Q&A: How to Take Profits, Investing My Monthly Escrow, & Cashing Out Whole Life Insurance

Summary

Rich Habits Podcast: Q&A – How to Take Profits, Investing My Monthly Escrow, & Cashing Out Whole Life Insurance

Release Date: June 5, 2025
Hosts: Austin Hankwitz and Robert Croak

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The Rich Habits Podcast, hosted by Austin Hankwitz and Robert Croak, serves as a beacon for individuals seeking to regain control of their finances through the cultivation of robust financial habits. In the June 5, 2025 episode titled "Q&A: How to Take Profits, Investing My Monthly Escrow, & Cashing Out Whole Life Insurance," Robert and Austin delve into seven listener-submitted questions, providing personalized advice and actionable strategies to navigate complex financial scenarios.

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1. Improving a Spouse’s Credit Score for Home Buying

Question by Jackson J. (02:11): "I have a good credit score around 750, but my wife currently has a very low credit score... What is the best way for her to raise her credit score from the mid-300s?"

Robert’s Advice (04:18):

• Secure a Secured Credit Card: "A guaranteed credit card is the easiest way to start building credit." This involves depositing a security amount (e.g., $400-$500) to obtain a credit limit.
• Consistent Payments: Ensure timely payments and maintain low balances to positively impact the credit score.
• Additional Strategies: Consider obtaining a small personal loan to build credit history and settle existing debts to remove negative marks from the credit report.

Austin’s Addition (05:24):

• Personal Experience: Austin shares his journey of building credit through a secured credit card, emphasizing the importance of understanding the billing cycle and responsible credit usage.
• Holistic Approach: Encourages listener to explore options like personal loans and ensuring old debts are settled to avoid lingering negative impacts.

Key Insight: Rebuilding credit is a gradual process that requires disciplined financial behavior, leveraging secured credit products, and addressing past debts to pave the way for favorable loan terms in the future.

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2. Investment Options Amidst Employment Restrictions

Question by Rita J. (08:16): "I have a brokerage account but face restrictions due to my husband's employment with a Big Four firm. Should I continue investing or explore other options?"

Austin’s Breakdown (08:16):

• Understanding Restrictions: Employees at Big Four firms receive insider information, necessitating strict compliance with trading regulations.
• Diversified Asset Classes:
  • Real Estate: Investing in properties like duplexes or quadplexes.
  • Index Funds and ETFs: Focusing on broad market indices like the S&P 500 or NASDAQ 100.
  • Managed Accounts: Utilizing services like robo-advisors (e.g., Betterment, Wealthfront) to build diversified portfolios without direct trading.

Robert’s Enhancement (11:26):

• Precious Metals & Cryptocurrency: Suggests diversifying into assets like gold, silver, and cryptocurrencies, which can offer high returns and maintain compliance.

Austin’s Emphasis (12:00):

• Income Management: Highlights the importance of maintaining a strong income while avoiding lifestyle creep to ensure long-term financial goals are met.

Key Insight: Diversifying investments across various asset classes and utilizing managed investment services can help navigate employment-related restrictions while maximizing growth potential.

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3. Managing Monthly Escrow for Mortgage Payments

Question by Alex (12:00): "Should I remove escrow from my mortgage and invest the $900/month saving it?"

Robert’s Perspective (13:22):

• Opportunity vs. Effort: Questions whether the potential gains from investing the escrow funds outweigh the effort and risks involved.
• Risk of Missed Payments: Highlights the importance of timely payments to avoid foreclosure, suggesting that the minimal savings may not justify the added complexity.

Austin’s Counterpoint (14:39):

• High-Risk Investment Consideration: References a previous episode discussing high-risk investment strategies, suggesting that limited funds (e.g., $500/year) could be allocated to a high-risk bucket for potentially higher returns without jeopardizing long-term financial stability.

Robert’s Reflection (16:08):

• Personal Anecdote: Shares his early entrepreneurial ventures to illustrate the balance between effort and returns, emphasizing that minor gains may not be worth significant effort.

Austin’s Final Thoughts (18:48):

• Small Savings Matter: Encourages listeners to identify and implement small savings strategies that can collectively lead to substantial financial benefits over time.

Key Insight: Carefully assess the balance between potential investment returns and the risks or efforts involved, ensuring that essential obligations like mortgage payments remain uncompromised.

