← Rich Habits Podcast
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- [00:01]
Narrator/Advertiser
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- [00:31]
Austin
So good. So good. So good.
- [00:33]
Commercial Announcer
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- [00:58]
Austin
welcome back to the Rich Habits Podcast Question and Answer Edition. These are our Thursday episodes where every Thursday Robert and myself sit down and we answer your questions as if we were in your shoes going through whatever you're going through. You all do a wonderful job of asking us questions all across the board. There's so much fun to answer and you can ask us questions in the future. For future episodes at Rich Habits Podcast on Instagram. Just send us a little bit of a DM there or email, email us@rich habits podcast gmail.com we've got I think Robert, six or seven questions for this episode and it's going to be a good one.
- [01:33]
Robert
I love it. I enjoy these episodes because personal finance is personal and people just get to plug away and see what our brains come up with to help them figure it all out. That's what we're here for is to bring a ton of value. And because everyone's situation is different, we're here to just give our experience, give our lessons and try to figure it all out alongside all of you.
- [01:56]
Austin
And before we answer our first question, this is a great opportunity to remind everyone that this episode of the Rich Habits Podcast is brought to you by public.com the investing platform for those who take it seriously. Because 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.
- [02:19]
Robert
And it all starts with your prompt. From renewable energy companies with high free cash flow to 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.
- [02:38]
Austin
Generated assets are like ETFs but with infinite possibilities. They're completely customizable based on your thesis, not someone else's. So be sure to go to public.com rich habits and earn an uncapped 1% bonus. Robert, when you transfer your portfolio, that's public.com rich habits to get that 1%
- [02:58]
Robert
bonus as always, paid for by Public Investing. Full disclosures in the podcast description.
- [03:04]
Austin
So our first question comes from Matthew N. On Instagram. Matthew says, hi, Austin and Robert, I've been listening to your podcast for over a year now and I love it. You too have done an amazing job discovering what the audience wants to hear and continually delivering on that. Thank you so much. Here's my question. I'm a 21 year old and have a year left in college. I. I have a taxable brokerage account with $29,000 in it. My portfolio has performed really well in the last 12 months. I'm about 45%. But I think I might be spread too thin and it's hard for me to manage my winners and losers, especially when there's volatility in the markets. So here's my breakdown. I have 29% of the portfolio in Schwab mutual funds, 23% in the ETFs you guys all talk about, and four 48% into individual single stocks, specifically 16 of them. How do you suggest that I downsize the positions in my portfolio so it's easier to track? And what do I do with that money? Do I just put it all into the ETFs? Should I open up a Roth IRA? A high yield Savings account? How should I think about this? All right, Robert, so we've got Matthew here, who has a couple mutual funds, probably a half dozen ETFs like most people do, but then 16 single stocks in a portfolio despite that portfolio only having $29,000 in it. So maybe let's first answer Matthew's question about how we would approach consolidating those positions and consolidating the portfolio and then explain how to go about the Roth and the High Yield Savings.
- [04:41]
Robert
Yeah, first and foremost. And we've been talking about this for years. Matthew, we love that you're thinking like this, asking these questions at your age. It's incredible that are this far along. But you're right, I do think you're spread too thin. You're trying to do too much with too little. And I know that sounds bad. It's not bad and it's not meant to be harsh. But when I look at SWPPX and presumably you have Voo, which is one of the ETFs we talk about all the time, you're basically owning the same thing, only in an index version versus a mutual fund version. I don't think you need to have both of those. And I think 48% of the portfolio across these 16 individual stocks is why you're probably performing very well right now. But it's also putting you in the danger zone of risk because so much of this money is in individual stocks and at your age and with this amount invested, I would flip that. I would have more in vo, more in QQQ or QQQM if it's long term and more in something else besides international. And this swppx, which is basically a mutual fund for the S, that's what I would do. And you don't mention, as Austin alluded to, having this Roth component that is something very, very important. In my opinion, the Roth is the greatest wealth building tool, especially if you're younger. And everyone should have a Roth the day they turn 18 years old and they should try to max it out every single year. So that's my take. I would move this money around a little bit more, get more into the QQQ and the voo, less into the individual stocks. I probably at your age, maybe add in a semiconductor or an energy etf, one of the ones we call out to get yourself some more exposure to the AI boom that we're working with right now. And that's the take I would have of what to do next. Because we want to get you into that base of that 100k saved and invested. But we want to do it in a way that is less volatile and more built on the core portfolio structure.
