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- [00:01]
Austin Hankwitz
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- [00:27]
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- [00:56]
Austin Hankwitz
Hey everyone and welcome back to the Rich Habits podcast, a top 10 business podcast on Spotify brought to you by public.com my name's Austin Hankwitz. 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 early 30s with a background in finance and economics. As the show name might suggest, every single episode we talk about rich habits as they relate to business, finance and mindset. And Robert, we're going to be talking about some very rich habits today. What are we talking about, Austin?
- [01:27]
Robert Kroke
Today is going to be a good one. I'm really excited about this episode because you all know we love hosting interesting people on the show and today's guest is a master class in betting on yourself. We're going to break down the mindset of professional risk taking through the story of a guy who went from sleeping on a blowup mattress with 11 roommates to become president of a multi billion dollar publicly traded AI company. And on top of that, we're digging into something every single business deals with, and almost everyone gets wrong, which is travel. It's one of the biggest line items companies spend on and it's a huge piece of the global economy. And our guest sits at the absolute center of how it's changing across the world. With us today is Michael Cindisich, President of Navon. Michael, welcome to the podcast.
- [02:15]
Michael Cindisich
Thank you. Thank you so much for having me here and I'm really excited to dig in today. Big fan of the podcast.
- [02:20]
Robert Kroke
Definitely. We are excited as well and I Want to start at the beginning. You graduated from UCLA on the pre med track. That is a paved road doctor Stable, respected. And instead you took a road trip to Silicon Valley and ended up as one of the earliest employers at a startup, sleeping on a blow up mattress with 11 roommates. What caused you to make this decision to give it all up and start over and go this entrepreneurial startup route?
- [02:48]
Michael Cindisich
Yeah, it was, it was crazy kind of situation how it all panned out. But I guess like to, to take it back. I was, I was pre med in college. I actually thought I was going to be a doctor since I was in middle school. I was always kind of doing that. I was working in a lab while I was in high school at the Keck Graduate Institute, which is like near where I grew up in Upland. And so I entered ucla. I thought, you know, definitely going to go on that track. I was a psychology biology major. I was actually working in a lab at UCLA in the minor research lab where I was doing brain surgery on rats to implant cannula and give specific drugs. And we were doing studies around basically PTSD avoidance. And so I was doing that, that was my honors thesis. And I was in the basement almost every day doing, doing these surgeries by myself. You know, while it was cool work, it was, it was really boring. And at the same time, a couple friends and myself, we decided to actually start a company in the summer before my senior year to build an insurance brokerage, but a more modern one. And we had a bunch of different products that we could sell, whether it was insurance or annu. Health insurance, life insurance, car insurance. And it was the six of us. And we got it to about 40 licensed agents. We had an office in Beverly Hills. We were sleeping on yoga mats in the office, we were showering at the gym next door. And then I'd be going back and forth to like go to class or do my labs and do my research. And something was telling me, like, man, I'm having so much more fun building companies and interacting with people and selling and marketing versus, you know, my research. And I kind of started thinking like, well, I have to do this again for the next four years in medical school and all of that. And even though it was always interesting to me, I actually decided you don't have to go right to medical school. From graduating college, you can often take a year off and study for the MCATs or even two years. And so I decided I was going to do that. So once college was over and we had graduated, I actually came up to Silicon Valley. I was living back at home for like, the first week after school, and my friend and I, one of the co founders of the other company, his name's Amjad. We can get back to him later, I'm sure. But we drove up to the Bay Area and we called his brother, and his brother said, I actually know of this, like, hacker house. And their shed in the backyard has opened up and you guys can rent it for $600 a month. And we were like, okay, well, that's a ton of money. But it's the, you know, it's Palo Alto, and so it's way cheaper than anything else we could find. So we said, okay, let's do it. And I think my parents thought I'd be back, you know, within a couple of days. But we went to Target. We got air mattresses. We met everyone at the house. There was a lot of people there. We moved into the shed and we both had, like, little twin air Matt. And we decided, you know, we were staying there. And we were looking at, like, applying for jobs in the tech market at startups or even bigger companies, but in the. In the Silicon Valley. And during that time, by the way, I was drop shipping gym workout tanks from Alibaba and selling them on Amazon. We were doing iPhone cases. And I also picked up a job tutoring chess students. So on Craigslist, on the drive up, I applied to be a chess teacher in the local Bay Area. It was paying really well. It was like $50 an hour. So I was like, okay, like, I can do this. And so on that drive, the guy got back to me right away. And I interviewed with him and he told me I can, I can have the job and I can start in a couple hours, like in the afternoon after the kids were out of school. So I had like, a backup plan. And it was like, let's go figure this whole Silicon Valley thing out and enjoy living in this house. And the house was like nothing I'd ever seen. Like, there was VR glasses and goggles already. And this is in 2014 or 2015. So they had VR goggles. There was no TV. There was a projector. People were playing Super Smash Brothers. There was like someone who rented the balcony, who was a student at Stanford. Over the summer, they. They rented out the balcony. There was an RV of a engineer at Google, and he was renting the garage, like, driveway to park his rv. And every room had, like two people in it. But everyone was building companies and having a lot of fun. And so we were like, you know, this is, this is incredible. Let's like, let's experience this thing. And my friend Amjad, who I came up with, ended up getting a job. I ended up getting a job at a, at a tech company. It was actually in the healthcare space, so it was kind of analogous. But I was hired to go build out the SDR and BDR function and we eventually moved into the house. So someone moved out and we shared a room in the house and just so, you know, like some of the people that were there. So Amjad, my friend and his brother who was living there for a little bit, they recently started a company called Socket and Socket, just raised for a billion dollar private company valuation. So that was really cool. The guy who was living in the garage for a little bit, he went on to go be one of the first engineers at ramp, who's a $40 billion company now. And he then after Ramp, he went to go help co found and build a company called Cognition, which builds Devin, the AI engineer, Cognition, I think, just raised for a 20 billion valuation. And so, you know, you have a lot of stories. I went on to Navon very early. We recently IPO'd and you know, we're very early in our journey, but, you know, we've, we've been growing very, very quickly, which is really exciting. So the, the people that have come from this house, it's really special. It's kind of like an episode of Silicon Valley or very similar to the show, if you will.
- [08:01]
Austin Hankwitz
It sounds really special and it really reminds me of what I feel like the PayPal mafia might have been back in the day. Right? You guys are all doing your own things and, and that's, that's so exciting. But for someone listening right now, that might be, maybe they're already in their, you know, career journey of lawyer, accountant, doctor, or maybe they're getting ready to go and they're pre med or pre law, whatever it might be. You know, you took a very big risk and I just want to better understand, like, did you have a framework or like the logic around this risk? Like, how did you actually calculate the fact that, okay, I don't want to go be premed, I'm going to go try this other thing. I'm leaving all this, like, I wouldn't say guaranteed upside when it comes to your salary, but very clear upside when it comes to being a doctor? Putting that over here for a second, I'm going to go try and run the other way and do this thing that I'm really passionate about. Like, how did you Weigh those options.
