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- [00:00]
Austin Hankiewicz
Hey everyone and welcome back to the Rich Habits Podcast, a top five business podcast on Spotify. My name is Austin Hankiewicz and I'm joined by my co host Robert Croak. Robert is a seasoned entrepreneur in his 50s with lifetime revenues of over 300 million under his belt. And I'm an entrepreneur in my late 20s with a background in finance and economics. Since quitting my full time job in corporate finance a few years ago, I've built a seven figure media business and actively advise some of the most well known fintech companies around the world. As the show name might suggest, every episode we talk about Rich Habits as they relate to business, finance and mindset. However, we try and bring you two unique perspectives. One from an industry veteran, which is Robert, and the other myself, someone who's still in the process of building wealth and figuring it all out. So Robert, what are we going to be talking about in today's episode?
- [00:48]
Robert Croak
Yes, in this week's episode of the Rich Habits Podcast, we're thrilled to welcome Troy and Garrett, the managing partners of NEOS Investments. Not only has NEO spent a long time supporter of the show, but they also make some of the most exciting income focused ETFs in the industry. And as bitcoin hits all time highs, we're really, really excited to discuss their newest ETF, the NEOs Bitcoin High Income ETF BTCI. It's great to have you both back on the show and I'm so excited to dig into this one.
- [01:21]
Troy
Thanks for having us, Robert.
- [01:22]
Austin Hankiewicz
Robert, I'm also really, really excited for this conversation. I've been very public about how much money I have invested into NEOs ETFs. And for those of you who are unaware, I've got over $120,000 thousand dollars of my hard earned money invested into Spyi and QQQI. So before we narrow the focus down to BTCI, how about we get some intros from Troy and Garrett. Let's start off with what does NEO stand for as well as maybe a quick rundown of the different ETFs that you guys have in your suite of ETFs. And especially let's talk about their tax efficiency, how the yield is generated, and why it's important to have some of these funds in a well diversified portfolio like myself.
- [02:00]
Garrett
Sure. So I can start a little bit about NEOS investments. We are a global asset manager and we focus on quantitative methodologies to creating yield enhanced or risk mitigated investment solutions. So think about your core building blocks that build your portfolio equities fixed income, different alternatives. We want to take those types of product allocations that you have today and overlay ways to generate a much higher degree of tax efficient monthly income and lowering some of the volatility and risk associated, but letting you, the investor, choose the types of exposures or areas that you want to expose your investment views on or that meet with your own financial goals. NEOS today has a lineup of actually eight products. Of course we're excited to talk about the most recent one, which is our bitcoin product BTCI in a few minutes. But some other products that we brought out in the earlier days that some of today's audience might know or others are SPY. It's our S&P 500 high income ETF. QQQI is our NASDAQ 100 high income IWMI, our Russell 2000 high income. And then on the fixed income side we actually have some things for the lower risk allocations into your portfolio, which would be cshi, it's a one to three month treasury bill product. We have bndi, a core fixed income where we're adding additional income on top of your core fixed income exposure. We also have hybi, which is a actively managed high yield strategy with a enhanced income overlay to it. And so when we think about our overall product sets, we want to fit within your equities, your fixed income, your alternative, and allowing you, the investor, to expose your views on the asset allocations you're looking for or the income amount you're looking to receive.
- [03:40]
Austin Hankiewicz
So in simple terms it sounds like you guys create ETFs across the gambit between the S&P 500, the NASDAQ, some Bitcoin, some bonds, like all across rates. Like how do you build a well diversified portfolio? You've got diversification inside of it and then you guys offer ETFs that align with that diversification, but you sprinkle on some tax efficient income on top of it.
- [04:05]
Garrett
That's right.
- [04:06]
Austin Hankiewicz
That's awesome. Now I'm definitely, you know, participating in the upside of holding SPY myself, getting paid out about twelve hundred dollars a month just by holding it, which is really consistent and really tax efficient. So it's exciting to see that compliment the rest of my portfolio. So let's now talk about cryptocurrency, right? What is the new NEOs Bitcoin High Income ETF, BTCI, what does it yield and why are people buying it?