- [06:47]
Austin
Yeah, I think that's a great segue into explaining that core satellite portfolio strategy we always talk about. Means 65 to 85% of someone's portfolio is invested into the index funds and ETFs that we know and love. That trend up and to the right over a long period of time. You've got SWPPX, which is again the S&P 500 there with Schwab. That's great. Rock and roll. Those are the types of index funds and ETFs we're talking about. But I think what's also just as important here for Matthew's situation is Leaning back on what you were talking about with being spread too thin and trying to do too much with too little. We always want to see people build their BAS base first before they begin to diversify into a ton of different single stocks or different asset classes or things of that nature. Which means, Matthew Love, that you've got $29,000 in your taxable brokerage account. Building your base means you have a hundred thousand dollars invested into these index funds and ETFs across all your different retirement and investment accounts. So as Robert said, love the fact you've got this 29,000, but would also, if I were in your shoes, consider taking out $7,500 of this, putting it into the Roth IRA and putting that into the VO's and QQQs and IQs of the world, things like that in your retirement account that are going to trend up and to the right over a long period of time. Because money that grows in compounds in that Roth IRA that you take out is not taxed when you are of retirement age, so 59 and a half or older. Whereas money that grows in your taxable account in comp, which of course you're young, you'll definitely see some compounding in your life. That money will be taxed. Now, is it taxed at long term capital gains, ordinary income, whatever? Depends on how long you hold the investment. That doesn't matter with the Roth IRA. So definitely take Robert's advice, open up that Roth IRA. You can do that on public.com, you can do that on Schwab, which it seems like you're using right now. Or you can transfer this portfolio, get a 1% bonus, which is pretty cool. But regardless of what you're doing here, it's important to find, focus on that Roth ira, contribute, max it out, get that money invested into the index funds and ETFs and continually invest in that Roth IRA. And you might say, oh my gosh, I didn't, I didn't make $7,500 this year, I'm in college, or whatever's going on, that's fine, maybe you made $4,000. Take 4,000 from this 29 and put that in the Roth IRA. Because only money you can put in this Roth IRA is money that you've actually earned in your W2.
- [09:21]
Robert
I love that, Austin. And it just makes me so happy to see so many younger people because our audience is so vast and wide in age groups that are asking questions in the podcast. It means that everything we do each and every week here at The Rich Habits podcast and in the Rich Habits network is working and providing value. That we're getting people so young interested in investing and learning on what to do makes me so happy.
- [09:48]
Austin
And you know what, Robert? Shameless plug. Our friend Matthew mentioned they've got 16 individual stocks. Do find yourself with individual stocks in your own portfolio. Go figure out what Wall street thinks about them at wall street favorites.com It's a platform that Robert and I built that essentially says, hey, here's what Wall street thinks about your personal portfolio. All the price targets, the hedge fund activity. It's all over at wall street favorites.com Now, Robert, our next question comes from Blake on Instagram. Blake says, hey guys, I love your show. My buddy from church and I have started a kettle corn business called Cowtown Dallas Fort Worth Metroplex. Let's go, dude. Our goal is to make money through events and weekend vendor markets, but also be involved in the community and help fundraise with churches in school districts. Do you have any suggestions on how to grow this business with marketing? How would you handle finances on savings, taxes, supplies, and maybe even paying ourselves in the future? We're hoping to be successful in this to help support our future family with an additional income stream. Let's go. I, I love this, Rob. It's the American dream. Kettle corn and Cowtown CR in Dallas. Right? That's what's.
- [11:00]
Robert
They better, they better send me some because I love kettle corn.