- [08:51]
Michael Cindisich
You know, I think for me, I'm definitely a gut feel type of person. It's kind of how I operate most decisions in my life. But I would say, like, I did things to make it a little bit easier. So because I got the, you know, the chess teaching job and I was able to do drop shipping, and every morning I'd go and drop off packages at FedEx and get them shipped out. I was doing things to, like, have a backup plan. And the other thing I realized is medical school can always wait. There's. It's a long life, hopefully. And, you know, taking a year, taking two years with backup plans, that would be, you know, I would be able to get by just fine. I think that was. That was one thing that allowed me to make these types of decisions earlier. And what I'd say, by the way, because I get asked from people all the time is like, how do you choose which early company to go join? And what makes. What makes it successful? And how can you better position yourself that way? And the decision process I made when I was interviewing at Navon, it was formerly Trip Actions, now, now it's obviously called Navon. But one I was looking at the seed investors and the amount. And so back then they had raised, you know, $4 million seed, which was a very big seed round back then. Now it's like nothing. But I looked at that, I looked at the investors who had backed them. Oren Zev from Zev Ventures, he had backed Audible and Chegg and a lot of great companies. And so he was the main person that was putting money in early days. And then the founders, so Ariel and Elon, our founders, they had a very successful track record, growing companies, but then also building their own companies and having successful exits. So that was another factor. And then the last one I would say is, again, it kind of goes back to the gut feel, but after meeting them, I really aligned with the mission and the vision and really the opportunity. Because if you think about the opportunity that Navon is attacking, it's a very, very large market with a lot of Runway, a growing market, and a huge tam. So I realized, like, this could be something very big for a very long time, which got me really excited. And by the way, a funny story. After I joined Navon, about six months in, I walked by Ariel's desk and I was like, is that Sivan? That's his. That's his son's name. And he was like, yeah, how the hell do you know my son? And I was like, he was actually one of My students at one of the schools when I was teaching chess. So.
- [11:01]
Austin Hankwitz
Dude, no way. That's so funny. That's crazy. So maybe he was cutting you a check before you were actually on his payroll. That's funny.
- [11:08]
Michael Cindisich
Yeah, I guess so.
- [11:09]
Robert Kroke
So I want to talk about something that has been kind of all over the place recently. In this past graduation season. There were just so many speakers literally getting booed off the stage the moment they start talking about AI and the future of work. And there's a lot of fear out there specifically that AI is going to wipe out all of the entry level jobs before young people can even get a foot in the door. So from your purview, what advice would you give the 22 year old right now staring down that fear today, whether they're in school or out of school, of what is really going to happen in the workforce with all of this AI integration?
- [11:51]
Michael Cindisich
Yeah, it's a good question. You know, I think at least from where I'm sitting, I believe that we're hiring or the world is hiring more engineers, more software engineers than ever before. And maybe now they're called AI engineers, but they're, you know, it's, it's equivalent skill set like computer science. I think people are hiring like crazy in that field. I think people are building more businesses than ever before and with AI they're generating more revenue faster than ever before. And there's a lot of different sectors and companies that continue to scale. And we see it in our own travel data because we work with a lot of companies on travel. And obviously when the company grows, a lot of times travel volume is growing. And so from where I'm sitting, it really doesn't feel like people are not hiring. It actually feels like there's more job creation happening right now, more companies are scaling faster. And you know, some companies are scaling back because they're using AI to become more efficient. But I'm a firm believer and in the camp of if you can do more and there's more opportunities and more products you can build and more segments and GEOs and customers you can go after. You know, we generally try to take advantage of that by actually scaling faster. So instead of necessarily taking it all to the bottom line, why not reinvest back into the company to scale revenues faster. And if you look at public market, for example, comps, another percentage point of growth is actually rewarded a lot higher in market cap than another percentage point in profitability. And so I think that actually companies are starting to use that and just want to scale revenues Faster and faster. Navon example, I think in Q4 last year we were reporting 35% or something revenue growth. Q1 we reported 40%. And by the way, for the year before, I think it was 31. And so, you know, these are rough numbers. But all that's to say we're actually accelerating our revenue growth and we're very, very excited about that. And hopefully we'll continue to invest and grow faster and faster. And I can tell you personally here at Navon, we are hiring all over the place. And so whether it's for sales, for marketing, for engineering, all different functions within the company, we are hiring. And actually new grads, it's a really attractive place to hire from because new grads can come in and we can teach them our system, we can teach them our playbooks, but it's also the first class that's really graduating, that's grown up in the AI era. And there's a lot to learn from that versus, you know, the rest of us that have been in this corporate world trying to figure this out. And maybe there's new people with new ideas and better ways of doing things that are really impressive. So I think that's one piece. The other piece, I'll say more as it relates to Navon, is we actually think that in a world with all of this AI and in a world where, you know, there's all this technology and noise and inference and interference, we think people will value in person and human connections more than ever before. And we actually see that with our data. The companies that are growing fast are traveling a lot. The companies that are growing fast are meeting their customers in person. They're meeting the companies that they're working to acquire. We just acquired a company last week called Smart Trips in Brazil. And there's no way that that acquisition gets done without face to face meeting the founders and really understanding the people that are joining our business. And so I actually think that there's an opportunity here where experiences and in person connections and really traveling to have these experiences will actually continue to grow.
- [15:16]
Austin Hankwitz
I completely agree, and I know we've mentioned Yvonne a couple of times here, but I want to give you the opportunity to one, explain it as the president of the company and then after everyone clearly understands what you guys are building and what's going on, talk more about your experience about going from literally cold calling to book meetings, to then be the VP of sales, to running the payments and expense business, and now being the president and how that frontline experience is shaping how you lead and Advice you can give to people who are still at the bottom of that corporate ladder, but aspire to do what you did and become the president of the companies that they're working at.
- [15:53]
Michael Cindisich
Yeah, great. I guess I should have explained what Navon does, but when you think about Navon. So if I work at a corporate, usually that corporate will want to provide me tools to book my travel, to get support when I need to make changes or cancellations, and then to pay for my trips, my expenses, and file my expense reports. So that when you have employees that are spending on behalf of the business, spending the business's money to do something travel or expenses, it's a software and a travel agency that has, you know, live human support 247365 to basically book your trips, file your expenses, pay for those trips, and get support when you need it when you're traveling. The value that we drive is there are very legacy corporate booking tools and travel agencies out there. But when we started the company and thought about what can we do and how can we attack this space differently, we saw that there's way better ways to build the technology to create, you know, or to manage your bookings. And so, for example, we provide all the inventory. Every flight, airline, hotel, car rental company, rail. And we basically, when you do a search for a trip in our product, we know what you're likely to book. We know your loyalty clubs, your past booking behavior. We know different patterns, and we can surface really simply the results that you want when you need to make a booking. And it's very. You know, it was odd to us that personal booking tools were relatively simple to use, but all of a sudden you're at a corporate and you have to use a very clunky, almost erp type.