- [04:30]
Troy
So I think for us, when we wanted to, we really, as Gary's kind of alluding to, we, we look at ourselves as a solutions provider. So as you just discussed, we have all these different ETFs that kind of go from equities to fixed income to ultra short duration and now alternatives. With our Bitcoin high income etf, we really wanted to have something in the space specifically around Bitcoin where we could provide income through an option strategy while holding some underlying long bitcoin exposures, whether that's through one of the ETPs that are out there or synthetically through an option strategy. And we look at it as if you could hold some Bitcoin. And there are times when bitcoin kind of just trades sideways and it doesn't do much. And if you could still earn some income during those times, we're looking to provide that income. And then when it does move higher like it did over the past couple of weeks after the election, we really want to be able to participate with that upside. While you are selling calls deep out of the money and bringing in income to distribute, you will eventually, you know, cap out part of your portfolio. But the nice part about our rules based strategy is we're not overlaying on 100% of the portfolio. So a lot of the portfolio can still participate with the upside of Bitcoin while still providing that real income on a monthly basis. We just had a distribution. The fund went X today, it distributed just over 2.3%. So figure an annualized yield of over 27%.
- [05:44]
Austin Hankiewicz
Wow, 27%. I mean into that point too, to the upside participation. I just pulled up BTCI right now on my computer. The price of BTCI, which is again, that upside participation went up 23% over the last month. So not only can investors expect that, let's call it 27% distribution yield on an annualized basis, but you also experience the ups and downs that come with holding Bitcoin.
- [06:06]
Troy
Exactly. Yes. We wanted to make sure that while you're holding it, while you're holding our price product and you're getting that income on a monthly basis, that when we do have these runs higher, specifically around events like we just had, we want to make sure that you can participate in that. You're not just really capped out close to where you brought the income in. So for us, having that price appreciation is really important. And as you said, you know, it's had a nice run over the past few weeks and that's how we kind of manage the portfolio to, you know, ensure that it could participate with the ups and downs of Bitcoin while still providing that income.
- [06:36]
Austin Hankiewicz
That's Amazing.
- [06:37]
Robert Croak
Yeah. And so everyone knows I've been in crypto for many, many years. And recently I shared some crazy screenshots to the Rich Abbott's network and they really were losing their minds seeing me, you know, buying Ethereum and Bitcoin for, you know, I showed some screenshots of me buying 100 Ethereum at $17 each and buying 10 Bitcoin at $2600 each and stuff like that. So personally, it's been incredible to see the institutional adoption of Bitcoin and cryptocurrencies as a whole. So what are your thoughts on Wall Street's relationship with bitcoin, how far it's come and how much of an impact on your confidence it made in creating of btci, the etf?
- [07:20]
Garrett
As probably most Wall Street's always looking for the next opportunity to provide some type of investment product or ability for individuals to make money off of different asset classes. And so I think the biggest issue was just the regulatory hurdles to get through to one, institutionalize the security aspect and the structure behind it to be able to create a financial product. And once the sec, the regulators, got comfortable with how they could ultimately safeguard investor assets, you know, within crypto, then you saw obviously the opening and the adoption for ETFs and different financial products to be available to the masses and to the retail. And so I think overall it took a while to get there, but we really got off the cliff earlier this year with the approval of all the spot Bitcoin ETPs. Now you've seen Ethereum. And so I think that's opened up the ability for these financial products to have options and different derivatives on them which allow us to create the products that we like to. I think that's only going to continue. And so as we see certainly new president elect and an administration that's very much more pro supportive on digital assets and crypto and taking down some of the red tape or, you know, hurdles for investors to be able to access these types of products? Like, I think that's only going to continue. And how deep it goes on different coins and digital assets, not sure, but certainly getting kind of these core, more institutionalized cryptocurrencies to be out into the masses and allowing asset managers such as ourselves to overlay our expertise as different products for them to choose from. I think we only see that growing, given the structural shift in obviously the new president elect and what's being voiced so far on regulatory changes.
- [09:01]
Robert Croak
Yeah, I agree. And I think it's so important when you think, when Blackrock says the water is safe, then I think the water is pretty safe. And so moving forward we just have so much adoption and all the big boys are jumping in, including you guys. It shows us that, that we have a path by Lean, we have a place to go and that this is going to work. Now are there going to be bad actors? Yes. Are some cryptos going to go to zero? Yes. But that's in any growing sector. So I'm super excited about it for sure.
- [09:31]
Austin Hankiewicz
And I think, you know, beyond that too. Robert, what's so exciting is we've been so vocal about how important it Is to have 5 to 15% of your total, you know, portfolio allocated to Bitcoin. And we've been so vocal for the last two years about that. Right. How important it is to be dollar cost averaging into this asset class because over a long period of time tends to outperform the S&P 500. Now let's dig into the people that maybe just want to own Bitcoin. Right? There are people out there that want to own Bitcoin directly. They want to have their cold wallets, they want to be sort of these bitcoin maximal and maybe aren't interested in the ETFs. So what type of investors are you hoping are interested that do resonate with btc? Is it the investor that wants the income? Are they thinking more about the stability of the returns? Right. Who is that like perfect investor for btc? Now before you answer that question, let's take a moment to hear from this episode sponsor Monarch Money. This episode of the Rich Habits podcast is brought to you by Monarch Money, which by the way received the award for Best budgeting app of 2024 by the Wall Street Journal. Monarch is the way to manage your money. Whether you need to stick to a budget, track your investments or collaborate with your partner, you'll get clarity, confidence and peace of mind for your finances with Monarch Money, specifically as it relates to.