- [11:03]
Austin
So Robert, what would you do in their situation? You've got this really cool kettle corn business. My brand immediately goes to you. You know, they mentioned the fundraisers with churches and schools, you know, talking about the, maybe some farmers markets, things like that. But I'm thinking like even more local, like neighborhoods. For example, there's someone here in my neighborhood specifically that is always, she has a wonderful bakery business that she runs out of her house. And I mean, top tier, like doing some really cool cakes and cake pops and cupcakes. Like, she's really good at it. What she does all the time is she'll make an extra half dozen cupcakes or make an extra cake here or there and just offer it to people in our neighborhood. Helping. Oh my gosh, I just tasted your cupcakes. This is amazing. My, you know, nephew has his ninth birthday coming up. Can I buy some cupcakes? You know, stuff like that. So I think it's all about getting, especially if your kettle corn is as good as you think it is, getting the product in people's hand so they can experience how great you've built this and that might be just normal neighborhood Facebook groups or maybe even Facebook groups for your smaller suburb of Dallas Fort Worth. I'm not too sure there, but what's your take, Robert?
- [12:10]
Robert
Yeah, I agree with you and I love this type of business because you can literally do these festivals, you can do these farmers markets and really build the brand. You could start out with a little pop up tent and a plastic table from Home Depot and still crush it. But the main thing I want to add in here, because you asked about how to grow with marketing, you should be filming all of this every single step of the way. You should be filming even if you're not doing TikTok, even if you're not doing a lot with Instagram yet, because that's the next phase. Everybody loves to support a small company, whether it's a soap company, a cake pop company, or a kettle corn business. So once you get to that point and you're ready to start TikToks and try to go viral of you guys at this cool farmer's market or this church event or whatever, you're going to be able to build a much bigger audience through social media because they're going to see you guys giving out the product, doing the taste testings at all these cool festivals. That's number one is make sure you're filming along the way so you have all of this content ready for when you feel it's time to expand. But I do love Austin's idea of keeping it super niche down in your area till you get all the processes dialed. You mentioned savings, taxes, supplies. Because in the beginning all of us have done this where we're starting out. We're going to the store four times a week to try and get it all figured out. We're not sure what to do about taxes and savings, but use AI as your friend. Hey, I just launched a small business. What type of structure should I set up for this business? How should we do the documentation? Use AI, even if it's just ChatGPT as your friend to figure it all out. That way you can get the right bank account set up. Maybe you can go into your local bank, get yourself a credit line so you make sure you have enough money to grow. When you start scaling, all of that is important. And then down the road, when you feel like you've made profits and you're growing in the bank account is stable, then look to start doing an owner's draw or maybe a paycheck. Because like a lot of times in a small business like this, you want to have that cash reserve. It might only be $5,000, it might be $10,000 that you set as your minimum. That way you have money to work with. Because you never know. You go viral one time and all of a sudden you have 400 orders over a weekend. Happens all the time to us with our consumer products. You need to be prepared. So that would be my take on what to do about savings, taxes, supplies, and eventually paying yourself.
- [14:45]
Austin
What I love most about your answer was the document the journey and make the content. You know, we have a mutual friend named Evan Van Aken at vanaider Vanatter Growth V a n a d e r G r o w t h on Instagram and Vanaider V A N A D E R on YouTube. Here, hundreds of thousands of followers. Literally. Go get inspired by what he does because you're like, oh, I don't know how to make content that sounds like it's for, you know, my teenage daughter who's doing TikToks. Oh, no, it's not even that, man. Go sit down in your kitchen and just talk to the camera about how excited you are to make this kettle corn. Or, hey, y', all, it's a big Saturday. We have this big thing going on with the farmer's market and the kettle corn. Or, hey, we're collaborating with this church here. Come along for the ride, for the day, on a Sunday. And this is what we're doing. And just talk about what you're working on, because people follow people, People want to support other people. And I think if you've got a product like a kettle corn, maybe you've got different types of flavors, maybe you've got different sizes, different skus. Things of that nature. People are going to get and resonate with that type of stuff. They're really going to see this and say, I really want to support this person. Maybe I' kettle corn. But I love Blake and what Blake is doing. And if I can buy some of Blake's kettle corn to get him excited, I'm going to do that. And I. I just. I really want to double down on that piece of advice that Robert gave, because it's really important to document the journey. You don't have to have a perfect outcome, a perfect day, a perfect anything. Just document what you're doing. Filming videos, maybe you're just posting some stories like, like. But let people know and. And open up and show people what you're working on, because people follow people and they want to support other people