- [17:25]
Austin Hankwitz
Very clunky. Let me just double down on the very, very clunky. I remember it's clunky. I used to work in, you know, I was doing that, and it's clunky.
- [17:33]
Michael Cindisich
And then you're at home on the weekend and you have to file your expense reports and you take photos of receipts. And it's like, there's got to be a better way. So. So we built a very friendly interface to search and book for your trips. We also own the travel agency. We are the travel agency. So our when you call in for support or when you chat in and need help, we have all the context of the booking. We know who you are, we know what trip you're on, we know what you're struggling with, and we can support you faster. And then we also are the payment mechanism. So oftentimes, which is maybe, you know, I would say it's maybe another financial tip for your podcast. But there's a lot of companies that make employees front their personal money on behalf of booking a trip. Like, I remember my first trip that I took out of college for my first company. We didn't have a corporate card. They didn't pay for the trip. So I had to call my mom and say, can I use your credit card and pay for this? Because, like, 1200 bucks and all of that. So we provide the payment Rails and the credit cards and corporate cards and virtual cards to pay for those bookings. And then lastly, because we have the whole context of travel, we make expenses completely automated. So more than 70% of our expenses, nobody has to do anything. So you swipe our credit card or you connect a credit card, and policy applies on that transaction. All the approvals happen. The managers get the visibility in real time, and then it syncs right to the ERPs. And so a good example is that is like, I don't care if one of my employees buys a hot dog or a hamburger for lunch. I don't need to see that. What I need to know is that it was a meal and that that's within policy. And if it is, I don't need to see it, I don't need to touch it, and I don't need the employee to reconcile it when we have all the context and we can automate that entire expense and reconciliation for them. So we provide this holistic, all in one travel and expense solution for corporate employees. And then the second part of your question, I think was like, you know, navigating and growing throughout the company. I would say first and foremost, it's great to align with a company that doesn't value, I would say, experience as much as it values results and people who come with really interesting and new ideas and really can create value no matter what level of the rung on the totem pole, I guess, of the corporate that you are. And I think that's like the container that's helpful to put yourself in to then be able to grow in your career and into your scope and responsibility and people you manage and impact that you provide to the company. So I think that's like, number one, I would say another thing that I realized, and I think a lot of the people here at Navon have realized as they grow in their careers, is there's not really a thing of like, I'm on the bottom or I'M on the top. It's almost like everyone's kind of faking it till they make it. And the second you get comfortable, especially if you're at a fast growing company, you move on to the next thing that makes you uncomfortable. And then you keep moving on and moving on because the business takes on more and more challenges. And so I think that that's like a really important thing that I learned, which is like, we're all people, everyone is their own person dealing with a bunch of insecurities and struggles. And if you're bold enough to speak up and bring new and cool ideas and you go and do things that drive value for the business, then you'll find a way, no matter what, to move up throughout the company. And that usually gets recognized if you're at the right company that, that, that values that type of contribution.
- [20:47]
Robert Kroke
Wow, I love this. This is such a great conversation, Michael, and music to my ears. Austin knows this very well. But I hate friction in my life and in my companies. So everything about me internally and how we function is to prevent friction. And travel is very friction filled, you know, especially before we had the tools that you have here at Navon. But let's talk about the companies that are lagging behind and not utilizing these tools fully yet. What are the biggest things companies are getting wrong in how they manage travel? And where specifically are they bleeding the most money without even realizing it? Because you mentioned earlier this holistic approach, and I think that's very important part of your message here is getting people to understand that this just removes the friction and makes everything easier on both management side for the company and the employees. Because you mentioned they don't have to do their expense reports on the weekend after they just get back from a long trip. So walk us through. Where are these companies getting it wrong by not utilizing these tools in the best fashion?
- [21:54]
Michael Cindisich
Yeah, I mean, number one company would get travel and expense wrong if they're not using Navon. So I guess I have to start there because we remove the friction. You know, I can share more about the value of what we deliver in results of the company. But I would say the biggest thing that I see companies are getting wrong is they actually see travel or T and E as a cost and not a revenue and a business driver. And the reason why I think that that happens is because if you're not leveraging a platform that gives you real, real time insights and data and visibility and you can't tie that type of travel or that type of spend back to an roi or a business outcome, then you're kind of flying blind. And I've seen companies before that do something like, like, hey, we're overspending on T and E, so we're gonna do a travel freeze or we're gonna just tell everyone they need to spend 15% less. But if you think about why do you spend for business travel? You spend because you want to close deals, you want to beat the competition, you want to build relationships with your customers, you want to meet the people that you're acquiring, and you want to build the culture of your company. And that usually happens in person. And so if you're not directly using a system that allows you to drive those insights and understand that roi, then you're flying blind, you're misinformed, and you're typically seeing it as a cost and not a business driver. And for me personally, like if I look at the enterprise sales team and I see the people who are have the less the least travel spend or are taking the least amount of trips, that's a huge red flag. And we see it in our own data. The salespeople that make president's club are often the people that are traveling the most. And the highest conversion rates on our deals are usually the deals that we've met the buyers in person versus over a zoom. And so when you start looking at it that way, it becomes a very strategic lever for your business. But you can't do it unless you can actually understand the data.
- [23:54]
Austin Hankwitz
Before we ask Michael our next question, gotta give a shout out to public.com, the investing platform for those who take investing as seriously as we do here on the Rich Habits podcast on Public, 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.
- [24:15]
Robert Kroke
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 even lets you back test it against the S&P 500, all with just a few clicks.
- [24:35]
Austin Hankwitz
Generated assets are like ETFs with infinite possibilities. They're completely customizable based on your thesis, not someone else's. So go to public.comrichhabits and transfer your portfolio today. That's public.com rich habits paid for by Public Investing.
- [24:52]
Robert Kroke
Full disclosure in the podcast description.
- [24:55]
Austin Hankwitz
Back to our conversation with Michael. Well, you mentioned this data and as I was preparing for this interview, I was reading a study by, by Forrester, and it said that customers that use Novon saw a 376% return on investment over three years with a payback period of under six months. Can you explain where that ROI actually comes from? Because that is a big number that I'm sure people's ears perk up now. They're like, wait a second, how does that work? How does that actually come together? Michael?
