Rich Habits Podcast Episode Summary

Episode Title: Q&A: Hedging Against the “September Slump,” LTC Insurance, & Taxes on Worldwide Income
Hosts: Austin Hankwitz and Robert Croak
Release Date: July 24, 2025

Welcome to the Rich Habits Podcast—your go-to source for financial literacy and wealth-building strategies. In this engaging Q&A edition, hosts Austin Hankwitz and Robert Croak delve into crucial financial topics submitted by their listeners. From hedging against market slumps to navigating long-term care (LTC) insurance and managing taxes for expatriates, this episode is packed with actionable insights and expert advice.

1. Introducing New Friday Episodes (00:44 - 01:53)

Austin: Announces the introduction of new Friday episodes starting August 1st, focusing on current financial headlines and their impact on personal finances.

Robert: Highlights the importance of these episodes in helping listeners interpret and react to real-time market movements and economic reports.

Notable Quote:

"These new Friday episodes will be covering the biggest headlines and happenings that are impacting you and your money."
— Austin, [00:44]

2. Listener Questions Overview (02:58 - onwards)

Austin introduces various listener-submitted questions, setting the stage for in-depth discussions on each topic.

3. Moving Traditional IRA to 401(k) for Backdoor Roth IRA

Question by Shiho N.

Summary: Shiho N. faces challenges contributing to a Roth IRA due to income thresholds and existing traditional IRA balances. She seeks advice on transferring her traditional IRA to her employer's 401(k) to facilitate a backdoor Roth IRA.

Robert’s Response (05:00 - 07:05):

• Step-by-Step Guidance:
  • Liquidate existing traditional IRA holdings, ensuring no transfer of specific mutual funds that aren’t compatible with the 401(k).
  • Coordinate between Morgan Stanley and the 401(k) provider to transfer funds, typically taking 5-7 business days.
• Key Advice:
  • Ensure compatibility of investment products during the transfer.
  • Reinvest the funds once transferred to restart the backdoor Roth IRA process.

Robert’s Notable Quote:

"Don't just leave that money sitting. Get it rolled over, get it moved and get it optimized."
— Robert, [07:05]

Austin’s Addition (07:37 - 07:44):

• Encourages immediate action post-transfer to execute the backdoor Roth IRA for long-term tax-free growth.

4. Marketing Exercise Videos via Stan Store

Question by Luke S.

Summary: Luke, a small business owner with a physical therapy practice, explores the idea of selling his extensive library of exercise videos through Stan Store to expand his reach and revenue.

Robert’s Response (08:34 - 12:16):

• Validation and Strategy:
  • Affirmation that Stan Store is a suitable platform for selling exercise videos.
  • Suggests building a personal brand and possibly offering subscription-based access ($29.95/month) or selling individual courses.
• Monetization Ideas:
  • Subscription models for ongoing access.
  • Selling specific modules targeting different fitness needs (e.g., stability, strength, pain relief).

Notable Quote:

"Stan is definitely an incredible platform. Austin and I both use it."
— Robert, [08:34]

Austin’s Response (09:36 - 12:16):

• Tactical Implementation:
  • Categorize videos by target outcomes (e.g., strength, stability, pain relief).
  • Utilize Stan Store’s features like video uploads, digital downloads, and email flows to manage sales and customer engagement.
  • Emphasizes the importance of niching down to specific audiences for effective marketing.
• Business Model Development:
  • Suggests using email flows to upsell additional courses or in-person coaching services.

Austin’s Notable Quote:

"There's a bunch of ways to think about that, but tactically, yes, you can make a Stan Store work for this."
— Austin, [09:36]

Robert’s Final Thoughts (12:16 - 12:44):

• Reinforces the value of niche expertise and leveraging Stan Store to monetize specialized knowledge.

5. Hedging Against the “September Slump”

Question by Sean M.

Summary: Sean observes that September has historically been a poor-performing month for the Nasdaq over the past 16 years and inquires about strategies to hedge against a potential downturn.

Robert’s Response (14:19 - 15:41):

• Market Timing Caution:
  • Advises against attempting to time the market, especially for individuals without substantial assets managed by professionals.
  • Emphasizes proper investment diversification over reacting to monthly market fluctuations.

Notable Quote:

"We don't like to see anyone try and time the market."
— Robert, [14:19]

Austin’s Response (15:41 - 19:50):

• Personal Strategy During 2025 Volatility:
  • Shared experience of hedging portfolios with precious metals (gold, silver) and hedged equity income ETFs (QQQH, SpyH).
  • References a prior episode featuring Steven Sykes discussing bonds and option contracts as hedging tools.
• Balanced Approach:
  • Advocates for being prepared for volatile periods without overemphasizing rare Black Swan events.
  • Maintains focus on long-term equity growth despite short-term market downturns.

Austin’s Notable Quote:

"We followed a lot of those strategies in the first half of this year to help buoy some of the downside risks."
— Austin, [15:41]

Robert’s Addition (24:09 - 25:26):

• Midlife Squeeze Awareness:
  • Cites Ray Dalio’s concept of the midlife squeeze, emphasizing the importance of financial planning for simultaneous family and elder care expenses.