that they resonate with. So our next question comes from Tanner on Instagram. Tanner says, hey, Austin and Robert, I've been following your podcast for a while and it's been so helpful. I even got my mom hooked. Nice. I just graduated college and my first credit card was the Discover IT student card. I'm joining the workforce and I was wondering, do you guys have any advice as to what credit card slash cards I should get? My friend just told me about the Sapphire, the Chase Sapphire, but that seems geared toward traveling lifestyle. Maybe I should just stick to the Discover it for now. I feel like it doesn't give me any perks. What would you recommend in my position? I would appreciate if you guys wanted to do different types of credit cards and their perks and rewards in future episodes. Good question, Tanner. I'm not a credit card, like, expert where I think Robert and I should do a whole episode about it. We have done a great episode, I think about a year and a half ago about, like, how credit card work, the statement balance versus the due date versus minimum payments and, like, the interest and all that stuff. Right. So we've done some stuff on that in the past. But I will, as someone who, you know, spends probably 3, 4, or 5,000amonth on. On credit cards that I pay off every month, I really like my Robinhood card. I get 3% cash back on every single purchase with that. See, here's the thing, Robert. Like, there are some people that love to do this credit card point stuff. They will, you know, open up this card, buy this thing with it, do this thing, take the points, convert it from Chase to Hyatt, go fly Emirates, and, like, go all these crazy cool things. There are people that are really good at that. I'm not one of those people and genuinely don't care to do all that stuff. What I care about is the cash back. And I find myself with the Apple card and the Robinhood card, getting sizable amounts of cash back on a monthly basis. And then I take that cash back because it's free money, and I invest it into the stock market. So literally, with Robinhood, what I've done, I've got over $1,000 now invested into VGT, the technology ETF, we all know, and all of that money has come from cash back that I got from spending with my Robinhood card. So the Discover it has a great 5% cash back, rotating categories. I think it's a great card. I had that card. Robert had that card. I mean, it's. It's a solid card. I think everyone should Use it. I mean, cash back to me is what's important. But Robert, what's your take?
- [18:54]
Robert
Yeah, I agree. I would keep the Discover card. I still have mine and I, I don't even know how many decades I've had that card. But I think the Chase Freedom Unlimited is a really good card for someone that's just entering the workforce. There's no annual fee, really good perks. And I do think that one is better for someone starting out rather than the Chase Sapphire, especially if you're not going to be traveling a lot. But I agree with you. I'm not one of those credit card expert people. I feel it's a full time job trying to strategize how to get the most out of my credit cards. I think I do an OK job with it. But for me I would just add one or two more cards to Discover it. Get the cards that work best for you. You don't need a, you know, a Platinum American Express at this point or any of those things. Just get things that work for you to get the points and get the rewards and rock and roll.
- [19:45]
Austin
Yeah, maybe we should be more honest here. That's a trap. Don't get your Platinum card. Don't like, don't pay $900 for some, you know, reserve card like that. Stuff like is so silly. Especially when you're right out of college just trying to figure all this stuff out. Now don't get me wrong, there are people out there that spend a ton of money and they're actually getting real perks from using their cards that they pay a ton. Yeah, that they pay big annual fees for. But if you are someone who's putting a tank of gas a week on this, your Netflix subscription and some groceries, do what Robert said and do not get a card with an annual fee to it. That just doesn't, doesn't make sense for your situation. Even if the fee is like 95 or something. Like it just doesn't. It doesn't make sense. In my humble opinion, once you find yourself in the situation where you are traveling more, you will use the perks. You will use, you know, the hotel credits and the airline, you know, stuff like that. Then sure, maybe, you know, kind of do a little cost analysis there. But where you are right now, Tanner, I don't think it's worth it. So our next question comes from Yee. Yee says. Hi, Austin and Robert, I love your podcast. Always motivating me to do more with my money. Money. My name is yi. I'm 33. I make 134,000 a year. I own a two unit building where I house hack and rent out the second floor, essentially taking care of my mortgage. I contribute to my 401k up to my employer's match in the S P500 and have maxed out my Roth IRA with the VGT ETF. The two of them total $137,000. I max out my HSA and invested all 21,000 of that into VFIAX. And for my debt, I've got a car note of 27,000 at 6%, 17,000 of student loans at 4.6% and about 70,000 in a high yield savings account collecting 3.5%, 38,000 in individual stocks, mostly tech heavy and 11,000 in Ethereum that I'm down 45% on and refuse to sell. So my question is, am I wrong to be holding so much cash? I was planning to eventually buy a single family home with this $70,000. I'd like to invest more, but I'm not sure where to diversify. This money if I didn't buy a home should contribute more to my 401k. Should I use some of this cash to pay off my loans? Thank you so much. After your recent passive income episode, I'm now earning passive income with qqqi. That's cool to hear. Robert, what would you do in Yee's situation?