- [10:46]
Robert Croak
Collaborating with your partner, Austin Monarch Money makes it simple to set shared money goals, access a joint view dashboard to track your progress, and you even receive monthly email updates that include a breakdown of where everyone's money went during the month.
- [11:01]
Austin Hankiewicz
My favorite part about Monarch Money is that it is so easy. You simply log into Monarch and see all your finances in minutes, track your spending patterns all at a single glance. Monarch is the top rated all in one personal finance app for a reason. That's because Monarch helps you make smart money moves very simply.
- [11:18]
Robert Croak
After trying out Monarch for myself, I get why it's the top rated personal finance app. And right now, listeners of this show will get 30% off their first year. When you go to monarchmoney.com habits, that's M O N A R C H M o n e y.com habits to get 30% off your first year. And we appreciate them supporting the show and all of our listeners.
- [11:45]
Austin Hankiewicz
All right, let's now see what they have to say.
- [11:46]
Troy
I think it's anyone looking for exposure to the space, maybe they don't want to have that cold wallet. They're not ready to kind of take that leap into owning bitcoin directly, but they want to get some income while they're holding, holding the product. So it's really coming down to someone looking to be in the space maybe wants a little bit less of a volatile ride with the options. You could probably dampen the volatility of the product versus the underlying bitcoin a little. So I think it's someone really looking for the income but wants to be maybe dabble, start to own in the space and see how it works out for them.
- [12:18]
Austin Hankiewicz
I think it makes a lot of sense. Right. As someone who owns SPYI and so much of it, what's really cool about that is do I have hundreds of thousands of dollars invested into The S&P 500 via Voo? Yes, I do. Right. So like give me the volatility that comes with that. But I think that's what's so fun about building a well diversified portfolio from scratch. Something that Robert and I really, you know, talk about, which is like active management of our portfolios. I'm able to allocate 10, 15% of my portfolio into this more stable, income focused, tax efficient ETF that is SPYI as well as btci and sort of have that strategy laid out for me that says, okay, I know that every, you know, a hundred dollars invested here can turn into X amount of income. So how do I now allocate this additional income? Do I want to go buy more of the existing etf? Do I want to use it as a income stream to supplement my lifestyle? Do I want to use it as a way to maybe dabble in the dark arts of single stock investing or anything else? Right. That's out there. So there's a lot of really fun ways that people can build these portfolios. And I think BTC does a really good job of really rounding out the edges of having some crypto exposure with some tax efficient high income on a monthly basis.
- [13:28]
Robert Croak
And I'd like to touch next on there's A lot of confusion for bitcoin, you know, because people always see that it moves in cycles. You know, we see the big bull runs, we see the big retracements and pullbacks. And in my opinion, I feel we're going to see less and less of that as more and more of the big firms get involved in all these ETFs are created. So do you think with the emergence of all these crypto ETFs that that will cool off the volatility and the retracements in the coming years? Because I feel like this is kind of our last super cycle and then it's just going to become, you know, more stable over time. We'll still see volatility, but just not as much. What are your thoughts on that?
- [14:09]
Garrett
Yeah, I would agree with you, Robert. I think if you think about any asset class or anything new, when there's only a smaller subset of investors that are in it, you can definitely see much larger price fluctuations. I do agree. I think as it's become more institutionalized and you have more financial products and more investors as a whole within the space, when you start to get one of those retracements or those sell offs, there's a lot more people that want to take advantage and buy that dip or that sell off. So just naturally, as you have more buyers and more investors in the market, I think that will help substantiate, you know, obviously a slightly lower volatility because you're going to get people that want to be buying the dips buying those types of sell offs. That's overall healthy, right? That's actually a good thing. Generally speaking, Bitcoin's volatility is actually so high even still today relative to the S&P 500. Just to give like the audience an idea, all these have volatility indexes and if you just think about the number, The S&P's volatility index is roughly 17 today. Right. That's including all sorts of conversations around the Fed and interest rates and new presidential elections and stuff. So you're seeing the S and p volted at 17. Bitcoin is 60. Right.
- [15:17]
Austin Hankiewicz
Oh, wow.