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4. Balancing Retirement Contributions for Early Retirement

Question by Emil C. (19:16): "Should I allocate more funds to my bridge account instead of my Roth IRA to achieve early retirement?"

Emil’s Situation:

• Current Investments: $115,000 in retirement accounts and $10,000 in a bridge account.
• Goal: Retire as early as possible with a projection of $2 million by age 60.

Austin’s Strategy (22:15):

• Prioritize Contributions:
  • Employer Match & Roth IRA: Continue maximizing contributions to employer-matched 401(k) and Roth IRA.
  • Bridge Account Allocation: Allocate surplus funds to the bridge account after securing retirement savings.
• Realistic Goals: Emphasizes that early retirement is an exception rather than the norm, encouraging a focus on long-term retirement planning.

Robert’s Reinforcement (23:15):

• Roth IRA Importance: Advocates for everyone to have a Roth IRA, highlighting the benefits of tax-free growth and flexibility in retirement planning.
• Encouragement to Start Early: Stresses the significance of beginning Roth IRA contributions as early as possible to harness compound growth.

Key Insight: Maintain a balanced approach by prioritizing retirement accounts like the Roth IRA and then allocating any additional funds to a bridge or taxable account to support early retirement aspirations.

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5. Financial Management for a Young Law Enforcement Officer

Question by Jake V. (26:40): "How can I manage my money better, considering my mortgage, student loans, and retirement accounts?"

Robert’s Recommendations (26:40):

• Roth IRA Setup: Encourages opening a Roth IRA to benefit from tax-free growth.
• Debt Management: Prioritize paying off high-interest debt before maximizing retirement contributions.
• Emergency Fund: Ensure an adequate emergency fund is in place before aggressively paying down student loans.

Austin’s Step-by-Step Plan (27:43):

• Emergency Fund Expansion: Aim to increase the emergency fund to cover three to six months of expenses.
• Prioritize Roth IRA: Continue contributing to a Roth IRA once the emergency fund is sufficient.
• Student Loan Repayment: After securing the Roth IRA, focus on paying off student loans to free up monthly income for further investments.

Robert’s Final Advice (31:32):

• Budgeting Tool: Utilizes a free budgeting tool to track expenses and manage debt effectively.
• Holistic Financial Health: Emphasizes the importance of understanding monthly finances to make informed decisions.

Key Insight: Balanced financial management involves securing an emergency fund, optimizing retirement contributions, and strategically addressing high-interest debts to create a stable foundation for future growth.

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6. Taking Profits from Single Stocks in a Roth IRA

Question by Amanda (31:53): "Should we take profits on single stocks inside our Roth IRA?"

Robert’s Approach (32:15):

• Profit-Taking Strategy: Suggests taking out 25% of profits once a stock is up 50%, and another 25% if it continues to grow by another 50%.
• Reinvestment: Reinvest the withdrawn profits into diversified assets like VOO or QQQ to maintain portfolio growth.

Austin’s Perspective (33:05):

• Index Fund Focus: Advocates for reallocating profits into broad market index funds to ensure consistent growth and mitigate risks associated with single stocks.
• Long-Term Growth: Highlights the importance of maintaining a diversified and growth-oriented Roth IRA to secure a substantial nest egg.

Key Insight: Implement a disciplined profit-taking strategy within a Roth IRA to secure gains and reinvest in diversified index funds, balancing growth potential with risk management.

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7. Deciding the Fate of a Whole Life Insurance Policy

Question by David S. (35:23): "Should I keep or cash out my whole life insurance policy with a cash value of $111,000?"

Robert’s Recommendation (35:23):

• Cashing Out: Advises cashing out the policy and investing the proceeds into low-cost ETFs like VOO or QQQ, projecting significant growth over 20 years.
• Term Life Insurance: Suggests replacing whole life insurance with term life insurance to maintain necessary coverage at a lower cost.

Austin’s Support (36:37):

• Investment Potential: Estimates that investing the cash value in the stock market could grow to approximately $700,000 to $800,000 over 20 years, far exceeding the current death benefit.
• Insurance Transition: Emphasizes securing term life insurance before cashing out to ensure continued coverage for dependents.