- [22:10]
Robert
Okay, Yee, I'm going to take a stab. This is a lot of numbers. I like what you're doing. I think you need some more diversification. I don't think you should sell your Ethereum at a loss right now we are too close to so many things happening in the cryptocurrency, space, adoption, everything that's happening. So at this point I would probably just hang on to the Ethereum for a little longer, keep an eye on it because there is a world. We could see a bull market there for some of these top cryptos like Bitcoin, Ethereum, Chainlink. But yes, I agree. I think you're sitting in way too much cash in the High Yield savings account because even though you're doing it right by having that 3.5% gain interest on the money, I think it's just way too much money. Unless you know when you're buying a house, if it's just there because someday you're going to buy a house, I would get rid of that money and get that down to maybe 10, 15, 20,000 and get the rest invested. Because at your age there is so much money to be made and you can take on more risk than only making three and a half percent interest on your money. Now, I'm glad you're doing it, but I think the amount is too much and I would rather see that get invested into these index funds that we talk about to work towards your base. Would I put more into the 401k? No. Up to the match is the general rule we want to see. So you can do everything else to get your Roth maxed out and then have your bridge account fully funded along the way as well. That would be my take. Austin, what did I miss?
- [23:38]
Austin
Yeah, I think it's a good reminder to hit people with this phrase, which is match beats Roth beats taxable. So we go up to the match with our 401k and just whatever that's invested into. In your situation, you've got the s and P500, but some people it's target date fund, mutual fund, whatever. But the match is free money. So we don't care. We just want to get that free money up to the match in the 401k and then max out the Roth IRA because you have full autonomy over the Roth Individual Retirement Account. You can put that like your case in the VGT if you just want to get all in on that tech there or as we recommend, more voo, qqq, things like that. And then if have Autonomy in that 401k, you can go back, contribute more now. So instead of just up to that 3% match, maybe it's 5 or 6% of your annual salary gets invested into the 401k and you've invested that, call it extra 2, 3, 4% of your annual salary into the index funds and ETFs we talk about, not those target date funds. And if not, then you just take it to the brokerage account and contribute money into that and let it grow over time as well. I agree. I think 70,000 and high yield savings, earning three and a half is like not that great use of the money. I mean, just year to date, the S and P is up. What is it here, Robert? 10%? Yeah, 9.9% as the time we film this. And the Nasdaq is up 19% year to date. So every dollar you have sitting in this high yield savings, assuming it was invested, you know, half in the S and P, half in the Nasdaq like we just tell people to do, could be up a blended 15% or so, 14.5% between the two of them. Just here as we end the month of May. Now of course I have no idea what the rest of the year is going to entail. No one knows that. So when it comes to saving for a house or having these big pre planned purchases, Robert and I like to see that plan in place first. Not just blindly putting, you know, 60, 70, 80,000 in a high yield savings for a one day I'll do this, have a date you want to do this by and then ensure that your money is actually liquid in cash roughly 12 to 18 months before that date. Because again, again the S P is up, the NASDAQ is up. But we also saw what happened in the month of March which was terrible. And again Q1 of last year, the Trump tariff tantrum that was terrible. Where if you had that 70,000 or whatever for your down payment in the markets three days before closing, well, it might be a different story. Right? So that's what I like to say. 12 to 18 months before your big purchase, start taking some of that money out of the markets. Park it in a high yield savings so you're still earning on it. But I think having that 70,000 sitting for maybe one day I'll purchase a home is, is just dead money.