- [15:17]
Garrett
So you still have a volatility index of on average 60. It's not 80, maybe where it was three years ago in Bitcoin, but 60 is still exponentially higher than what you're seeing in just broad based equity markets. So I think overall the institutionalization, the more buyers coming in, more financial products to be able to support that. Totally agree. We'll reduce some of the Volatility, but I think you're left with good volatility as opposed to maybe some bad volatility of things that I would say are just much more sporadic because it was a more emerging asset class and something that not all people would have access to. Because to your earlier question, people that do the research and the work getting coinbase set up or cold wallets and understand where my money is and am I comfortable it's gonna be safe now that they can buy it in their Schwab robinhood, you know, public.com right accounts. That's just giving the ability for a much more wider audience and comfortability.
- [16:12]
Robert Croak
Yeah, I agree. And either way, I guess what's your opinion on how does that lead to the great value proposition for btci? The fact that you can keep getting the steady income even though bitcoin frequently fluctuates. Talk to the audience about that because I want to make sure they hear this because many of them are still saying they're too late on crypto or they just simply don't understand the upside potential of crypto and bitcoin specifically long term. And I think BTCI really solves this problem because you're going to have that income regardless of the fluctuation. So walk them through that a little bit.
- [16:50]
Troy
Yeah, I agree with you. I think to people listening who say I'm too late to buying any kind of bitcoin, it's had its move. I don't know if it'll continue. I think the nice part about BTCI is while it's sitting here, you can still earn income on a monthly basis off of the volatility of bitcoin that Garrett just walked through. So for those times when we do have those big rallies and we do see bitcoin eventually move higher again, you could participate in a lot of that upside, the way the structure of this rules based strategy works. But in the meantime, you could still bring in Inc Income and have a nice income stream off of your investment into btc. So really, to us, as you know, all of our strategies here are income producing. We focus on the active option management of all of our products and what it comes down to is really sourcing that income from the different volatility markets as Garrett was walking through, whether it's the S&P 500 with Spyi or the NASDAQ 100 with QQQI. For Bitcoin having so much more volatility embedded into it, you could bring in a lot of income. Hence the higher yield that you're seeing on a product like this.
- [17:55]
Austin Hankiewicz
Something that I think is really interesting about this is, and Robert, you probably can resonate with this. I certainly can. When I was dollar cost averaging into bitcoin aggressively, Right. Call it tens of thousands of dollars in 2023. You know, I've since invested well over a hundred thousand into bitcoin over the last 18 to 24 months. But to, you know, this point of dollar cost averaging, it really sucks when the price doesn't do anything, but you continually put more money into it. Right. It's like, what am I doing this for? Because with some single stocks or even ETFs, like they can stay the exact same, but they pay their investors dividends quarterly. Right. So like I do see a return on my investment even if the stock stays the same. But with bitcoin, I mean, I'm over here buying at like 24, 25,000. It's just been there for months and months. I'm like, man, what is this actually going to work? Right. When's this going to pay off? I think that's what's so exciting about BTCI is like for those investors that get frustrated when it comes to dollar cost aver and not seeing results in a 1, 2, 3, 4, sometimes 5 month period in time that comes with, you know, long term holding of certain asset classes, having that monthly income to look back at and say, wow, I just got paid $3,000 this month because I owned so much BTCI, or wow, I just got paid $47 because of my BTCI position. Right. Whatever that looks like for you as an investor. I think that is just what really helps round some of the edges when it comes to getting frustrated with investing and not having to wait for that perfect moment and listen to like, well, Robert Knox and keep saying it's going to go up, but it hasn't done nothing yet, man. I'm just, I don't know what to do. Right. I think it's kind of this perfect balance for those investors that do want to see some immediate returns, some immediate results with their investment as well as again, to Troy and Garrett's point of that awesome upside potential because they do have such long exposure to the asset class.
- [19:39]
Robert Croak
Yeah. But I think that speaks to patience is the key in investing. The people that try to get rich quick are the ones that try to time the market. They're always in and out. They're chasing, chasing, chasing, and their returns never, ever beat the market and certainly don't keep up with what we teach. And so I think it really, what was f Scott Fitzgerald's famous quote, the victor goes to from the spoils. And I think that's a perfect situation here. And that's why we love what you guys are doing, is because I believe we are opening people's eyes up to, you know, these new opportunities to beat benchmarks, have income from your ETFs and be able to make money two ways. And I just think that's what makes it so awesome that we get to share with our audience all of these incredible products that you guys are producing, you know, for the last few years. And it's just an exciting time because I feel like it's. We're always just releasing the cheat code to them of, look, if you want to get wealthy, here's the way to do it, here's the way to make more money. And it's a lot better than a mutual fund or a Target date fund or a cd.