- [25:25]
Michael Cindisich
Yeah, so, so before I explain the value, I'll explain who uses us. Companies like an OpenAI or an Anthropic are leveraging Navon for, for their travel, all the way to companies like Aviza or A G Healthcare or Cummins, you know, huge diesel manufacturer, you know, Unilever, all these types. So we span the gamut of small companies, the most innovative companies in the world, and then a lot of the biggest companies in the world that are super global have a lot of operations and travel and different types of needs. So that's who we service today. And when it comes to that roi, it's really broken down into three main areas. One is just hard dollar savings. If we can look at someone that spends $100 million on travel and tell them we're going to save you $15 million, you know, on average, it's a huge value add, not to mention all the benefits of being able to understand the travel and drive it more effectively, but the way that that dollar savings comes in. So number one is we connect to every single source of inventory, whether that's corporate inventory, like through a global distribution system, all the way to consumer inventory sources like booking.com or Expedia, Priceline, Agoda, all the way to. We build and invest in technology to build direct connections into these airlines. So there we're going direct, and it's not through an aggregator, which then allows better pricing flexibility, different fares, and more ancillaries to those bookings. So that's one I would say is content, just more content. And if you've used a corporate booking tool in the past, you might say, wow, why am I needing to use this thing? I look here and it's like 200 more expensive, but I can go on the Internet and I can find cheaper prices. So, like, is this corporate tool even saving me money? Oftentimes the answer is no. But because the inventory and the content is not there, the next part that we drive savings is it's really behavioral. When a company sets their policies, we have our own rewards engine that actually pays the travelers to choose more cost effective options on behalf of the company. So you might have a policy in New York of 350 a night and if I run a search, I can see the average price or median price for good hotels is lower. Navon will bring the policy down. But if you book below that, we will give you a share of the savings. And that's not something the company pays for. Navon would pay and then you can use those rewards that we give you to book personal travel on our platform. Whoa, whoa, whoa, whoa, whoa, whoa, whoa.
- [27:50]
Austin Hankwitz
That's so cool. Wait, so you're saying that someone right now is traveling a ton listening to this episode. Like I travel all the time for work. I'm always using these clunky because I traveled for work before I was a cool, fun podcaster and I would use these clunky websites to go to Boston and Louisiana and all these things that I'd have to do. And what you're saying is if they use Navon and choose a option that's going to save the company money compared to like what the company, you know, put as their sort of like quota there, like the budget for that specific trip and they choose a trip that's cheaper because they stay at a different hotel or they don't maybe spend so much on meals or maybe the Uber. They sweet talked to Uber driver and they said no problem, you can well take you down the road. Whatever they did that savings, a portion of that gets passed down to the actual employee and they then get to use that toward personal travel to go to Mykonos with their pookie bear.
- [28:47]
Michael Cindisich
That's right. Your reaction was my reaction when I interviewed with Ariel and Elon. The whole thought process was if my policy is $300, I'm going to try to spend 299 as much as I can to get to that policy. But if I can actually instead of staying at, I don't know, a jw, but staying at, you know, a traditional or normal Marriott hotel. But I actually get a share of the savings to then enjoy for my personal travel. Like I'll take that all day. And so that's the mechanism that we built that really also helps drive the behavioral change when people are booking their travel. And so these things create adoption. And then sometimes companies or we'll help them negotiate corporate rates, we take our buying power, we will help negotiate with hotels for like chain wide discounts and stuff like that for our customers. So that's dollar savings. That's one portion. The other portion is time Savings. The average time to book on Navan a trip is seven minutes. And you can imagine with the clunkier tools, either you have to call, you have to email, you have to wait for it to load. The Average time is 45 minutes with traditional tools. So if we can book in 70 in seven minutes instead of 45, huge time savings. The other piece is if we can have you swipe your card and the expense is automatically reconciled and filed for you, you don't need to do expense reports. That's a huge amount of time savings. And so we look at dollars and time. And then the other part of that study was also on implementation. And this isn't a ERP integration that completely upends your financials and everything like that. We've made integration and implementation so easy that even companies that have more than 100,000 employees, we've implemented them in less than 90 days. And our average implementation time is much lower than that. But we've become so fast and so good at implementing really quickly that it allows these big companies that are switching to us to realize that value very quickly. And that's what the Forrester result found by talking to customers and all of that, that's a study that, you know, we aren't necessarily building for them. They're actually going out there and doing their own study, talking to our customers.
- [30:47]
Austin Hankwitz
I was gonna say. So it sounds to me like people listening right now that do travel, if you're using one of these other platforms, you need to go to your boss and say, why are we not doing Navon? Like what? Like, this is crazy. It's taken me 45 minutes. Every time I want to go. I could just. We just use Navon. I could do this in seven minutes. And I could go to Mykonos.
- [31:04]
Michael Cindisich
Yes. Yeah. And I don't have to do expense reports on the weekends.
- [31:07]
Robert Kroke
Yeah. But let's. Let's talk about something that's not on our agenda today, and that is the cool factor of this Mykonos trip and the potential for this rev share in the savings, because, let's face it, the markets are changing. People are spending more money on travel now than ever before, especially younger people. And they're picking experiences over buying things, over buying these consumer products. So I think this secret sauce that you guys have built into this is really an incredible little thing that I didn't even know existed for people to start loading up on these benefits and savings for their own personal trip. So I think it's really, really cool and exciting.
- [31:47]
Michael Cindisich
And by the way, you get airline miles. When you book through us, that all passes through you get your credit card points. So it's kind of a triple dip. I guess. We're adding another way to get rewarded for travel.
- [31:57]
Robert Kroke
I love it. Well, travel and tourism represent about 10% of the global GDP and business travel alone is projected to hit roughly $2.9 trillion globally by 2029. And companies travel to enter new markets, close deals, all the things you talk about. But Michael, from your seat, where can you see these spending patterns across thousands of companies in real time? Because the rest of us are seeing really mixed economic signals. What are you seeing? Are you seeing a rise of travel? Is it plateauing? Where are things from your seat in the market?