- [26:18]
Robert
I agree. 100 have a timeline. Understand the timeline and get the money working for you. And like Austin said, then start to deploy that money out of the markets and back into that high yield savings
- [26:32]
Austin
for the future house and places that our friend yi can deploy that is on generated assets using public.com generated assets is an awesome tool that allows you to take your prompt and turn it into a real investable index. You can invest into semiconductors or maybe quantum computing or maybe you want to invest into companies that advertise with Mr. Beast. This is something Robert and I are personally testing right now. We saw Shopify, Starbucks and recently Lowe's advertise with Mr. Beast and we have a hunch that those stock prices are going to trend up into the right. Another one of this, Robert, was Royal Caribbean a couple of years ago. They did like Icon of the seas or something. Mr. Beast did a whole video about it. Stock went up like crazy in the following 12 months. So maybe that's your generated asset strategy. Whatever your generated asset strategy is, is go do it on public.com. they've never made it easier to say I've got an idea to invest. Let me actually invest into it. Using generated assets on public.
- [27:31]
Robert
Yeah, all we really care about is giving you guys the sauce, give you the tools. I mean these generated assets in public.com are free. You can literally go test any thesis, any conviction, any hunch that you have. So just get in there, play around with it. You don't have to have a hundred thousand dollars to make it make sense. You could be starting out with a few hundred dollars and see what works for personal finance is personal and we love this new generated assets tool inside
- [27:59]
Austin
of public.com so our next question comes from Yaya on Instagram. Yaya says hello. I'm 39 years old and currently unemployed. The only real savings I have is my 401k, which I started when I was 19. I managed to grow my 401k to $745,000, but honestly I know very little about investing or stocks and that's something I'm embarrassed to admit. I don't even fully understand what my 401k is invested in right now and I'm trying to figure out the smartest to keep moving forward financially. Eventually I'd love to buy a house, but I keep hearing mixed advice. Some people say using money for my 401k to buy a house is smart. Others strongly advise against it. Being unemployed has been a huge reality check for me. I'm down to 60,000 in my bank account and still haven't found a secure job. I've realized I don't want to spend the rest of my life not understanding how to make my money work for me. If you have any advice, guidance or resources you'd be willing to share, I would really, really appreciate it. Specifically around my question about borrowing from my 401k to buy a house. Robert, what's your take on the situation?
- [29:02]
Robert
I would start first with the education process. I would go to Amazon, go to your local store or find a notebook. I still love notebooks. You can do it however you want. Then I would go to the Rich Habits podcast. I would start at episode one and I would binge watch them over the next couple months and take notes out of every single episode. Make that just a note specific episode for your financial learning and journey. Then what I would do is I would try the a seven day free trial inside of the Rich Habits Network so you can get in and you can see all of the modules and learn everything within all of our educational tools. Those are the first things I would do. You need to learn and have the confidence that you know what you're doing moving forward. The second thing I would do is I would go into my 401k. I would download it or take a picture, screenshot or whatever. Take notes in that so you understand what you're invested in, so you know if it's good, bad or indifferent and you know what to do next. Then number three, three, I would look at transferring that 401k over to public.com, getting that 1% match. So that way, moving forward, you have it under control in a place that you understand, you know, we love public.com and I would do that next so you can get in a place of not having this fear around money. So many people have 401k and retirement accounts. They have no idea what they're invested in. They don't know what the fees are. And that is something we need to say. Stop right now. We need to give you the confidence so you're not so stressed out about all this. So that's what I would say. And then the last thing from me and then Austin, you can take it away. I would not borrow from my future to buy a home. I think it's a bad idea. I probably wouldn't suggest it. I would rather see you keep renting for a while until you get stable income again. So that way you're not caught off guard and you're depleting what you've done such a great job of doing. And that is building up, up your 401k. That would be my take.