Robert’s Caution (38:26):

• Avoiding High-Fee Policies: Warns against new indexed universal life (IUL) policies due to high commissions and fees.
• Professional Advice: Encourages consulting with unbiased financial advisors rather than those selling insurance products.

Austin’s Final Thoughts (39:18):

• Term Insurance Promotion: Recommends shuriance.com richhabits for obtaining affordable term life insurance.
• Strategic Cash-Out: Reinforces the importance of investing the cash value in growth-oriented assets to maximize long-term financial benefits.

Key Insight: Transitioning from whole life insurance to term life insurance and reallocating cash value into diversified investment portfolios can significantly enhance long-term financial growth and flexibility.

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Conclusion and Community Engagement

Robert and Austin conclude the episode by encouraging listeners to engage with the podcast through emails, Instagram DMs, and the Rich Habits Network community. They emphasize the value of continuous learning, community support, and collective investment opportunities available through their platform.

Notable Quotes:

• Robert (02:11): "These episodes are really heartfelt because we get to dig deep into people's daily lives and really, really answer these questions."
• Austin (05:24): "We walk through all the specific nuances as it relates to the billing cycle, the statement date, the balance, all the things to understand and master credit card usage."
• Robert (23:15): "Everyone from the age of 18 should have a Roth IRA and do their very best to max it out as soon as possible every single year."
• Austin (36:37): "That's what you want to do. You want to go hit up shuriance.com richhabits link in the show notes below."

Final Thoughts:
This episode underscores the personalized approach of the Rich Habits Podcast in tackling diverse financial challenges. From credit rebuilding and strategic investments to optimizing retirement planning and reassessing insurance policies, Robert and Austin provide insightful, actionable advice tailored to individual circumstances. Their emphasis on disciplined financial habits, diversification, and informed decision-making serves as a valuable guide for listeners striving to achieve financial literacy and independence.

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For more insights and to join the Rich Habits Network, visit the show notes below and connect with Robert and Austin on their Rich Habits Podcast platform.

Transcript

[Austin]

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[Robert]

Robert yeah, me too. These episodes get better and better and it really illustrates just how personal finance is personal. Everyone's situation is different. Life gets in the way sometimes. Family gets in the way. There's just so many things that can happen, good and bad, in people's financial journeys. I've been through it all personally, so I can speak from experience. So for me, these episodes are really heartfelt because we get to dig deep into people's daily lives and really, really answer these questions and help them and other people that might be going through similar situations. So I love it.

[Austin]

I'm right there with you, Robert. Again, these episodes are our favorite and I really think that they're getting a little bit more popular. I think a lot of people are starting to realize that the Q and A episodes are where the the action really is. With that being said, before we jump into our first question coming from Jackson, let's take a moment to hear from this episode's sponsor, public.com if you're looking for an online brokerage account that was actually built during the century, you gotta give Public a try. Because on Public, you can invest in almost any stocks, bonds, crypto options, and more. And if you're like us and you keep an emergency fund, you can take advantage of their 4.1% APY offered by their high Yield Cash account. The biggest reason why we recommend Public for every investor out there is it's a platform that has everything all in one. That's it. You got your emergency fund, your T bills, your bond account, your crypto, your stocks. It's all on one platform and it's very easy to set up and use.

[Robert]

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[Austin]

So our first question is coming from Jackson J. On Instagram. Again, that's Rich Habits podcast on Instagram. Sen A dm we'll get to it. Jackson says I have a good credit score around 750, but my wife currently has a very low credit score somewhere around the mid-300s and we want to buy a house in the next five years or so. This low credit score is due to some old debt, about two or $3,000 that she had let sit and go to collections over the last few years from a year that she was in community college. She's never had a credit card and the majority of her credit history are those debts plus rent payments for apartments. What is the best way for her to raise her credit score from the mid-3002? Hopefully closer to six or seven over the next several years so we can secure a loan without too high of an interest rate. Robert, you want to kick this one off?

