax brackets, you're making sure that you're withdrawing it slow enough and low enough to keep you in your ideal tax bracket. Let's call it, I don't know, under 20%, under 22%, 24%, whatever that looks like for you, and not withdrawing all of it, 600 $800,000 of it in a single year, and then paying up to 33, 35, 37% tax on that incremental couple hundred thousand dollars, whatever those tax brackets are. I'm not a CPA. You guys can google them, figure them out there. But that's, that's really where my head's at. Robert, just make sure you're not being real crazy about how much you're taking out of it at a certain specific year. One broad stroke, pull off of these retirement accounts into your bank account there being taxed in that one calendar year with this big tax bill. But do you have any other, you know, pointers or ideas to think about? I can't be. I mean, it's pretty simple.
- [37:14]
B
Yeah, I would say you covered it all. The only thing I would add to it that's not really tax efficient but is important for these withdrawal strategies is understanding the 4% rule and trying to stick somewhere close to that. Because when you go into retirement or you're leading up to retirement, you kind of have to reverse and engineer how much money you need in retirement to lead the lifestyle that you're projecting for retirement. So make sure to read up on this 4% rule, which basically explains that you can take out 4% per year to come up with that number and not run out of money over 15 or 20 years. But just make sure you understand that so you know how much you need to be able to withdraw that 4% per year and pay all of your bills and live the lifestyle you want to lead. That's not taxes efficient, but that is a withdrawal strategy that should help some of you that are more concerned of how much you need in retirement.
- [38:04]
A
Now, where the flexibility comes from, Robert, is where they mentioned bridge accounts, right? These taxable brokerage accounts, you get much more flexibility with these because they're not classified as retirement accounts. With a bridge account, you, for example, might be direct indexing on public.com, the S&P or the Nasdaq, and you might be, you know, experiencing some automated tax loss harvesting, allowing you to build up losses in your brokerage account account of 4, 10, $15,000 on maybe an annualized basis, depending on how much you have invested there. And then as you realize profits in the account and withdraw those profits out of the account at whatever age you want to, because there's no age limits or restrictions around deposits or withdrawals there. In a normal taxable brokerage account, you can use the money you've tax loss harvested those losses to offset the gains you've realized elsewhere. And so sort of, I mean, you have $4,000 of tax loss harves, $4,000 of realized gains elsewhere in your taxable bridge account portfolio. You now can add $4,000 to your checking account and you don't owe any taxes on that profit because those losses were offset by the gains there. Now you have to be wary about a lower cost basis when it comes to direct indexing. But you specifically talked about sort of the withdrawals here and thinking about taxes. So that's where I'll leave it for you. But Robert, I actually I had a conversation with my CPA yesterday and he shared with me a crazy strategy to save money on taxes that one of his other clients had recently done. And I'm going to share it with you all here. His name's Stephen Gabrielson. Snapback CPA is his name on social media. Go check out Stephen. He's incredible. But he shared with me this. He said Austin people, small business owners are contributing up to that $72,000 a year to their solo 401ks to get and save on taxes because they are very high earners right now and they're contributing that 72,000 to pull down their taxable income. And that is in a traditional pre tax retirement account. He said someone he knew had $2 million and one of these pre tax solo 401ks. They then took that 2 million. It was a self directed IRA. They then invest $2 million because it was self directed into a real estate venture. That real estate venture they like went out and they bought some existing hotel or some land or development, tore it all down, then was able to reprice his investment instead at 2 million, all the way down to 400,000 as a sort of mark to market. That person then did a conversion from the pre tax account to a Roth Roth account, paid taxes on the four hundred thousand dollar conversion there. So what would that be? Call it, I don't know, 25 effective tax rates, call it a hundred thousand dollars of taxes. And then did another mark to market about a year or two later, pulling that 400,000 back up to the 2 million dollar, you know, whatever it was worth whenever they exited the real estate. So essentially over the course of two years there, his 2 million went down to 430,000. Converted it from a traditional to a Roth. The Roth then went back up to the 2 million and then he put it back in the markets now as a Roth retirement account. So no taxes on any withdrawals in the future. Having only paid $100,000 on that 2 million, which is a 5% effective tax rate, which like I was mind blown, that 2 million is going to double, triple, quadruple more into the future as the markets I'm sure continue to trend up into the right. But essentially this person created a way and figured out with whatever' going on there to only pay $100,000 in taxes on what I'm sure will be, you know, 3, 5, $10 million of Roth value in retirement. Because again, once it's that Roth retirement account, you can pull as much money as you want out of it tax free. What do you think about that?