- [31:02]
Austin
Great takes. Yeah. I love the idea of going back and listening to the episodes and taking notes. I love the idea of keeping your money invested and letting that grow for you over time. But the real question is, is your 401k actually growing now? It seems like 20 years worth of compounding. It surely has or it wouldn't be nearly, you know, three quarters of a million dollars. But I want to take Robert's advice one step further. Take a Screenshot of your 401k in your existing fidelity. Maybe it's capital principle, whatever. Take a screenshot. Take multiple screenshots, all the screenshots you need, and then go to a chat, GPT, a Gemini, a cloud, upload all of them and say, hey, this is my 401k. What am I investing in? Because I guarantee you, Robert, our friend here is going to have a 401k full of mutual funds with 9 different tickers and 14 different holdings and expense ratios and all this stuff that no one ever understands. So don't feel bad that you don't understand it. I feel like it's kind of created that way, unfortunately. But I would take that and I would absolutely ask AI to help break down and say, literally, this is the prompt. This is my 401k I don't understand what it's invested into. Can you please explain to me me what these specific positions mean, what their expense ratios are and their 10 year historical performance and have they outperformed the s and P500 and the NASDAQ 100? That's going to get you 90% of the way there. Just that prompt right there. From that you can start digging in to understand, you know, are these holdings us, are they international, are they emerging markets, are they large cap, mid cap, small cap? Like understand all that stuff. AI is going to help you a lot here. But the good news is you're rich. You've done a really good job over the last 20 years of investing consistently. You've been doing something right here. And if I were in your shoes, I would not borrow from your 401k. Maybe there's a world where once you get this new job, you don't contribute to the 401k because your 401k here is obviously with your old employer. You roll that over, like Robert said, into public, into a traditional ira. You get it invested into the things that you believe like the index funds and ETFs we talk about. And you let that grow. You're 39 with three quarters of a million dollars. The good news is every seven years the stock market doubles in value on average. Which means by the time you're 46, your 750,000 will be worth 1.5 million. And by the time you're 53, you're 1.5 million will be worth 3 million. This is assuming you don't add any more money to it. That's just what compound growth does. And that 3 million by the time you're 60 turns to 6 million. And this is all adjusted for inflation. And so I just want you to kind of take a deep breath and realize you've done great. You've got a ton of money invested at a very young age. Now what's most important is ensuring that it stays invested correctly and it's not eaten away by a bunch of expense ratios and fees and financial advisor, this or whatever's going on. So our final question comes from Jordan F. Jordan says hey would love to hear some of Yalls current stock positions on an episode. I understand the fundamental ideas of investing in the S P and the nasdaq, the majority of retirement savings, but would also love to hear some more of Yalls opinions on the picks and shovels AI trade. Thank you for considering. I love this. Robert, I will go first. I think the easiest way for you mentioned picks and shovels, AI trade. That includes. You don't have to get fancy here, you don't have to be sexy. I'm doing anything crazy. The SMH ETF that Robert and I have held and talked about for years now, now in the last 12 months is up 150%. I own that one. R MX is the VanEck Rare Earth and Strategic Metals ETF. In the last 12 months that one is up 164%. Rare Earth Metals, silicon. You guys get it. Another great one, AIQ that Robert does a great job of talking about all the time. That one's up 60% in the last 12 months. I mean think about. It's just crazy Robert, I just kind of reflect upon here. How many times in the last 24 months have we been talking about AIQ and SMA and you know, rare earths and quantum or you know, all these other crazy cool space exploration, right? SpaceX IPOs right around the corner. You don't think the. What is it? XAR is an etf, remember we talked about back in the day that I own Aerospace and defense. That's up 60, I'm sorry, 51 in the last 12 months. So like it's just so fun and cool to be in some of these. And it's not a single stock, Robert. It's a just the themes. That's what I think people miss. They get over indexed on oh my barber told me about this micro cap single stock that's going to go sell chips to in videos, supply, whatever, right? Like all these crazy little convoluted things and they try and overthink the perfect trade to go make their 200% return or whatever and they forget that literally just being in the right theme, not even the single stock but the thematic ETF like an SMH or an AIQ or an R, E, M X or you know, we all know what peptides are and how exciting those have been. Think about the Ozem ETF that's up 26% in the last 12 months. That's the Ozempic GLP1 Weight Loss ETF, right? Like just think about the themes. Find an ETF that matches that theme for you and your risk tolerance and then find a responsible amount of exposure, maybe 3, 4, 5% of your portfolio for that specific theme. And that's it. It's really simple.