- [32:30]
Michael Cindisich
Yeah, you know, every quarter we, we or I think it's quarterly or every six months we produce business travel benchmarks. So we, we commission a study. It's internally off of the millions of data points that we have from, from customers and, and industry trends. And we're, we're really owning business travel. So business travel follows very different patterns than consumer or personal travel. So for example, business travel will take a huge dip in December where the TSA lines are higher because everyone's on personal travel. And then business travel dips in like August for example. And Europe trends have different than the U.S. trends. And you know, every, every part of the world is a bit different. See is that business travel is booming. Very interesting, you know, comeback from the pandemic days when everyone stopped traveling for business. But we saw a rapid recovery. We still see business travel increasing year over year, whether that's costs or just the amount of travel that companies are doing. And a really interesting thing is teams have become distributed in a lot of cases post the pandemic. And so today it's not, not what it used to be. Where it was. Sales and marketing is on the road all the time. Sales and marketing are back on the road all the time. But a lot of companies are having on sites and off sites and it's product people and it's engineers and it's different employees within the companies are actually now traveling. So net net we see travel increasing. And when we just reported our Q1 earnings a few weeks ago, the travel volume on Navon for Q1 was up more. It was up 50% year over year from the year prior. Now a lot of that is because we're signing up new businesses and we're driving new sales, but a lot of that is also our existing customer base that's actually just investing more and more in travel. So from where I sit, it looks like people continue to prioritize business travel more and more, even though, by the way, at the same time, costs are going up a little bit. We saw oil prices increase, which impact airline prices. There's inflation and things like that. But it looks like businesses are continuing to prioritize that and see the value in connecting face to face.
- [34:32]
Austin Hankwitz
I completely agree. I think connecting face to face is incredibly important. Talk to me more about this new Navon Edge you recently launched. Navon Edge. You describe it as bringing the kind of travel assistant that used to only be reserved for C suite executives, now to everybody. How does it actually work is you just. You just chat with it and it does your. Like, what's going on?
- [34:57]
Michael Cindisich
Yeah, so. So the way we think about it is, first of all, forms and tables are not as important anymore. And if you think about how we book travel previously and in a lot of cases today, we go and we select, you know, here's the location I need to go to. These are the to and the from. Here's the dates. This is what I need to do. And then you press search and a lot of people are really optimizing and seeing the value and chatting in versus filling out a form or a table. And so first of all, Navon Edge is specifically a chat interface with a lot of imagery overlaid into it while you're chatting and as it's pulling in results. So I can say I need to be in New York next week for this event. It doesn't even need to know, you know, what, where the event is, anything like that. That's what I need to do immediately. It'll start searching for flights. It knows where I am, I'm based in San Francisco. It knows that I always do the 2pm flight from SFO into Newark, specifically on United because of my loyalty. I like to fly United and I like to get in you around midnight so I can still get sleep and the red eye socks. So like, it'll. It'll optimize that for me. It'll research and know what the event is. It'll find the location, it'll figure out what hotels are relevant to me within my policy that I like to stay at or have previously booked. It knows me, so it can even suggest restaurant reservations for me. I can go right in there and ask what you know, what's available, and it will surface restaurant reservations at places that I like or that kind of match, you know, know the taste of the cuisine. It'll alert me if there's, you know, I don't know a lot of traffic or if this airport is, is not good and I should fly into another airport and ask me if it's okay with it. And it's much more of like an actual conversation that you would have with your EA that really knows you and can plan around your trip. You can connect your calendar, you get your loyalty clubs, you can optimize for the points that you have. So it's really a hyper powered EA that has infinite context about travel. And so we get that context from all of our own bookings and all of the bookings of the volume that we see on our platform, plus all the context of everything else that exists in the world to basically help us plan and book. And the really interesting thing about our platform is any LLM can, can plan a trip, but what they can't do is they can't book the trip. Usually then you get kicked out to this thing or that thing. But if we have all the planning and all the booking, plus all the travel specific, specific context in our platform, it creates a very, very interesting user experience. And that's what Navon Edge is. We recently launched it a few months ago and we're really excited about the people that are signing up and the trips that we're seeing being booked.
- [37:35]
Austin Hankwitz
All right, so here's the real question I think everyone listening at home is, is asking their brains and I'm asking this right now. I'm going to a wedding in about a month. I had to go to Google flights and type in all this information. I'm flying southwest one way, allegiant the way back. There's no round trip. Those are my only options. And I had to go to both these platform into all this stuff. It took me, me and my fiance are going, it took us probably 45 minutes to an hour just to get our flights figured out. When is Navon Edge going to be for the everyday part? When can Austin just subscribe to Navon Edge or so I just, I feel like this is such a revolutionary product that everyday people should have access to it or something. Man, this is so cool.
- [38:15]
Michael Cindisich
You can sign up today so you can actually go to Navon Edge. You can sign up, you can download the app, create your profile, connect your email. By the way, it'll pull in your loyalty clubs and then start telling it what you like to do. And next time you want to go book a trip, you can leverage Navon Edge to do it. So yeah, go, go and give it a try. We'd love.
- [38:33]
Austin Hankwitz
So we don't need to have a corporate account with Navon. I mean, this is for anybody. That's what you're saying.
- [38:38]
Michael Cindisich
Well, Navon Edge specifically is targeting, I would say frequent travelers. So a lot of times it's business travelers. And then we see a lot of leisure on top of it. We call it leisure where more people are blending, like their weekend trips and, and their corporate trips. But for you guys, you're, you're, we can, we can add you to it and you can test it out, no problem.
- [38:57]
Austin Hankwitz
Dude, so cool. I can't wait. This is so exciting. This is the coolest thing ever. Why, why did it take so long for this to come about? Amazing. Before we ask Michael our final question, Robert, we are now entering the second half of 2026 and after what Trump just did, talking about how the Iran ceasefire is now done and it's, we've got uncertainty like crazy. Semiconductors are going up, down, left, right in circles. We saw good news from Micron, but now we've got earnings coming up. Major indices have been all over the place in the month of June and July. We are uncertain. We have never been so volatile, in my opinion, as it relates to the headlines and emotions that are taking charge of the markets right now.
- [39:37]
Robert Kroke
100%. Which is why it's never been more important to have a financial 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 ride the wave.
- [39:52]
Austin Hankwitz
We've been talking about how important it is to dollar cost average for years now. And when the market feels shaky, it's hard to see your progress. This is why we recommend being a part of the social platform like Blossom Social, because on Blossom, you're able to see your entire portfolio in a very clean and simple way. Think holdings, performance, dividends, all the good stuff.
- [40:11]
Robert Kroke
And you're also able to follow along long term investors on the platform, helping you stay motivated during these uncertain 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 account.
- [40:27]
Austin Hankwitz
We're both on Blossom. Our portfolios are on Blossom. So if you want to join us, go search up Blossom Social in the App Store, head over to blossomsocial.com on your phone or desktop shop, click the link in the show notes below, and we'll see you over there. All right, back to our interview with Michael.
- [40:42]
Robert Kroke
So just one more little piece for Me explain to our listeners, we've got Edge over here. What is the difference with Navon Anywhere? Because I saw that and I was like, wait a second. Because I want a world where I can talk to my AI agent and say, hey, I've got a light schedule this weekend, I need you to do this. I want to give you a budget of $5,000. Book me somewhere cool that's on a beach for this weekend. I want to get to that point. So explain, because it looks like Navon Anywhere is getting us there through this Gemini Enterprise, directly through Google with this new tool. So just do a quick one on the difference between Edge and anywhere and what that means for people listening.