- [20:44]
Austin Hankiewicz
I'm right there with you, Robert. So, you know, as we kind of wrap things up here, I'm curious, is there anything you want to say directly to your fellow, you know, Neos ETF investors? Right. You have billions of assets under management. I'm sure millions of that is coming from people who listen to the Rich habits podcast. So, one, that and then two, what does 2025 look like for NEOs? Is it new ETFs, is it new asset classes? Like, what are you all focused on?
- [21:07]
Garrett
Yeah, first and foremost. Thank you. Right. Thank you for your trust, your partnership. It means a lot to us. Troy and I have spent our whole careers focusing on the space. And this is, we're incredibly passionate about our whole team of roughly 20 people here are passionate about delivering these great yield enhancing products and delivering the performance tool. So we just appreciate your commitment, the trust to it. You will always know that we're always here. Our heads are down. We're focused exclusively on this space because we love it so much. We put a tremendous amount of our own capital and our friends and our family in it. So, you know, thank you for, you know, your trust and commitment and I'll let Troy talk a little bit about 2025 for us.
- [21:41]
Troy
Sure. No, thank you. Thank you both and thank you to the community. I think for 2025, as Garrett said earlier, we have ETFs in the marketplace now. We're really excited about those. We have two more in registration right now which are filed out there. One is a 20 plus year ETF that with added income. Think of it as a CSHI, but with 20 year longer duration. And then we have a real estate high income ETF that's filed out there right now. So we're hoping to get those out in the next couple of months and then after that we're looking into. Yes, we're going to continue to expand. As we talked about earlier, we're a solutions provider, so. So we're not looking to bring out a ton of ETFs all at once. We thoughtfully bring out our products when there's a demand and a need and we, we feel like it could fit into our overall lineup. But you could rest assured they will all have options income and be monthly distribution products. So we're really looking forward to finishing off a great year of 24 and really looking forward to what we're going to be bringing out in 25.
- [22:37]
Austin Hankiewicz
That's amazing. Troy Garrett, thank you so much for joining us on this week's episode of the Rich Habits podcast. I am so excited for btci. I cannot wait to own more of it. I love monthly distribution. The 27% tax efficient annual yield there is insane. Cheers to all the success you all have seen. I know you introduced qqqi, you know, earlier this year and I think it's well over half a billion dollars in assets under management already. Spyi is over 2 billion in assets under management. You guys are just a rocket ship and it's so cool to be a part of your journey.
- [23:06]
Garrett
Thank you Robert Austin and the audience. We appreciate the opportunity to come on today and thanks for everything.
- [23:10]
Austin Hankiewicz
Thank you, Robert. That was an awesome conversation with Troy and Garrett. I love that they are so open to joining us here on this podcast. I think a quick takeaway that I got was kind of back to this idea of Wall street being so thumbs up on these Bitcoin ETFs and you know, being so passionate and excited about introducing this new asset class to the masses. Right. BTC is a great example of that. We've talked about. I bit we've talked about, you know, some other Bitcoin ETFs, but I think the biggest differentiator with BTCI is that income, right? That 27% annual yield. It's tax efficient. It's really, really cool and I'm excited to have it in my portfolio. What was maybe a big takeaway for you?
- [23:46]
Robert Croak
I think it's really help audience understand that for the people that are sitting on the sidelines and maybe feel like they're too late or they haven't bought crypto because they don't know how because they're afraid to open a wallet or they're afraid to get a Coinbase account is knowing that they can go to something like btci, get the income because of the strategy they use, but then also have the exposure to Bitcoin. So I just love that because the more adoption we can create through these products like btci, the more growth we're going to see. But also it just gives people more diversity in their portfolio. So I love it. And obviously the Neos guys have been very supportive of us and they just create incredible products. And so for me that's the biggest takeaway in the fact that they create the products as they see the need. So these products are very well defined on where the markets are going and what is needed for the retail investors. So that'd be my biggest part.