- [36:57]
Robert
Yeah, that take really means a lot to me and everyone listening because I think the number one problem, and this goes back to Warren Buffett's statement when he was asked many Years ago, why don't more people follow how you build wealth? And he said, because no one wants to get rich slow. And the thing of it is, there are a million stocks people could go buy right now that are picks and shovels plays in the AI sector. But all of ETFs you mentioned already own all the right stocks. So it takes all of the scary volatility out of it for the most part, if you own these ETFs, because there's a million stocks in energy chips, infrastructure models, applications, all of the different sectors within the AI trade. But I think it's better to hold these overall ETFs, because let the smart people do it for you. They're crushing it. Everyone's making money. So I agree with you, Austin. I, I think people should focus more on the ETFs that we talk about and the ways to build wealth the right way, rather than taking these long shots on these micro cap stocks that the barber or someone at the, at the mall said that they should be buying. Because those people aren't really investing for the long term. They're gambling.
- [38:13]
Austin
And I will say there are these micro cap stocks that people have done great research in. They deeply understand them and they own them and they get it. And that's, that's cool. But, but that comes with a ton of deep understanding. Hours and hours of, you know, building a thesis around a stock and doing a lot of research, and then also a ton of volatility that is likely gonna happen on the back end. I mean, single stocks move dramatically. Just think about what's happened over the last, heck, I don't know, six to nine months with, you know, Robinhood. It's another great example. Robinhood's a single stock that went from the darling of the stock market. It was 40, 50 bucks a share this time last year, went all the way up to $200 a share, and now it's back down to 75. Robinhood's business has only gotten better. But single stocks have volatility. And I just want to make sure everyone listening right now understands that single stocks are much more volatile than thematic ETFs. Thematic ETFs are much more volatile than index funds, and index funds are much more volatile than a high yield savings. Right? Like, it's kind of like that's like the hierarchy, you know, and that volatility, volatility, the, it's up 4%, down 6%, up 12%, down 19%. Like, whatever, that's what you can expect from single stocks. Expect less of that from thematic ETFs, but certainly more volatility with thematic ETFs than you might see with an index. And of course, cash is cash.
- [39:43]
Robert
The only last thing I'm going to add is we're not shying away from single stocks. We both own a ton of them. But we also do this every single day for a living. We do the research. Our goal with this podcast, the Rich Habits Network, is to educate people how to build build wealth, not day trade stocks, not forex trade. We are here to help people understand how to do that the right way to build real wealth over time.
- [40:08]
Austin
Everybody, thanks so much for tuning in to this week's episode of the Rich Habits podcast, Question and Answer Edition. Quick reminder Robert Wall Street Favorites. I know we've talked about it already on this episode, but it's the easiest way for anyone listening to understand what Wall Street Wall street thinks of their portfolio, what Wall Street's price targets might be on the stocks in your portfolio, as well as what hedge funds out there are buying the stocks in your portfolio we just had, I think, Robert, it was what, May 15th. We just had 13F filings come out for Q1. And inside of Wall Street Favorites there's the institutional tab. And inside that you get to see momentum, conviction buys, top funds, crowded trades, sector flows, all of these implicit important data points that allow you to understand what the biggest hedge funds on Wall street are doing with their Money. With these 13F filings, if you want us to add a specific hedge fund, I think we've got like, I don't know, 26 or 28 that we track inside of here. Let us know. But it's fun. I'm just looking at it right now. Robert. It shows you, you know. Pershing Square has added a new position to Microsoft Situational awareness added micron. You got third point, increasing their position in Amazon by 12% quarter over quarter. That's interesting. So like that's the type of intel you can experience and really dig deep inside of Wall Street Favorites.com it's awesome. It's incredible. Be sure to check out WallStreetFavorites.com 100%
- [41:42]
Robert
it is a very cool tool and it takes all the guesswork out of figuring out in your own portfolio or stocks. You're looking at what is Wall street doing and why do they like each individual rule stock. I love the tool. A lot of time and energy went into building this tool, so make sure you guys check it out.
- [41:59]
Austin
As always, thanks so much for tuning in to this week's episode of the podcast, and we'll see you tomorrow for our episode of the Rich Habits Radar. Sam.