- [42:06]
B
I think it's incredible and it reminds me of the Peter Teal story of how he became so incredibly wealthy when he had all this PayPal money and he said somehow converted it into a Roth component and then was able to grow it there and then buy all of these assets through the Roth component. So I think it's really smart. Just make sure everyone out there when you do something so incredibly complex that you have the right people helping you do it, that is how the rich get richer. And that is by understanding the tax code and how to use real estate as your friend. But I love that story and I definitely want to look through it with a fine tooth comb and understand exactly how they did it because maybe I'm missing something. I thought I do a lot of cool, complex things, but that sounds really, really incredible.
- [42:51]
A
So our next question comes from. She she says stumbled upon your show and I've been an avid listener since. Thank you for all you share. I'd like to stay anonymous, so call me. She My husband and I are 49 years old. We started late with investing and put all of our money in real estate. We have very minimal invested in the markets for our retirement. Our son is going off to college paying 65,000 dol year in tuition student federal loans of $5,500 a year. We're able to fund $35,000 in cash, but we'll need to borrow $20,000 more to cover the difference. Our budget is going to be tight. What is the best way for us to finance this? Should we do a parent federal loan? Should we take a HELOC out on our house or maybe navigate it some other way? Thank you so much for your insights. She Robert, I'll let you kick this one off.
- [43:37]
B
She she, she. There is no world where you should be financing this. You've already made it clear at 49 years old, you're late to the party. You have very minimal investments for retirement, yet you want to go into more debt to finance this student loan tuition and for the college. I think it's crazy. I just wouldn't do it. I would have the conversation with your son and say, hey, we're going to put you in a community college for the first two years because the average community college was, we looked it up, is 5, 6, 7, 8, $9,000 a year. Do that for two years and then find a college that isn't so expensive. Because why on Earth at 49 years old, would you want to further delay any chances of being able to have a solid retirement fund so you can take care of yourselves in retirement for all of this student loan debt? I think it's crazy. I like the fact that you want to help your, your son, but I wouldn't personally do that. If you had millions of dollars, sure, loan them the money, give them the money, do whatever you have to do, but you don't. And so you have to look out for yourself first because nobody's going to be there to pick you up in retirement if you don't have the money, so I wouldn't do it. Or if you're going to help at all, I would consider a community college because at the end of the day, many of the degrees that are out there now are not worth all of that money anyway because AI is changing, the job workforce is changing, and I would just really be careful of getting further in debt given your current situation.
- [45:07]
A
I completely agree. She do me a favor. Put the phone or laptop or however you're listening or watching this episode in front of your son. Hey, she son, you don't need to go to a $65,000 a year school. I'm so excited you got into a $65,000 year school. It's a testament to how smart you are, testament to your extracurriculars, testament to how you interview and how you write and all the, all the things that go into getting accepted into such a prestigious college that wants to charge so much money for. You need to go there. What you need to do is go through college as cheaply as possible, graduate with tens of thousands of dollars of student loan debt. I graduated student loan debt. My fiance has got 30 something thousand of student loan debt. Like it's okay to have 20, 30, $40,000 of student loan debt. Very normal, very fine. You know, you can manage a 250, a $400 a month payment. If you go to this college and you go out and borrow $260,000 in tuition just to get a DE ABC College one, your monthly payment's going to be like $3,000. That is rent and a half for a 20 something year old. First off, like that's, that's pretty much all the money I spent when I was 20 per month is 3,3000 something dollars. That is going to set you back so, so much. I know you're so excited to go there. I know your friends are going to go there. Your girlfriend might be wanting to go there. I don't know the situation, but I do know that you are shooting yourself in the foot. And I guarantee you, unless this is like Harvard or Princeton or some real top tier branded school, I promise you going to your state school with two years of community college before and then two years at the state school so you get the degree that actually says University of Tennessee on it or University of whatever on, on your actual degree is going to be just as fine as going to this random $65,000 liberal arts school or whatever. Assuming it's not an Ivy League and it's just a normal, you know, hey, we're really expensive college. Like, I promise you this is the right decision to go somewhere else. And you are putting your