[Robert]

Jackson, you know this is a pretty easy fix. You've got time because you're not in a rush and the main thing I would say in the simplest way would be to go get a guaranteed credit card. She has to rebuild her credit and she's got to start somewhere. And a guaranteed credit card to me is the easiest way to start building credit. All it means you go to your local bank or credit union. I want a guaranteed credit card. You hand them 400 bucks, 500 bucks, then you have that for your credit limit, and you're using your money to guarantee that you pay on this credit card. You make sure you make the payments on this credit card. You make sure you keep them very low balance or pay it off every single month. You make sure you make the payments on time. And that will be the easiest and quickest way to build credit. But then along the way, as you get the credit score up so you can qualify for other credit offerings, then you could add some additional credit cards, maybe a points card, maybe a card you could use for grocery in gas. But in the interim, she just needs to get that credit score up to 600. And I would start with the guaranteed credit card as the easiest and best way that I know of to build credit quickly.

[Austin]

And I think when you say guaranteed credit card, you're talking about a secured credit card.

[Robert]

Yes.

[Austin]

Yeah. So I'm right there with you. That's what I did. I think you guys know this story. Whenever I graduated college, I had no credit history. I was 22, never had a credit card. My parents never really taught me about credit. And so I went to, you know, my friend Chris was like, hey, man, I just got this cool Amazon prime credit card, 5% cash back on Amazon. You should apply for it. It's for students. And I was like, I'm a student. I'll apply for it. I got denied. The reason I got denied is because I didn't have any credit. And so then I did a little bit of research to what Robert was alluding to here. And I went and opened a secured credit card from bank of Tennessee. It's the bank I bank at. And I was able to, you know, give them like, I think it was 300 or $500 as my guarantee. And I was able to borrow against that. And I put like a tank of gas on it every single month. I let the billing cycle go through, get that reported to the credit bureaus, and then I paid it off and then had the payoff, then get reported to the credit bureau. So remember, there's a whole sor process here as it relates to building your credit score. We did an Episode here. Episode 114. It's titled Swipe Smart Using Credit Cards without the Debt. Highly, highly recommend. Jackson. You guys going back and listening to episode 114, we walk through all the specific nuances as it relates to like the billing cycle, the statement date, the balance, all the things to understand and master credit card usage. But beyond that, I wonder if there's a world where your wife can just get a $500 or $1,000 personal loan at even a 10% interest rate. Doesn't really matter. And she it off, right? She just like just get the loan to pay it back and really have some true credit history now of like positive payments. Doing that for two, three, four, five years. I'd be very surprised if your wife isn't in the call it 6 or 700 range depending on now if she has actually closed the accounts with some of this old debt. Want to make sure that is taken care of, right? Either go pay off the 2 or $3,000 debt from this community college, settle with the collections agency, do whatever, but you have to close that account. Without that account closed, you're going to have a hard moving on from it, right? It's always going to be this like, you know, black eye essentially on your.

[Robert]

Credit report to add to that and piggyback. Make sure when you do settle these debts that you request by settling them that they are settled and removed from your credit score. Because the sooner you can get those bad debts removed from your credit bureau, the better off you're going to be for the future and building that credit score. I know it's work, I know it sounds daunting, but this is something you guys can knock out over the next couple of years. Get her back on track and just keep her there and make sure we keep that credit score up.

[Austin]

And with that being said, shout out to you guys for wanting to buy a house soon. Quick shout out to Robert here who co founded Equifunds Group. If any of you guys are trying to go get a mortgage or buy a house, they are backed by Supreme Lending, one of the largest lenders in America. There'll be a link in the show notes below. To go check out equifundsgroup.com it's Robert's mortgage company. You guys should definitely go check that out. It's a pretty simple way to get a mortgage.

[Robert]

Definitely. Thank you for that. Yeah, reach out to Lance. He's incredible. He'll take good care of you. Even if you're just trying to get pre approvals or figure out any refinances or anything like that. Just reach out to Lance.

[Austin]