- [41:24]
Michael Cindisich
Yeah, great question. So Navon Anywhere is really an extension of our entire AI and infrastructure. And so what we started to think about is we see people like to operate in their everyday tools that they're already in all day long and continuing to operate with versus going to another interface to go and get something done. And so what Navon Anywhere does is it is essentially it's an agent to agent protocol or an MCP as well, where we can embed within Google Gemini. And so you can just talk to it in Gemini and what it'll do is it'll connect to our agents and then it will fulfill and show you the inventory, the policy, the trip options that are available. Load that back into Gemini Enterprise. And so that's exactly what you're talking about. It's about us really meeting the travelers, the bookers, where they are and so that they don't have to go to a new interface. It's essentially a headless way to think about it, where our infrastructure is so robust and we have these agents that have capabilities to do all of our, the policy management, the booking, the fulfillment. So we figured we should go and integrate those into the different systems that people are used to working within all day long. And it just makes it more efficient and easy for them.
- [42:37]
Austin Hankwitz
So, Michael, I've got an open claw AI agent running on a Mac Mini that's looking at my Gmail all the time. And it's looking at these things. It's proactively, you know, responding or saying it's doing the stuff here. But that's very niche, right? That's very like I had to go set it up. There's a lot going on there. But how far away are we from like business travel itself completely getting automated with artificial intelligence? Like I receive an email about a conference that I really want to go to and I can forward it to Austin's agent@navon.com or something. And then I get an email back 10 minutes later from that. That address, and it says, here's your booking information here. They just do it all for you without even, like, just hands off.
- [43:22]
Robert Kroke
Off.
- [43:22]
Michael Cindisich
I think we're very, very close to your point about, you know, your. Your OpenClaw. We have a project internally that our CTO and co founder has been working on and even launched some parts of it called Travelclaw. And so we're thinking the same way you are. But to start, you could take that email and forward it or add it to the Nevon Edge chat and it would suggest the trip for you, and you can say, go ahead and book it. So I think that we're very, very close to that future. Future. Now it's a question of how much will people want to review it and accept before something actually gets booked without them knowing. But in the end of the day, the technology is there. I think it's about the workflow and the interface that it shows up. And we can have you talk to our co founder if you want to start trying out our travel cloth.
- [44:03]
Austin Hankwitz
I'm in on that one. I love the future. I'm so grateful that incredibly smart people are on the bleeding edge of artificial intelligence and just truly trying to solve these problems and these clunky platforms that have been around since I was in college. Like, I'm 30 now, by the way. Right? So it's like, it's so exciting. Michael, we're so grateful that you joined us on this episode of the Rich Habits podcast. I learned a ton, and I hope everyone listening got some really cool inspiration from your story. If you are someone listening that travels a lot, go bring up Navon to your employer. Let them know that this awesome platform exists and that you prefer to try it and give it a whirl. But, Michael, before we sign off, any parting words?
- [44:42]
Michael Cindisich
No, nothing. Nothing for me to add. Just thank you so much for. For having me. A big, big fan of the podcast. I really especially liked the one on Monday about the skills, the top 10 skills that make people rich. And, yeah, thank you for doing what you guys are doing. And it's a. It's a great outlet to listen and learn, so really appreciate it.
- [44:59]
Robert Kroke
Thank you, Michael. Incredible conversation. I'm going to put a shameless plug. I feel like we need a Rich Habits brand ambassador deal here. We travel a lot. We're always going everywhere, so we're going to work on that. But you did a great job. We hope all the listeners go check out Navon, because what a learning experience for me. And I travel a ton, so I'm so excited to. To learn more and really dig in and use the platform.
- [45:24]
Austin Hankwitz
So y' all missed this. We just chatted with Michael for like a minute or two after the conversation we just had because, like, Robert and I are like, yo, why don't we use this? Like, Robert was right. Like, we travel all the time for the Rich Habits podcast and just personally with business and stuff, it's like we need to be using this specifically the Navon Edge. And he said that small businesses don't pay booking fees. It's free for small business owners and small business users, which we are. I mean, I don't have more than, you know, seven or eight employees, so we're definitely a small. I'm not a Visa or a Unilever, whatever it's called. So that's really cool to hear. I'm definitely going to be checking out Navon and using it. Robert, next time we go travel for a Rich Habit retreat or a New York Stock Exchange or something of that nature.
- [46:05]
Robert Kroke
Yeah, 100%. I love how much I learned about it because you mentioned in the podcast how clunky everything is and it's time consuming and I hate friction and I just feel like Navon, with all these new tools is so close to just getting rid of all that. And so this will take away just so much time and friction to get it done. So very cool interview with Michael from Navon.
- [46:28]
Austin Hankwitz
Yeah, shout out Michael, shout out Matt as well for orchestrating it and shout out the whole Navon team. Thank you all so much for joining us here. I learned a ton and we're so grateful and hopefully we'll have you back to tell us more as to what's going on in the back half of the year with some travel trends and different types of, you know, holiday travel, I'm sure lots to. Lots to consider there. All right, Robert, let's now jump to the Q and A section of this episode with the first question coming from Instagram. Remember, if you have questions to ask us, you can ask us questions directly face to face inside of the Rich Habits Network. Every Tuesday night, we host a Zoom call. There's like 250 of y', all, 280 of y' all that show up every Tuesday. And it's so fun. It's such good vibes. Definitely join the Rich Habits Network link in the show notes below or in addition to to, you can DM us on Instagram at rich Habits Podcast or email us@rich habitspodcastmail.com if you have questions to ask. So this question's coming from Diane. Diane says hello Austin and Robert, first of all, I want to thank you and your team for all the amazing information you share with us. I've been implementing your advice and many of your tips over the last two years and I've seen a big increase in my investment portfolio and my IRA account with the boom in AI and chips. I wanted to ask for your Investment advice on two ETFs I've seen talked about a lot. D R A M and S O X X. Which one do you think offers the best value with the least cost basis? I appreciate any information you share and look forward to many more episodes. Diana, what a great question. Let us dig in. So let's set the table here. Robert. D R A M is the round tail DRAM Memory etf. D R A M. DRAM is an acronym for Dynamic Random Access Memory. So when you think of like SK Hynix or Micron or these other different companies who build these HBMs and these memory chips that that are with Nvidia's chips and GPUs and things like that, right? That's the types of companies inside of the DRAM etf. So if you go look at it, literally some of the top holdings are SK, Hynix, San Samsung, SanDisk, Western Digital, Seagate Technologies and other memory focused companies. Now the other ETF he mentioned is soxx. This ETF is created as a way for people to mimic the SOX index, the semiconductor index. It's been around for a very long time and so SOXX is a way for people to have liquidity to buy and gain exposure to that index. The DRAM ETF is very native new. The SOX index, the SOXX ETF is not new. It's been around for a very long time. If I were in your shoes and you're sort of asking a couple different questions here, I guess the answer to the first question you're asking is like which one has the least cost basis? So maybe you're talking about the expense ratio of some of these products. Looking at DRAM specifically their expense ratio is 65 basis points. Looking over at SOXX, the iShares Semiconductor ETF, their expense ratio is about half of that that at 34 basis points. But I want to be very clear and Robert, maybe you can double click on this too. The DRAM ETF is a thematic ETF that's very much focused on one niche inside of Semiconductors as a whole, where the SOXX ETF is instead there focused on the semiconductor industry as a whole. So if you look at SOXX and you're thinking about the semiconductor industry as a whole, it's like these two top 37, 30, you know, 30 plus names here are inside of this ETF and that's how you sort of get this broad exposure to semiconductors. Whereas if you look at the DRAM ETF again, you're really narrowing that down to just the names that are operating in this sort of niche of memory. They've got 24 holdings inside of the DRAM ETF and some of them are just cash holdings and different loan obligations, things like that. So I'll pause there, I'll let Robert chime in, but I do want to round off this conversation with an observation we shared during the Rich Habits Network live stream earlier last week.
