Rich Habits Podcast – Q&A: AI Bubble, Mutual Funds vs. ETFs, & Spending $30K On A Car

Hosts: Austin Hankwitz & Robert Croak
Date: November 13, 2025
Episode Theme:
This Q&A episode empowers listeners with practical financial advice by tackling real-life questions about buying cars, insurance choices, retirement accounts, investment vehicles, utilizing business tax breaks, and the ongoing debate about a potential AI investment bubble. Austin and Robert blend approachable explanations with their own money backgrounds to demystify personal finance, always focusing on building lasting “rich habits.”

Key Discussion Points & Insights

1. How Much to Spend on a Car? (from [02:07])

• Listener Question: Is spending $35,000 on a 2024 SUV too much of our net worth (approx. $450K) as a family?
• Austin’s Analysis:
  • $35K for a car (~8% of net worth) is reasonable for this profile.
  • “Even if you said maybe closer to $40,000. $45,000 maybe…” – Austin ([05:24])
  • Main point: Don’t feel guilty if you can afford it and actually need it; make sure it fits the family’s needs.
• Robert’s Take:
  • Recommends buying used instead of new to avoid early depreciation.
  • “My general rule of thumb... if you’re going to get a new vehicle, I prefer leasing. If you’re going to get a used vehicle in this instance, then I think it’s totally great to just go ahead and buy it.” ([04:27])
  • Advice: Consider total cost of ownership (insurance, upkeep, gas).
  • Suggests monthly car payments shouldn’t exceed 10% of net monthly income.
  • Big Red Flag: $740/mo average car payment in USA is excessive!
• Actionable Framework:
  • Buy slightly older (2–3 year old) vehicles to maximize value.
  • Paying cash (no loan) is optimal if affordable and drives overall cost down.

2. Whole Life Insurance vs. Investing ([07:39])

• Listener Question: Should I keep paying $300/month for a $300k whole life policy, or invest that amount in the market and buy term life instead?
• Austin’s Analysis:
  • “The only reason you have life insurance is if you pass away...”
  • Highlights cost inefficiency: “I have a $2 million term policy for $100/month. You have $300k for $300/month.”
  • Recommends: Surrender the policy, redeem the cash value, and funnel $300/mo into index ETFs.
• Robert’s Take:
  • “When I think of whole life, I think of higher fees, the opportunity cost lost... and high surrender charges.” ([10:18])
  • Advocates for term insurance plus investing the difference in the market.
  • Suggests S&P 500 ETFs (VOO), QQQ, or AIQ as better long-term vehicles.

3. Roth or Traditional 401(k)? ([11:17])

• Listener Question: As a high-income earner, should I use my new employer’s Roth 401(k) option?
• Austin’s Primer:
  • Traditional 401(k): Pre-tax contributions lower current income taxes, but withdrawals are taxed as income in retirement.
  • Roth 401(k): After-tax contributions, tax-free qualified withdrawals in retirement.
  • Recommends Roth for most: “We cannot predict what tax brackets will be in 20, 30, 40, 50 years from now.” ([13:28])
  • For high earners, Roth means paying taxes now but locking in decades of tax-free growth.
• Robert’s Endorsement: “Austin, you always break that down so well for our listeners.” ([15:00])

4. Mutual Funds vs. ETFs in Retirement Accounts ([15:34])

• Listener Question: Should I move my IRA from mutual funds (recs from advisor years ago) to ETFs/index funds you discuss?
• Robert’s Take:
  • Strongly prefers low-cost ETFs over mutual funds due to lower fees and better historical performance.
  • “Mutual funds generally underperform and have higher expense ratios and fees associated with them.” ([16:26])
  • Importance of actively monitoring investments – don’t be hands-off or blindly trust an advisor.
• Austin’s Practical Breakdown:
  • Shares his own Roth IRA allocation: 60% VOO (S&P 500), 30% QQQ (Nasdaq 100), 10% Bitcoin ETF ([17:48])
  • “You’re not behind at all, Shelley. You’re doing a wonderful job. 120,000 invested... It’s incredible.” ([18:36])

5. How to Prioritize Saving at 25 ([18:36])

• Listener Profile: 25, earns $28/hour, has $20K in high-yield savings, just opened a Roth IRA, but carries a new car payment.
• Robert’s Advice:
  • Biggest flag: The new car payment is eating up opportunity to save/invest.
  • “You should be focusing on living lean and mean at 25 years old, not having the brand new car, not having all the finer things in life.” ([19:25])
  • Aim for 15–20% of net income invested in a Roth every month.
• Austin’s Personal Story:
  • Regrets his early 20s new car purchase, sold it for a “clunker,” used savings from the switch to max Roth IRA.
  • “Why was I owning this asset? Because I thought it was cool... Turns out it was a terrible mistake.” ([20:18])
• Action: Stop adding to emergency fund after you’ve built it; funnel extra cash into retirement/investments, especially Roth IRA.