So our next question comes from Rita J. On Instagram. Rita says. Hi guys. First of all, I love your podcast. Please keep going. You have my five star rating. Here's my question. I have a brokerage account, but I'm hesitant on depositing into it consistently as I'm limited due to my husband's working for a big four company. I don't feel as though I'm making as much money as I could because of their restrictions. Should I continue putting money into this brokerage account or are there other options that I should be exploring? Thanks in advance. So just to set the table here, Rita J. Your husband works for a big four accounting consulting firm. So that's Deloitte, PwC, Ernst and Young or KPMG. And they've got some very interesting rules as it relates to buying and selling stocks. So because you work at a firm that does the accounting, auditing and consulting for pretty much every publicly traded company in the United States, you have some insider information as to what their numbers might look like or their biggest strategy updates might look like. And you get this information in real time as you're auditing ahead of these earnings calls. And so the reason why they have these restrictions there for you is so you don't trade upon some information that you might have got from your husband who was working there. Right? So here's the deal that is correct. You've got some crazy compliance restrictions on your account because of what your husband does. There are three solutions to this. The first solution is a completely different asset class altogether. Maybe you want to invest into real estate. Real estate has nothing to do with accounting and audit and consulting and whatever else is going on with these big four firms. So if you wanted to start a real estate portfolio, you could do that by buying a duplex or a quadplex with this 5% Fannie Mae mortgage and begin to become a real estate investor and build your wealth that way. The second way, if you really do want to invest, is to just buy these well diversified index funds and ETFs like the S&P 500 or the NASDAQ 100. These are pretty much the easiest way to get around, in my humble opinion. Any of these like single stock compliance, because not buying a single stock, you're just investing into American capitalism. And there's nothing wrong with that. The last way to get around this is to have someone else manage your account. Maybe you've got a managed account through Fidelity or use a robo advisor like Betterment or Wealthfront, I would actually encourage you to do that because their fees are much lower, but you just give it your risk tolerance. Sort of what your investment horizon is. Maybe other ideas and things that you have a liking to as it remains to themes or different types of sectors of the market. And they will build a portfolio for you. It's completely hands off. You don't make any of the decisions. Therefore there's no reason, in my opinion, for your compliance team to push back on that because again, you're not the one making the decisions. A financial advisor is doing that for you. So to recap, you can just switch to real estate and just do that your whole life, which is pretty limiting. Or you can just buy index funds and ETFs, which I don't think their compliance team would have any issues with. Or someone else can go build a curated portfolio for you that will include some cool single stocks and sectors. But because someone else is building it for you, you don't have much compliance to worry about over there.

[Robert]

I love that breakdown. And the only thing I would add is they could look at precious metals. There's a world where they could make really good money. Right now, gold and silver have been doing really, really well outperforming the S&P 500. And then also cryptocurrency. They could have a small portion. I would think that most of the cryptocurrencies would be within compliance to be able to have a portfolio through public.com of cryptocurrency. That could also be an alternative for them to flush out and make sure works so they can stay in compliance but still be fully diversified in other sectors that could help them build the wealth along the way.

[Austin]

The most important thing to remember here though is that guys got the hard part of wealth building out of the way, which is a wonderful income. If your husband is working for one of these companies, chances are he's making hundreds of thousands of dollars a year. And your household income is very big. And it's very important now to make sure that you are not letting lifestyle creep get in the way. You guys might live in a big city like a Boston or a Chicago or a New York, and maybe, oh, time to upgrade the apartment, upgrade the home, get the kids in a different school system. Make sure you keep your eye on the prize, which is a wonderful retirement, right? That is the goal. And by working with a robo advisor, having precious metals, maybe some cryptocurrency, you should be able to achieve that pretty easily. So our next question comes from Alex. Alex Says, hi, Austin and Robert. I love the podcast. I listen to you guys on my commute to work. I'm from California. My mortgage payment is 33.60 per month. It's a 2.5% interest rate and I've got 10 years left on the loan. 865 per month of that 3360, however, goes to escrow. I was thinking of removing the escrow and just pay my property tax in hazard insurance on my own every year. My plan is to put $900 a month in a high yield savings account so that I can earn interest on it and then use that interest to invest in stocks. What do you guys think about this? I always appreciate your perspective, Robert. You are the king of arbitrage, so I will let you kick this question off.

[Robert]

So, Alex, I love where you're at here. Love the thinking. Everyone should think like this. Where can I make the most money and arbitrage it to my own benefit? But in this instance, I also have to take into consideration opportunity cost, ROI of my time, and less friction. So Austin and I did a math on this, and I just don't know if there's enough money to be made in this transaction to make it worth the effort and the time it's going to take to prevail in this situation. If you were going to be able to arbitrage 2 grand, 4 grand, 10 grand a year by making this move, I think it would be worth it. But to save a couple hundred bucks, I don't know if it's worth the extra time, the work, and also the worry because you're taking it off autopay out of that escrow account and you're putting it on yourself and you could miss a payment, you could get sick, somebody could miss the payments or whatever. You don't want to be in a situation where you fall into foreclosure because you forgot to make some payments on your property taxes. So that would be my takeaway. But I want to commend you on the thought process because everyone should think like this, of where they can carve out additional money in their daily, weekly, monthly budgets to be able to invest more money. Money. Most people don't think like that, so you're definitely on the right track.