- [24:43]
Austin Hankiewicz
And not just creating these products, but creating products that are successful. Right. They've got billions, like plural billions of dollars of assets under management across their different products. So they're definitely doing something right. So really excited that they join us on this episode. Everyone go check out neos funds.com BTCI if you want to learn more about the Neos Bitcoin High Income etf. They've hit the ground running. It's all the information's over there for you guys to check out. Now before we jump into the Q and A section of the show, Robert, I think it's time for this, this monthly update on our FREC investment. As you guys know, we took $20,000 of our hard earned money, we deposited it into frec.com, that's f r e c dot com. And what they do is they allow you to direct index the S P 500 and a bunch of other indices out there and automatically participate in tax loss harvesting efforts. So since we deposited our money on June 6th of 2024, our $20,000 investment is now worth 21,853. Do we have an all time performance of 10%? Right. So we got a 10% return on our investment there. But most importantly, we've tax loss harvested $978. Right? That's $978 of money that we didn't now make in 2024 while our investment continues to go up in value, which brings the total return of our investment if you include that tax loss harvesting to nearly 15% since June, which just outperforms the S and P dramatically. It's just so cool to see, Robert, There are so many ways for our audience members to, you know, if it's btci, if it's Freck, if it's whatever else to just optimize the money that they're already investing. Right. People get so overwhelmed with where do I put this money, how do I do this, what's the Roth, what's the this, what's the that? But if you just listen to the show, if you just do what Robert and I are doing, I mean, you guys are going to be set up for success. And that goes with Freck, that goes with BTCI and everything else we talk about here. So definitely go check out freck.com if you've not already for your direct indexing needs. It is a wonderful, wonderful way to track the S&P 500 while also getting some of that free tax loss harvested money.
- [26:55]
Robert Croak
And I think that's the coolest part about what we've built with the Rich Habits podcast and now the Rich Habits network is we're kind of peeling back the layers. There's no gatekeeping. We are showing people live what we do with our own money, how we put our money where our mouths are and what the returns are. We share our wins, our losses, although there haven't been any losses in a few years. So it's been great. And I think that is the critical point is we try to break down all of the financial topics they are and all the ways to build wealth and break it down into bite sized nuggets so everyone can take action because that's the key. We can teach all we want. If people aren't executing on them, they're not taking action, then we're not doing a good enough job. So I love it. I love that we get to share all of these nuggets, as everyone says, each and every week. And you know, they can pick and choose what fits for them because like you always say, personal finance is personal. And our jobs are just to educate, break it down and show you what we think are the best strategies to build that financial freedom. So I love that I get to wake up every single day and do this with you. It's been an incredible ride for this past couple years, years.
- [28:05]
Austin Hankiewicz
And when we see a new strategy or a new idea or a new something out there, we go straight to the horse's mouth. We say, hey, Troy, Gary, you guys just introduced this stuff. What is btci? Come on the show and talk to us about it. Right? Or with Jay Jacobs with BlackRock's iBit. Hey, what is this? Bitcoin ETF? Bring it over here. Right? Let's talk about it. Same thing with Masterwork, same thing with Capital One, same thing with Titan, same thing with Frack, right? We want to be able to go to the horse's mouth, straight to the source as your sort of ambassador for our listeners, right, and say what's going on? What should people care about? And let's shoot our friend straight here because we need to know what's important and what's not. So we're just so grateful and we can't wait to continue to do this with you guys here. With that being said, now, let's now jump to our question and answer portion of the podcast. Now our first question comes from Inside the Rich Habits Network and it comes from Philip B. Philip says, I love the Rich Habits Network, the tools you all provide and the podcast, all of it is simply so awesome. I'm 60 years old and plan on retiring in about 4 years or so and do not need to be super aggressive to meet my freedom number as my current net worth at the moment is $4 million. But I was wondering if either of you had any suggestions on dividend ETFs. I'm looking to allocate a portion of my portfolio to be a little less aggressive and a little more asset protective in nature, which is why I think dividend ETFs would be the solution. I'm also interested in what percentage of my portfolio would you suggest in this category as my other investments are all the ones you all have suggested. What a great community. I love being a part of this. Thanks in advance. So Robert, I'll kick this one off right. We just spoke with Troy and Garrett about Spy and QQQY. I think these are both some incredible income focused ETFs. As you all know, I have over $120,000 of my hard earned money in Spy and QQQI. I love the passive income that comes with it. I get paid every single month. It is just mailbox money for me right now. And what's cool about that too is in times of volatility, Philip, you know, let's say the price of the S&P 500 goes down. If we have like some sort of a pullback or again, volatility, the monthly income sort of supplements that price drop. So let's say you invested $100,000 into the S&P 500 and it goes down by 1%, one and a half percent over the course of four weeks or one month. Now your $100,000 investment is worth about 98,500 or 99, 000. Well, if you just bought the S&P 500 straight up with Voo and not Spyi, then that would be the case. You'd be sitting at 98,500 or so. But now, because you have spy, the price would still come down just about the same, but you would get that monthly income of, let's call it $1,100, which now brings your total return back up a lot closer to that original investment. Right. So in times of volatility, especially, you mentioned asset protective in nature. SPY and QQQI and these NEOS funds, I think, are really, really important.