parents in a really tight spot to expect them to come out and, and pay so much. It'd be so different if your, if your parents were like, hey, we've got this 529 account. We've been, you know, to Robert's point, we got all this money we've been saving for it. We're ready for this. But they're not. They got to go remortgage the house. They got to go, you know, say the budget's going to be tight. Think like that is, that's insane. Like, don't ask your parents to do that. And then also she do not offer that back to she here for a second. We talk about this, we use this phrase a couple times on the show, which is when the plane is crashing, you want to put the, the mask on your face before you put it on to the person next to you. You're 49. You mentioned you're late to the party. You all need to get aggressive with your investing. You need to be on budget. You got about 20 years here of investing ahead of you before you start to, you know, 70 years old. Really thinking here about retirement in a serious manner. That doesn't mean I need to go borrow $20,000 and pay 35,000 in cash for my son to have his freshman year, that he's going to probably get a 2 something GPA at the school because he's, you know, a freshman in gen ed classes and like it's no fun and you know, whatever. Please don't do this. If you can't hear my voice, I hope you're watching this video and you can see it in my eyes. Please don't, don't do this. It's a very bad idea. I would much rather see you do the community college route for a couple years. If you don't have the money. If you do have the money and you want to pay for a little bit of that community college, like that's great. But I'm just, I'm not seeing in this situation, Robert, a family that can afford to pay $260,000 of college tuition for an undergraduate degree in something that's likely going to, to pay $75,000 a year straight out of college. That might turn into six figures by the time they're 30. But I've got so many friends that went to the University of Tennessee that borrowed $27,000 or $32,000 of student loans over the course of that four year period of time. They worked part time on the weekends, they were waiters. I worked part time in college like I, I paid my own rent like I had six roommates my senior year. Like that's what college is all about. Like saving money and being as, as lean as possible and then graduating and making great money out of college because you know, state schools are just fine. Like they're just fine. Robert. I mean what was your experience going to college?
- [49:29]
B
Yeah, same as yours. I had no help. My father told me he would give me back then $25 a week to help. That lasted about five or six weeks and he stopped. I had to run up credit cards for books. I had to work nights and weekends to get through school. But it was worth every second of it back then. But I want to just click back on one little part of this. Prestigious schools don't mean what they used to mean nowadays with AI and where everything is going. If you feel your job and what you want to do, this career you're looking for needs a degree. I don't think it's worth it to have your parents and everyone involved be in this debt to be able to do that when you can go to a state school or a community college and probably get the same degree and just be just as effective if in the market because of that and save tens and tens of thousands of dollars. That's my take. Awesome. But I think you gave a great breakdown. Don't do this. She please, please keep saving for your retirement so you guys can live comfortably and have dignity in retirement. But don't go further into debt for this prestigious degree.
- [50:30]
A
Now before we jump to our final question, we've officially entered the second quarter of 2026 and uncertainty has never felt so high. Major indices haven't experienced durable uptrends in months. We saw this crazy V shape recovery recovery. We talked about it from the March lows but. But now we're having a little bit
- [50:48]
C
of a sell off.
- [50:48]
A
It's all over the place. The Fed has completely flip flopped on their rate cut expectations. Inflation is now top of mind for a lot of people in the markets. We are all over the place Robert,
- [50:59]
B
which is why it's never been more important to have a plan and stick to it. And if you're a long term investor like us, that plan has never been easier to come up with and implement through dollar cost averaging and re riding the wave.
- [51:11]
A
We've been talking about how important it is to dollar cost average for years now. And when markets feel shaky, it's hard to see your progress is why we recommend being a part of a social platform like Blossom Social. On Blossom you're able to see your entire portfolio in a very clean and simple way. Think your holdings, your performance, your dividends, all of the important information about your investments.
- [51:32]
B
You're also able to follow along other long term investors on the platform, helping you stay motivated during these uncertain certain times. Not to mention the portfolios on Blossom are all verified. So if you're seeing someone buy or sell a name, it's because they actually did it in their own brokerage accounts. None of these fake gurus with these copy and paste fake accounts. These are all real and verified.