[Austin]

You know what, Robert? I, in my brain, I was like, all in on, like, don't do this. It's four or five hundred a year. There's no reason for it. But then we think back to our episode with Chris Camillo, and if you all haven't Listened to our episode with Chris Camillo. Go listen to it. You all loved it. It is a wonderful episode. I think it was maybe two or three weeks ago we had him on the show, but Chris was talking about everyone having a high risk bucket and, and using money that was already there to fund that high risk bucket. Therefore, if you lose the money in your high risk bucket because you made a high risk investment that didn't pan out, it's not like you were losing money you had to go work hard for. And so in this situation, Robert, maybe Alex will take this $500 a year, put it in his high risk bucket, roll the dice on something that's high risk in his view, and turn it into much more over a, a period of time. That's the only like, argument I could come up with with this because, like, I'm on your side. This is too many brain calories. There are too many deadlines. There are too many things to worry about where this could go wrong just to make another $500 a year. But if you were to take this $500 and maybe you were able to put it in Abercrombie and Fitch stock before their earnings call, which caused the stock to go up 20% in 24 hours, and you bought some call options that quadrupled in value overnight. Right. Some really high risk crazy stuff, then maybe it could be a good idea. But just want to make sure we're on the same page as to like the expending all these brain calories to make a little bit of money versus being more strategic and thoughtful as to how we are putting our money to work.

[Robert]

When I think back to my earlier days, let's say I was like 23 or 24 years old, I had my eye on this convertible that I wanted really bad. But I've always been a bucket guy. I promise you guys. Even when I was young, I always had multiple sources of income because I always looked at it that if I wanted a of bunch boat or I wanted a convertible, something had to pay for it. So I remember ordering three crane machines. I don't know if you guys remember the crane machines of the vending machines. And I had one in my bar, one in our restaurant, and one at a friend's bar. And I was hopeful that I would make 400amonth off of those machines to be able to pay for the convertible. And it worked perfectly. I made plenty of money with the machines to pay for the car and the insurance because it was going to be my second car. And when you think about it, was it really worth all work to order the machines, place the machines, fill the machines to be able to pay for the car. But now, in the end, thinking back 25, 30 years ago, it was definitely worth it. So it could go either way. Just make sure if you're doing these types of arbitrage situations that you're not spending so many hours to do it, that you're making less than minimum wage. Because you have to always consider if it takes you three hours a year to make the extra $500 a year, it's worth, worth it. But if it takes you 30 hours, then you might as well go get a side hustle because you'd make more per hour. So I'm definitely with you on that though because you started getting me thinking back to my early twenties of all the crazy schemes I would do to make extra money to buy the stuff I wanted.

[Austin]

Yeah, I think the idea of earning money elsewhere in your life, if it is. We've talked about this a couple times, right? My dad is a great example of this. He had 18 for decades he was paying $120 a month. He finally got an ad for Visible Wireless by Verizon for 25 bucks. That's all he needed. It was all the normal stuff he had already used. And so he switched from 125 to just 25 or whatever that is. And now he's saving 80, 90, 100amonth by just doing the small little switch, which is like essentially a thousand dollars a year of savings. There are little things that we can all do in our lives to come up with 1, 2, 3, 4, 5,000 more dollars a year. And if you want to go be aggressive with that, as does Chris, like go be our guest. But we also think that 1, 2, 3, 4, $5,000 that you could come up with is also an opportunity to turbocharge some of this index fund investing we talk about, get that Roth IRA maxed out, things of that nature. Just make sure you've got your priorities straight. Make sure you're not doing anything that is going to gamble or risk your long term trajectory of wealth building. But Alex, seems like you're in a good situation so we are rooting for you, especially with that 2 1/2% interest rate. That is awesome.

[Robert]

Yeah, I love it. But before we get into our next question, listen up folks. Time could be run running out to lock in a 6% or higher yield. At public.com you can lock in a 6% or higher yield with a bond account. But remember your yield isn't locked in until the time of purchase. So you might want to act fast. Lock in a 6% or higher yield with a diversified portfolio of high yield and investment grade corporate bonds only at public.com forward/rich habits.