- [31:01]
Robert Croak
Yeah. And I think another one we should touch on Austin is DGRO. That is the iShares Core Dividend Growth et ETF. We both like that. I don't think we talk about it enough, and it's been doing really well. Also. Also, I think we should mention schd. We both own that. That's been a good one as well. I just really love the NEO spons. But definitely SCHD in DGRO are great ones to look at as well.
- [31:27]
Austin Hankiewicz
Robert, I love those suggestions. I couldn't agree more. I think what's so important about dividend growth investing, like, as a, you know, portfolio strategy and why I do it myself itself, is because this idea of yield on cost, a great example of this is Warren Buffett back in the day. Decades ago, this guy went out and he bought hundreds of millions of dollars worth of Coca Cola stock. Well, since then, Coca Cola, he still owns the same amount of stock, but Coca Cola every year has been raising their dividend. And so, I mean, I think it goes like he bought $400 million worth of coca Cola stock several decades ago, and now every single year he gets paid, paid 400 million in cash dividends because of the stock that he owns. Right. So he has a hundred percent yield on cost. Lowe's has a very similar story here. If you bought one share of Lowe's stock back in 1995, about 30 years ago, you would get paid 127% of what you paid for that stock back then because of how much they're raising their dividends every year. So, for example, if you bought the low stock today, your yield on that Stock would be 1.7%. But because Lowe's, for example, has been growing their dividend, for example, they grow it on average, 17% per year, that 1.7% yield quickly turns into 2%, 2 and a half percent, 4%, 10%. Right. And so it's a way for people to start making more and more money passively over time while also owning stocks that go up in value.
- [32:57]
Robert Croak
Well, and that's why it's so important to understand how to actually build wealth. And usually it's by having a plan. And when you have a plan and you stick with it and you allow compound interest in the these investments we talk about to take place, it's just the best strategy to let your money grow on itself and just wake up every year and every decade with more and more of it, because you're not in there in and out of investments, trying to time the market and spending your gains all the time. You just leave it go, and you keep building on it. And I think it's just so important for people to understand. So. Great question, Philip. Love having you in the community. Philip's been around for a long time, and I'm so glad to see you crushing it.
- [33:37]
Austin Hankiewicz
Well, back to this idea of having a plan, Robert. Like, that's the Rich Habits podcast, right? We love being able to share our plans, our personal anecdotes, our personal experiences, our unique perspectives on everything as it relates to personal finance and investing. It's just. It's so fun to be able to do this and help people that not just have, like, you know, we talked about this a little bit in a live stream. I think it was a week or so ago within the Rich Habits network, and someone was asking, like, hey, hey, what type of audience do you guys normally have? Like, I'm trying to figure out if this network's for me. Like, do I stick around, like, what's going on? And it's interesting because Philip, you mentioned he's been around for a while. He's got a $4 million net worth. Right. He's a multimillionaire who's still trying to figure out how to best optimize his investments. We're on the other side. We also have the people in their 20s and 30s who are just getting started and might have a negative net worth. So it's just so fun because the diversity of our audience is so great. Between net worth to net worth to life experience to education to income. Like, we talk about everything, and I think it's fun.
- [34:33]
Robert Croak
Yeah, definitely. Well, it just goes to show that someone with a $10,000, you know, investment portfolio and someone with 10 million, everyone has questions. You know, I've been a multi millionaire for decades now, and I still learn every single day from a lawyer, someone with more money than me. I learn from you. And it's just great because it's kind of like golf. You never really master it, and you're always learning. And it's Always changing. And that's what makes it so exciting.
- [34:58]
Austin Hankiewicz
So our next question comes from Daniel F. Daniel says what classifies as a dip? Last week on the live stream, you all talked about how to buy a dip. We saw a crazy run up after the election and you all suggested that we might have some sort of a correction over the coming weeks or months. And if we do have that correction, use it as an opportunity to buy the dip. But what classifies as a Dip is a 3% reduction in a stock price. A dip is a 10% reduction in a stock price as a dip. How do I figure out what a dip really is? Robert, I'll let you kick this one off.
- [35:34]
Robert Croak
Yeah, I think it's different for every sector of investing. You know, Austin and I talked about this when we saw this question, and it's a great question because I think the way to look at it is when you're comparing like the high flying Magnificent seven stocks, these big moving growth stocks, I think when you look at those where they're making, you know, 1 2% a day and you're seeing these big upticks, I think with something like that, if you see a 10% dip, a 12% dip, that's something to really notice and take heed and warning of. But then when you look at these blue chips that are the stable stocks, like the lows that we talked about, that make less and have less crazy growth, then I think you have to look at it as more. That 5 to 7% correction is when you start to take notice and look at what should you do next? Should you take some profits off the top? Should you sell your position or should you just sit and hold, hold and wait and see what happens. So I think those are the areas of concern for me and the percentages based on that, and that's how I look at it in my own portfolio.
