Rich Habits Podcast Summary

Episode: Q&A: How to Take Bitcoin Profits, Becoming a Full-Time Entrepreneur, & ETFs for the Roth IRA
Hosts: Austin Hankwitz and Robert Croak
Release Date: November 14, 2024

Introduction to the Q&A Episode

In this engaging Q&A edition of the Rich Habits Podcast, hosts Austin Hankwitz and Robert Croak address a variety of listener questions focused on optimizing investment strategies during a significant bull run, managing high-yield checking accounts, investing in gold versus cryptocurrencies, structuring Roth IRAs with multiple ETFs, and transitioning a side hustle into a full-time business. The episode is packed with actionable insights drawn from Robert’s extensive experience as a decamillionaire entrepreneur and Austin’s keen entrepreneurial spirit.

Taking Profits During the Bull Run

Listener Question: Sylvia R. from the Rich Habits Network asks about the optimal strategy for taking profits while dollar-cost averaging into popular stocks and cryptocurrencies during a historic bull run.

Austin's Strategy: Austin explains his "core-satellite" approach:

• Core Portfolio (65-80%): Invested in ETFs and blue-chip stocks for stability and consistent growth.
• Satellite Portfolio (20-35%): Allocated to higher-risk assets like single stocks and cryptocurrencies for potential outsized returns.

"Have a bunch of money in blue chips and a sizable amount in opportunistic names," [07:17]

Robert's Profit-Taking Approach: Robert complements Austin’s strategy by detailing his method:

• Profit Realization: Once an investment is up 50%, he takes 25% off the top.
• Reinvestment: The profits are rolled into core investments like the S&P 500 and other stable indices.

"Adjust your profit-taking strategy to where you feel the most comfortable." [07:17]

Together, they emphasize the importance of having predefined price targets and consistently reinvesting profits to build a robust, diversified portfolio without falling into the trap of market timing.

Optimizing High-Yield Checking Accounts

Listener Question: Maria N. inquires about alternatives to maintaining money in a no-interest Chase checking account for covering monthly bills.

Austin's Response: Austin suggests that while some checking accounts offer interest (up to 4.6%), the potential annual gain (e.g., $200) may not justify the time and effort required to manage multiple accounts.

"Consider the opportunity cost of your time... better used somewhere else." [10:59]

Robert's Insight: Robert echoes the sentiment, sharing a personal anecdote about the minimal savings versus the effort involved.

"Saving $20 a month isn't worth the extra activity and stress." [11:20]

Recommendations: Austin provides options from Bankrate for high-yield checking accounts:

1. Presidential Bank – Up to 4.6% (minimum $500 deposit)
2. Axos Bank – 3.3% (no minimum)
3. Lake Michigan Credit Union – 3% (no minimum)

They conclude that the time and energy saved by keeping a simpler account outweigh the modest interest gains.

Investing in Gold vs. Cryptocurrencies

Listener Question: AXA A. asks whether to continue holding the GLD gold ETF or shift funds into cryptocurrencies based on current market performance.

Robert's Perspective: Robert advocates for maintaining a diversified portfolio, including precious metals as a hedge against inflation. He believes cryptocurrencies like Bitcoin may outperform gold but cautions against overconcentration.

"Do you believe that cryptocurrency is going to outperform gold... keep your diversity." [13:28]

Austin's Advice: Austin warns against the temptation to "chase the next best thing" by frequently shifting investments between gold and Bitcoin, highlighting the risks of trading fees and opportunity costs.

"Don't try and do this timing the market stuff because it's only going to leave you chasing." [16:36]

Conclusion: Both hosts emphasize sticking to an investment thesis and avoiding market timing to ensure long-term portfolio stability and growth.

Structuring a Roth IRA with Multiple ETFs

Listener Question: Brian I. seeks advice on the optimal number of ETFs to include in a Roth IRA to balance diversification and simplicity.

Robert's Recommendation: Robert advises keeping the number of ETFs between three to five for those starting out, scaling up to seven or ten as one’s portfolio grows. He warns against excessive overlap and unnecessary complexity.

"Keep it simple... don't get talked to having every little thing." [21:23]

Austin's Portfolio Example: Austin shares his own Roth IRA composition, illustrating a balanced approach with six ETFs:

• VGT: 32%
• VOO: 22%
• VTI: 7%
• QQQ: 17%
• SPY: 7%
• IBIT (Bitcoin): 15%

"I have about 15% exposed to Bitcoin and the other 85% to major indices." [22:46]

Summary: The hosts concur that a streamlined ETF selection fosters effective diversification while maintaining manageability, allowing for growth without unnecessary overlap.

Transitioning a Side Hustle to a Full-Time Business

Listener Question: Ben S. seeks guidance on when to transition his thriving paid media agency from a side hustle to a full-time venture, considering his financial situation and obligations.

Austin's Experience: Austin shares his personal journey of quitting a full-time job to focus on entrepreneurship after achieving significant profit milestones. He underscores the importance of having a robust emergency fund and financial safety nets before making the leap.

"There's nothing more dangerous than someone who has their back against the wall. The only thing they can do is succeed." [32:37]

Robert's Advice: Robert suggests continuing to "double dip" by maintaining the full-time job while scaling the side hustle, emphasizing the value of time and reducing financial risk. He recommends waiting until the side hustle generates sufficient income (matching or exceeding the full-time salary) before transitioning.

"If you quit too soon, the side hustle could fail and leave you without income." [30:51]

Key Considerations:

• Financial Stability: Ensure side hustle income can sustain current expenses.
• Time Investment: Allocate sufficient time to scale the business effectively.
• Discipline: Maintain strong work habits and time management to balance dual roles.

Conclusion: The hosts advocate for a cautious, well-planned transition, leveraging existing income streams until the business can independently support financial obligations, thereby minimizing risk and fostering sustainable growth.

Final Thoughts and Recommendations

Throughout the episode, Austin and Robert stress the importance of having clear investment theses, maintaining diversification, and avoiding emotional or impulsive financial decisions. They encourage listeners to focus on long-term growth strategies, utilize high-yield investment opportunities wisely, and ensure financial security before making significant career changes.

"Have a thesis as to why you buy and allocate capital into something." [17:32]

By addressing listener questions with practical advice and personal anecdotes, the Rich Habits Podcast continues to empower individuals to take control of their financial futures through informed and disciplined investment practices.

Notable Quotes:

• "Be an investor, be an investor, be an investor." – Austin [03:45]
• "Don't try and do this timing the market stuff because it's only going to leave you chasing." – Austin [16:36]
• "I love this idea that Ben is going to do both." – Austin [33:29]

Conclusion: This episode of the Rich Habits Podcast offers valuable insights into navigating a bull market, optimizing investment accounts, balancing different asset classes, and making critical career transitions. By following the hosts' expert advice, listeners can enhance their financial literacy and implement effective strategies to achieve lasting wealth.