Robert’s Notable Quote:

"Be prepared. Like Austin said, get ahead of it."
— Robert, [24:09]

6. Long-Term Care (LTC) Insurance

Question by Greg P.

Summary: Greg seeks advice on choosing between traditional long-term care insurance and alternative products, considering his concerns about cost and complexity.

Robert’s Response (18:42 - 24:09):

• Personal Anecdote:
  • Shares a personal story about his mother's Medicaid depletion and the high costs of hospice care.
• Recommendation:
  • Advocates for traditional LTC insurance over hybrid or annuity-based products.
  • Suggests consulting with reputable providers like Suriance for tailored LTC insurance solutions.
• Key Considerations:
  • Importance of addressing LTC needs regardless of current net worth.
  • Emphasizes proactive planning to avoid financial and emotional strain.

Robert’s Notable Quote:

"I would just really look into it and not worry so much about what your net worth is, but what it can do and what the cost is relative to what the cost could be if you went down the road of needing long term care."
— Robert, [18:42]

Austin’s Response (19:50 - 24:09):

• Practical Insights:
  • Describes personal experiences with in-home caregiving costs.
  • Details two primary solutions: self-insurance (funding LTC from personal assets) and purchasing LTC insurance.
• Advocates for Open Conversations:
  • Encourages discussing LTC needs with family members to ensure preparedness.

Austin’s Notable Quote:

"Everyone here needs to take this very seriously... there's a point where we can't take care of ourselves."
— Austin, [19:50]

7. Taxes on Worldwide Income for U.S. Citizens Abroad

Question by A.J.

Summary: A.J., a high-income U.S. citizen moving abroad for work, seeks guidance on maximizing retirement contributions, handling tax implications, and exploring alternative retirement vehicles.

Austin’s Response (26:35 - 32:57):

• Retirement Contribution Strategies:
  • Maxing out Traditional IRAs and utilizing backdoor Roth IRAs.
  • Exploring Health Savings Accounts (HSAs) for tax-advantaged savings.
  • Suggests Solo 401(k)s for self-employed individuals to significantly boost retirement contributions.
• Tax Considerations:
  • Explains the Foreign Earned Income Exclusion (FEIE) allowing exclusion of up to $253,000 of foreign earned income.
  • Emphasizes the importance of reporting worldwide income and leveraging foreign tax credits.

Notable Quote:

"You can still max out your traditional IRA... and do a backdoor Roth IRA if you'd like."
— Austin, [26:35]

Robert’s Addition (32:57 - 33:45):

• Expert Guidance:
  • Recommends hiring professionals well-versed in international tax law to navigate complex structures and avoid costly mistakes.

Robert’s Notable Quote:

"Hire the expert and make sure you do it all correctly."
— Robert, [32:57]

8. Investing Excess Savings: Real Estate vs. Brokerage Accounts

Question by Evan M.

Summary: Evan, a 24-year-old with substantial savings, seeks advice on whether to invest excess funds in real estate (e.g., purchasing a duplex) or continue investing in brokerage accounts.

Robert’s Response (34:35 - 37:24):

• Strategic Advice:
  • Encourages continuing to build the investment base before venturing into real estate.
  • Suggests aiming for an investment threshold of $100k-$250k to ensure financial stability.
• Long-Term Growth Focus:
  • Highlights the benefits of compound growth in the stock market over real estate investments at this stage.

Robert’s Notable Quote:

"Keep doing what you're doing."
— Robert, [34:35]

Austin’s Response (35:55 - 37:24):

• Compounding and Diversification:
  • Discusses the Rule of 72, illustrating exponential growth potential through consistent investing.
  • Advises maintaining a diversified portfolio to maximize long-term wealth accumulation.

Austin’s Notable Quote:

"778,000... is going to become $160,000 by the time you're 31, and then it'll be $320,000 by the time you're 38."
— Austin, [35:55]

9. Listener Appreciation and Community Engagement (37:24 - 39:18)

Hosts’ Closing Remarks:

• Austin: Reiterates excitement for upcoming Friday episodes and underscores the value of the Rich Habits Network community.
• Robert: Expresses gratitude towards listeners, encouraging them to leave reviews, share episodes, and engage with the newsletter and community platforms.

Notable Quote:

"We love you all and appreciate just following along on this journey."
— Robert, [39:05]

Key Takeaways:

• Strategic Financial Planning: Importance of proactive strategies in retirement planning, market hedging, and insurance.
• Diversification: Advocates for a diversified investment portfolio across equities, real estate, and alternative assets.
• Tax Efficiency: Emphasizes understanding and optimizing tax obligations, especially for expatriates.
• Community and Resources: Encourages leveraging available resources like Stan Store for business growth and the Rich Habits Network for ongoing support and education.

Final Thoughts:

Austin Hankwitz and Robert Croak provide comprehensive, actionable advice tailored to diverse financial scenarios, empowering listeners to make informed decisions and optimize their financial well-being. Whether you're navigating retirement plans, exploring investment avenues, or managing taxes as an expat, this episode offers valuable insights to help you take control of your financial future.

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Stay tuned for more enriching episodes every Monday and Thursday, and don't miss out on the new Friday editions starting August 1st!