- [36:34]
Austin Hankiewicz
And by definition, Robert, I think it's important to discuss, like what is a dip like by definition as it relates to the indices, right? So the s and P500, the NASDAQ, the Dow Jones Industrial Average, by definition, if any of those indices pull back by 15%, that is classified as a correction, bear market territory. Right. Like a real thing take notice of. Now, I'm not saying you take that same approach with single stocks.
- [37:00]
Garrett
Sure.
- [37:00]
Austin Hankiewicz
If Nvidia pulled back by 15%, I would say it's another day in the markets. Right. Nvidia's all over the place. But if Apple or Lowe's or Home Depot or, you know, Berkshire Hathaway, if Those stocks pulled back by 15 or 20%, then I'm taking notice, like, whoa, what, what's going on behind the scenes that I don't know about? So just there's a bunch of ways to think about it as it relates to buying a dip, as it relates to the indices, I think, you know, call it that 5, 10ish percent range. I'm right there with you. But as it relates to single stocks, I mean, don't feel like you're missing out or even get too aggressive into buying the dip, even if it's pulled back by 15% or more.
- [37:34]
Robert Croak
I agree totally.
- [37:35]
Austin Hankiewicz
Now our final question comes from Nico. Nico says it's open enrollment at my company and I have a question on how to best use my HSA. My company offers an HSA healthcare plan and last year I put $3,000 into the account and I ended up using a thousand of that account to pay my co pays on physical therapy, my contacts and my dental cleanings. But here's my situation. I don't have enough money money in 2025 to max out my HSA at $4200 and max out my Roth IRA at $7000. What do you guys think I should do? Should I max out my HSA or should I max out my Roth ira? Because either one I choose will be to the expense of the other. Robert, this is a great question and in my opinion, I think they should max out the Roth ira because at the end of the day, the Roth IRA is tax free in retirement, whereas the hsa, it's tax free if you use it expenses throughout your life. But after you turn 65, you can start using that money on anything you want. However, you have to pay taxes on it, right? So I think the Roth IRA is the way to go here. I would definitely favor maxing that out. You also said you only used $1,000 in 23. Therefore it doesn't seem like you're going to spend $4,000 in 2025. Right. Unless something crazy happens with your health, which we pray it doesn't. But my opinion, Robert, I think that Nico should focus on maxing out the Roth ira. That's the end game. That's how you retire very wealthy, tax free. That's what I'm focused on at least.
- [39:04]
Robert Croak
Yeah, I agree and I think that's the proper strategy. Unless in this instance there's a pre existing condition that they're concerned with and they might want to load up on the HSA because of that. If not, I think definitely the Roth IRA is the way to go.
- [39:18]
Austin Hankiewicz
They also mentioned that they're 31. They rent in an expensive mountain town in the Rocky Mountains of the west, make 89,000 a year before taxes, and have a side hustle of writing articles for a magazine at $250 an article. What do you think about that side hustle? That's pretty cool, Hu.
- [39:34]
Robert Croak
I mean, I think it's awesome, you know, and everyone says that, you know, copywriting and writing and all that's going by the wayside because of ChatGPT. And it's definitely nice to use these AI tools, you know, to benefit. But certainly I don't think writing's going anywhere anytime soon. And if you enjoy writing, that would be an incredible side hustle for sure.
- [39:54]
Austin Hankiewicz
Well, everyone, thank you so much for joining us on this week's episode of the Rich Habits podcast. If you learned something about BTC I or the Neos funds and you think it's something that your investment friends might want to know about, send this episode to them. We're all trying to learn together. We want this to be the core resource that people can depend on Twice weekly all of 2024 and 2025. We have a ton of stuff in the works for 2025. We're growing the Rich Habits Network. The Rich Habits newsletter is off into the races and we're having a good time over there. There's just a lot to look forward to. Robert, I'm really excited about the year to come and major shout out to the Neos team for joining us on this episode of the show.
- [40:30]
Robert Croak
Yeah, I definitely love what we get to do each and every week. Like you said earlier, helping people, helping them grow their net businesses and understanding their mindset issues and all of that. I love it and enjoy getting to do it every day and appreciate each and every one of you that follows along.
- [40:45]
Austin Hankiewicz
Thanks, everyone. Don't forget to leave us a review and we'll see you on next week's episode. Have a great rest of your week.