6. Tax Deductions for Business Vehicles: Section 179 vs. Bonus Depreciation ([24:01])

• Listener Profile: Tradesperson, needs to replace a work truck, hears about “100% write off” for business vehicles.
• Robert’s Explainer:
  • Section 179: Allows deduction for business vehicles >6,000 lbs, but only up to business profits.
  • Bonus Depreciation: Can create a loss, lets you write off entire purchase price (not just out-of-pocket spent) in year one, as long as the vehicle is used and titled for business.
  • Both require vehicle to be used for business and titled in the business’s name.
  • “I see so many people in the construction trades... go out and buy that brand new Sierra... all this expense... all of that debt.” ([25:31])
• Austin’s Details:
  • With bonus depreciation, “it’s about the purchase price, not the cash outlay.”
  • “But please remember, we are not certified public accountants...” ([27:15])

7. Is There an AI Bubble, and How Can You Hedge? ([27:20])

• Listener Question: What are your thoughts on a possible AI bubble and how to hedge against it?
• Austin’s Market Overview:
  • AI productivity is driving real corporate profit growth; especially among the Magnificent Seven (big tech stocks).
  • Acknowledges there are “bubbly” sectors/companies (pre-revenue AI, space, quantum, nuclear, etc.), but not all of AI is a bubble.
  • “But it doesn’t mean that the entire AI sector is in a bubble.”
  • For diversification away from overhyped tech:
    • Healthcare (currently beaten down)
    • Real estate
    • Berkshire Hathaway
    • Precious metals, with a note of caution on recent price spikes
  • AI exposure via ETFs: AIQ, QQQ, Dan Ives AI30 ETF, VGT.
• Robert’s Reflection:
  • “There are bubbly companies within it that are built on hype cycle and not on revenue and profits.” ([32:09])
  • Long-term best-of-breed tech and secular growth trends will win out, even if some ‘dot-com crash’ style names fail.
  • Cites “bears sound smart, bulls make money.”
• Austin’s Analogy:
  • Compares hype-y, pre-profit AI companies to pets.com in the ‘90s – some will crash, but the overall trend (like pet e-commerce, now $10B+/yr) can still become massive over time.
  • “It’s so weird because we’re forced to bet on specific names... versus having the opportunity to just bet on a secular growth trend.” ([33:28])

Notable Quotes & Memorable Moments

• On Buying Cars:
  • “The average car payment in America right now is $740 a month. That seems crazy to me.” – Robert ([06:33])
  • “You don’t need these mutual funds. You don’t need be paying 60, 75, 85 basis points per year just to underperform the markets.” – Austin ([18:12])
• On Insurance:
  • “I have a $2 million life insurance policy. It’s about 100 bucks a month...You’ve got a $300,000 at $300 a month. Do you see the difference there?” – Austin ([09:23])
• On Lifestyle Creep:
  • “Lifestyle creep in this instance is getting in the way of your future dreams.” – Robert ([23:34])
• On AI Investing:
  • “It always comes back for me to... you have to think of it as, you know, bears sound smart, bulls make money.” – Robert ([32:50])
  • “Pets.com had to go under for $10 billion now a year to be spent 20 years later... What is that happening right now with AI?” – Austin ([34:10])
• On Taking Control:
  • “I'm so glad that Shelley is following along and actively watching her money. So many people... just have all these funds, they don't know why, they don't know what they do...” – Robert ([16:57])

Essential Timestamps

| Segment/Question | Approx. Timestamp | |-----------------------------------------|-------------------| | Car Purchase & Affordability | [02:07]–[07:39] | | Whole Life vs. Term Life & Investing | [07:39]–[11:17] | | Roth vs. Traditional 401(k) | [11:17]–[15:34] | | Mutual Funds vs. ETFs | [15:34]–[18:36] | | Saving, New Car Payments, Money Habits | [18:36]–[24:01] | | Section 179, Bonus Depreciation | [24:01]–[27:20] | | Is There an AI Bubble? | [27:20]–[36:32] |

Tone & Style

• Friendly, encouraging, and practical.
• Robert brings decades of wisdom and “real talk”; Austin brings relatability and transparency about his own missteps as a young professional.
• The hosts frequently emphasize actionable steps, self-reflection over “keeping up appearances,” and always investing in one’s financial education and future.

For listeners who haven’t tuned in:
This episode delivers high-impact, honest financial advice covering asset purchases, investment vehicles, retirement planning, insurance, tax breaks for business owners, and market trends. Austin and Robert offer both big-picture frameworks and practical, personal stories—always with an eye toward helping you build your “rich habits.”