- [51:55]
A
We're both on there. Portfolios are on there. So if you want to join us, just search Blossom Social in the App Store or head over to blossomsocial.com on your phone or desktop. There's a link in the show notes below. Go check out Blossom. You can go see what I got, what Robert's got and you can go see my massive Amazon Amazon position. Robert Our final question is coming from Mark on Instagram. Mark says hi Robert and Austin. I love the show. I'm 23 and I recently made a big life change. I left my job in law enforcement in Wisconsin to move to Arizona for my spouse's career. Currently pivoting into cybersecurity and IT, studying for certifications while working at 35 an hour for my parents real estate business. We're currently living rent free which has allowed us to pay off a lot of debt. But we want to buy our own home sooner than later. Here's the breakdown. We've got $33,000 in a high yield savings earmarked for a down payment plus $7,000 for personal 22,000 in our IRAs, 6,000 in ETFs in 1200 in miscellaneous brokerages. We are actively putting $400 a month into Voo via public. We own a duplex in Wisconsin. It's netting about $550 a month in profit. And so we here's my question. Once I land my new role, should I be maxing out my 401k? Is that our our number one priority here? Or instead should I be doing something with this duplex or maybe even saving more for a down payment on a home? Any general advice or direction you can give us would be super awesome. Thank you so much Mark. Robert, I'll let you answer Mark's question. What do you think?
- [53:24]
B
I think Mark is doing a great job I love everything about this question. It's very detailed. So that means Mark is on top of his money and about his, his business. Few things I would look at. I do love seeing you have the high Yield savings account already up and running. You've got the emergency fund up and running. You've got some money set aside for the first property. But what I would rather see you do at 23 years old instead of buying that first home for you and you already have the duplex. I know that I would still consider house hacking because what that does is it keeps more money in your pocket if you use the Fannie Mae 5% down mortgage, which is you can buy up to four doors. So you could buy a duplex, triplex or a quadplex with that. I'd love to see you guys do that, live in that in Arizona, where you're at now, for a couple years to be able to build some equity in that and then buy the primary home that you want to buy. Because we want to see you get closer to that 100k base before you start going all in on the dream home. Because many times buying the dream home, you end up being housebroke. And I don't want to see that happen happen with you or anyone listening. And then as far as should you be maxing out the 401k? I don't think so. I think you should go up to the match of whatever the company is offering. We always say that. Get the up to the match, the free money and then everything else I would put into your traditional bridge account. That way you have control over it. You can build that with autonomy and rock and roll and get to that hundred thousand dollars saved and invested. That would be my take on this question.
- [54:55]
A
Yeah, we like to say match beats, Roth beats to taxable. Right. So I agree. I think you should go up to the match in your 401k if you have a match and then above that, go max out that Roth IRA. Seems like you're doing a great job. $400 a month right now into V. I think that's through a Roth ira, I'd imagine so. Love to see that. And then if you still have money, then sure, go back to that 401k, turbocharge it a little bit, depending if you have autonomy, no autonomy. Want to see that back in public in that taxable brokerage account, invest into the index funds and in ETFs we talk about. So Robert, you said that you want them to do the house hacking stuff, so you think that they should turbocharge their high yield savings a little bit more. I'm looking at it right now. They said $33,000 in their high yield savings was only 7,000 in their personal. I'd rather see that 7 get closer to 15. I don't know how much money you guys are spending. I meant you mentioned no rent, so I'm sure it's cheaper than normal. But like that's not going to be life forever. So if I were you, I, I'd like to see a fully funded emergency fund before you do extra investing or extra saving or anything like that. Of course you've got a new role, so I'm not assuming you're going to just get hired and laid off. But you never know. No one knows what the future holds. You know, you also could have an emergency like a medical emergency or maybe a funeral or things of that nature where you do need to come up with thousands of dollars. And 7,000 might not be enough. So I really would also love to see you beef up that emergency fund fully funded to that three to six months of expenses which probably is in the range of 15 to 20 thousand dollars. Once you've got that, you are off to the races. A lot, a lot of ground covered here. Robert. At just 23 years old, that's an incredible situation to be in. Super, super excited for you, Mark. And congrats on hanging out in Arizona. Arizona is a cool place to be. Everybody. Thanks so much for joining us on this week's episode of the Rich Habits podcast. If you learned something, please consider sharing this episode with a friend. Also, be sure to subscribe to the Rich Habits newsletter. It comes out every Thursday and it's completely free. We also have these Friday episodes called the Rich Hat Habits Radar, talking about the biggest headlines impacting you and your money and of course the Rich Habits Network, our community for our biggest fans to come together. Ask questions, join us on Tuesday night weekly live streams. It's a good time over there.
- [57:10]
B
Definitely make sure you check out that seven day free trial for the network. It's all about community and leveling up your knowledge on finance, business, personal finance, real estate and even mindset. I love the community. It's one the of the coolest things I've ever been part of. So make sure you check that out.
- [57:26]
A
Everyone. Thanks so much and we'll see you on Thursday.