- [50:40]
Robert Kroke
Yeah, my biggest takeaways here are just a few DRAM their three holdings make up 73% of the entire fun Samsung, SK, Hynix and Micron. So for me that's a little too condensed down and like Austin alluded to kind of a niche down down ETF within the entire semiconductor space. And with that and a higher expense ratio, Austin alluded to 65 basis points for DRAM. That is why I personally prefer SOXX. Better coverage spread out over more companies and a lower expense ratio. So for me, long term, especially with all of this volatility in this sector, I like SOX X much better.
- [51:26]
Austin Hankwitz
Now here's an interesting observation Robert, that we had shared during our livestream that took place on Tuesday of last week. This is an image of a so x x ETF overlaid on top of the NASDAQ 100 during the dot com bubble. And so the blue on your screen you're looking at right now is that semiconductor index and its crazy performance over the last couple of months here year to date. And then you overl that to what we saw NASDAQ do back in the dot com bubble with all these.com Internet company names and all the euphoria that came for that. And it looks eerily similar. Now I'm not saying that these semiconductor names are going to fall and you know, come down or whatever, right? I'm not here to predict the future, but we've been telling people inside the Rich Habits Network now if you have exposure to the SMH or the SOXX of the world and you've had that in your portfolio for a while now, like we've encouraged people to do great, I Hope you're up a ton. I hope you're taking profits and doing a good thing if you' not. And Bill at the Barbershop or Martha down the street is telling you to go buy more of these semiconductors and chase and get emotional and say oh my gosh, but you should remortgage your house and put it in semiconductor stocks. Well, that's a reason to take a deep breath, pause and just think more rationally. You know, we shared a chart, Robert, inside the Rich Habits Network as well a couple weeks ago about how as the profit margin of the semiconductor stocks would rise over the last couple decades here, the price to sales ratios would go down because investors knew that profit profits were cyclical for semiconductor stocks. However, this recent rally, the opposite has happened. Not only have the profit margins of these semiconductor stocks gone up, but the valuation metrics has also gone up. And that tells me investors are looking at the semiconductor bull run and saying this time might be different. These profits might be permanent. They're not cyclical. We're going to be rich forever. And when I see investors get euphoric and have a sense of mania about their positions and their assumptions, despite history telling us something very different, my ears perk up. I get skeptical. And so that's why I've not chased semiconductor stocks here. I've owned them. I've got a ton of Micron, Nvidia and AMD and all that fun stuff. I've owned them over the years. But I'm not chasing and getting emotional my portfolio after the recent rise we've seen year to date with semiconductor stocks and I'd encourage others to do the same.
- [53:52]
Robert Kroke
Yeah, I think that's a great, great follow up to the overall question. And I really love that takeaway.
- [53:59]
Austin Hankwitz
So our next question comes from Aaron. Aaron says I'm 42 years old and I have 120,000 in my Florida retirement account investment plan. I hear a lot about the ETFs we should be investing in, but many state and county workers don't have the ability to choose our exact allocation. Instead of my Target Date Fund, would it be smart for me to put 80% of my portfolio in the U.S. stock Market Index Fund and 20% of the in foreign stocks? Or should it be something more aggressive? My Target Date fund currently has $20,000 of my money in cash and bonds and I just don't feel comfortable having that much cash despite only being 42 years old. That money should be invested. I never even thought to look at this until recently. Binging your Podcast, So thank you. So, Robert, our friend aaron here, she's 42 and the target date fund that she's forced to buy has got 20,000 of her 120,000 sitting in cash and bonds at 42 years old. What advice do you give her knowing that she can't actually go out and buy specific tickers? Should she put 80% in the US stock market and 20 international? What's your take there?
- [55:00]
Robert Kroke
Yeah, I like the 80% in the US stock market. I'm sure there is a reference or a ticker that you can use. We like voo, but there's others out there that are probably within your boundaries of what you can own. I definitely don't like the target date funds. The whole set it and Forget it for 30 years just doesn't work for anyone because you're leaving so much upside on the table and you have traditionally really high fees with these target date funds. So I don't like any of that. But I love the fact that you're thinking, let's get most of this money in US equities. And then instead of having 20% in international at your age, I'd probably try to find another fund that maybe gets you a little more exposure into AI semiconductor in all of these secular growth trends that are moving forward. But I like where your head's at. But I definitely would not have a lot of bonds right now at 42 years old and I wouldn't have 20% in international. But that's just my opinion.
- [55:54]
Austin Hankwitz
Yeah, I don't mind the 80 20, because if you're thinking about like AI exposure, like you're talking about, Robert, you know, the top 10 holdings in the S and P, Nvidia, Apple, Microsoft, Amazon, Google, Broadcom, Meta, Tesla, Micron, the make up 40% of the S&P 500 right now anyway, which I think is what that US stock market index fund's going to be. So half your money is already in AI names in companies that are going to do well with AI. So if you don't want to put maybe more of it in there, I'm not mad at foreign stocks, but I think you need to be very specific as to what that means, because that could mean emerging markets or maybe it's Brazil, that can mean Korea markets or. Or India. Right. Like, so if you have the ability to do something similar to VX us, which is the Vanguard Total International Stock Index Fund etf, which essentially is like the total world Stock market minus the United States, that's probably a good move. International has been an incredible place to be over the last call it 1218, 24 months, last 12 months VX US is up 22% year to date. It's outperformed the S P here at 12%. So being diversified internationally shouldn't make you feel too bad. But I agree with Robert that you got to get out of that Target date fund. Having $20,000 sitting in cash and bonds at 42 years old with 20 plus years of investing ahead of you makes no sense to me.
- [57:24]
Robert Kroke
No, I love that call out on the vxus similar fund. There's gotta be one in there. So that's a great rank reference. Now I just want to click back at you Austin. Do you like the 8020 of just the VX US equivalent for that 20 and 80% US or would you dial it back a little bit and leave 5 or 10% at 42 years old for some bonds or maybe some T bills or something to earn some other money but not be so much in
- [57:50]
Austin Hankwitz
international without knowing every bit of detail, it's hard to say. And no matter what you do, you're still going to be rich. So like Broad street strokes, I think 8020 is fine. I just don't think that you need a bunch of cash right now at 42 years old. If the purpose of this account is to compound and grow for you over the next 20 years, cash is not going to do that. Cash is only going to be worth less in 20 years from now. So by taking your cash and investing it, even if it's internationally, who knows what international stocks are going to be like in 20 years from now. But I think it's a great plan. Our final question comes from Marie. Marie says hello, my name is Marie P. I'm 37 years old old. Thank you for all your knowledge that you freely share on this podcast. I come with a cultural background where finances are taboo, so it's been difficult to find people I can talk to and get advice from. Your podcast has really helped me figure out my and my family's finances. Finances are taboo in my culture and I feel like that's one of the biggest reasons my parents are not prepared for retirement. I'm currently trying to help them invest what money they do have saved about $50,000. So my question is about retirement. What's the best way to draw from your retirement? Could you explain the different tax implications? I heard something no taxes up to $20,000 drawn out of 401ks and or no taxes if you draw up to $98,000 a year from retirement accounts. Should I draw from a 401k first Roth IRA bridge account? Are there resources you can give me to learn about retirement strategies? Thank you so much. I love these questions. I've got answers for all of them. But you asked about resources and I think a great resource that you can use here. Marie P. This is anyone can use is just your chat GPT, your Gemini, your Claude. They' to understand the tax code very, very well. Now again, not financial advice. Don't just depend on them for everything. But when it comes to these intricate questions about specific amounts that you can draw from to try and optimize for taxes, give it a little bit of information and they should be able to steer you in the right direction. But Robert, what's your take here on Marie's situation?
- [59:47]
Robert Kroke
Yeah, I think we don't have enough information so I'm going to give it a shot because she made it sound like it's taboo for a family. But they have $50,000 saved. Save. But then she mentions 401ks Roth IRAs and bridge accounts. For me personally, without knowing more details, I would not worry about anything but getting the bridge account set up. Get these funds into the bridge account and then depending on their age, look at the Roth IRA as well. But we don't have their ages and I would at least get the money out of what we're assuming is in just a traditional bank account or maybe a high yield savings account. Get it up and running and investing in the funds we talk about. But also make sure they have an emergency fund set up as well because as they age we need to make sure that they have that emergency fund which you could do right there on public dot com. Get that 3,4% so they're safe there for any bills for 3,4,5,6 months of expenses and get the rest of the 50,000 at least in a bridge account and up and running and invested.
- [60:47]
Austin Hankwitz
I'm going to try and answer each one of these. So what's the best way to draw from your retirement? The best way to draw from your retirement to preserve your invested capital, your portfolio is by using something called the 4% rule. The 4% rule essentially means if you have 60% of your portfolio invested in equities and 40% of your portfolio invested in cash equivalents and bonds, if you withdraw 4% of the total portfolio value on an annualized basis, theoretically speaking, you would not run out of money for at least least 30 years. So that's a very cookie cutter way to approach retirement withdrawals. Now that's assuming you're withdrawing money from a portfolio that's invested 60, 40 and it's grown for you and like that's your nest egg. But like that's the strategy a lot of people use. Now can you explain the different tax implications? So there's a couple tax implications to consider here. The first one is money coming out of a 401k, an IRA, things of that nature, right? Like that is money that likely went in pre tax. So every dollar you pull out of those will be taxed at ordinary income and there's nothing you can do about it. So depending on what account the money is invested into, if it's pre tax, if it's post tax, if it's a Roth or you know, whatever, depends on how you will be taxed when you take the money out. Now let's also assume maybe you have a bridge account. What Robert was alluding to, this is your normal taxable brokerage account. You can withdraw as a Married couple in 2026. $98,900 of long term capital gains gains portfolio income. You, you made a 98 grand profit in your portfolio, you sold it and you took that money out of your taxable brokerage account, it went into your checking account and that's all the income you made for the year of 2026 is that portfolio income. You don't owe a dime in taxes, Zero money in taxes on that. That's what's really cool about long term capital gains is depending on your total household income here. And if it's all that long term capital gain, like you can withdraw a ton of money against that. Now if I were in your shoes, I definitely think there's a couple things to consider. And again like retiring is only a math equation. The math equation is simple. Every month I spend X amount of dollars to live my life. If I want to retire, I need that same amount of money to be generated for me passively somewhere else. Some people use real estate to do that. Some people own businesses and the businesses spit off the cash. Other people use portfolio income, right? Stock market go up, I sell shares, I have portfolio income. I use that to live my life. So one, I would sit down with your parents and really dial in and help them figure out like what do they spend on a monthly basis and then how much of that needs to be supplemented from $50,000 per se, and then the rest, I'm assuming maybe from some Social Security and then maybe a part time job of some sort. Like how do we make that, that, that pizza, a whole pizza on a monthly basis. And where does that $50,000 thousand set into that? In my opinion, I think that taxable brokerage account might be the best bet because you can likely enjoy those long term capital gains with very, very low 0% taxes on them, depending on your household income. But again, there's so much we have questions about that we can't give a ton of information to. But I hope that answering some of these about best way to withdraw retirement, different implications, things like that can help steer you in the right direction.
- [64:12]
Robert Kroke
Yeah. And in the interim, the only thing I'm going to reiterate that Austin alluded to use AI the ChatGPTs, the Geminis as your friend. Feed it as much information as you can about the situation so it has the totality of exactly what you're dealing with and you will be able to gain a lot of knowledge on what to do next.
- [64:30]
Austin Hankwitz
Everybody, thanks so much for tuning into this week's episode of the Rich Habits Podcast. We're so grateful to have had Michael join us. So much fun, learned a lot, can't wait to hopefully have him back very soon. Do not forget Rich Habits Network. Seven Day Free trial, weekly live streams. You know you also get to invest alongside Robert myself and so we're always investing in the coolest, coolest companies. We're currently investing into a company that plans to IPO by the end of the decade, that is 3D printing homes. Pretty cool stuff. So definitely go check that out if that's interesting to you. Join seven Day Free Trial. All the fun stuff. Link in the show notes below or just Google Rich Habits Network. Thanks everyone and we'll see you on Thursday. Sam.