[Austin]

So our next question comes from Emil C. And this was an email sent to us. Mill says hi, Austin and Robert. I'm a huge fan of the show and appreciate all your insights on personal personal finance. This has been a game changer for my fiance and I. I'm almost 30 years old. I have $115,000 invested into my retirement accounts between my Roth IRA, my 401k and my rollover IRA from a previous employer. I have a goal of retiring as early as possible. But my bridge account is only around $10,000. I know I can't withdraw from my retirement accounts until I'm 59 and a half years old. And doing some quick math, if I let my retirement account sit without any contributions from here except my employer match for my 401k, I would have around 2 million do million at 60. Does it make sense for me to allocate more money now to my bridge account instead of my Roth IRA going forward to try and reach that early retirement goal? If not, how much my base should I have built into my retirement accounts before I allocate the majority of my investing money into my bridge account? This is such a good question, Emil. Want to just give you a round of applause for just thinking deeply about this. Such an incredible, incredible way to think about. So like just. That's awesome. Like you guys are really getting good at this stuff. Let's just make sure we're on the same page here. Right? Emil is like, listen, if I keep maxing out my Roth IRA and doing this 401k stuff, I'm going to be the person that Robert and Austin talk about who has millions of dollars in these retirement accounts at the age of 45, 50, 55. And I'll have these millions of dollars, but I can't touch it for another 5, 10, 15 years because I'm not allowed to enjoy the fruits of these accounts and the profits that they've created until I'm 59 and a half without penalties, fees and things of that nature. So now she's saying, do I put more money in a bridge account that I have the ability to buy and sell within and enjoy or, you know, how do I balance these things? So it's actually funny, Emil. I'm in the same situation. It's like I've got hundreds of Thousands in my own retirement accounts that I've built over the last several years here. And I'm also now trying to figure out do I keep putting money over there? Do I have it in my bridge account? What's the sort of balance there? First of all, like here's how we should always think about this method. Match beats Roth beats taxable. So what I want you to do, Emil, is always contribute to the match. Get the free money. Like that is like a no brainer every time. Do not stop investing toward your Roth IRA. $7,000 a year, $583 a month. That is going to be so important for you when you're 60 years old and you've got $3 million now of tax free money sitting there for you. That to me is one of the most important retire with dignity type accounts that anyone could open. And main I were you just like I'm doing myself, I will never not contribute to my Roth IRA every single year, no matter how much money I have elsewhere. It's just like the biggest no brainer to have tax free money. So match beats Roth. Do the Roth ira. And now if you have any more money left over, it's like cool. I'm going to now put everything now into that bridge account. I'm not going to increase my contributions to the 401k obviously I've already maxed out the Roth. So I'm going to put now another 5, 6, 7, 10, $15,000 a year into the bridge accounts. And here's the thing though too, I want to make sure like, just like we have a reality check here, early retire is an anomaly, right? If you retire before the age of 65, you are an anomaly. So I don't want people to feel bad if they don't have millions of dollars or hundreds of thousands of dollars in a bridge account by the age of 45 or 55 or even 60. That is an anomaly, that is something that is super rare is to be able to retire early. The goal is to retire at 60, 62, 64, 65, 67, 70 with millions of dollars in these retirement the baseline. Go get that done. And then once we've got that figured out, we begin to work our way backward. Five years, seven years, 10 years, depending on how we'll be able to invest and how much money we can invest into these separate accounts. So that's my breakdown, that's my real thoughts. Robert, what are yours?

[Robert]

I mean that was incredible. I'm mind blown right now and just so appreciative of how you broke that down for everyone listening. And the only thing I'll add, and this is a stat that I'm not sure of if it's better or worse, but Austin and I believe that everybody, everyone from the age of 18 should have a Roth IRA and do their very best to max it out as soon as possible every single year. And one of the stats that we looked up today is roughly 15% of US adults over 18 have a Roth IRA. That is mind bending to me that people don't understand the importance of having the Roth ira, maxing it out and having all of that tax free money into retirement. So please, if you're parents and you have kids that are almost 18 years old, have the conversation with them, get the Roth IRA set up. I think it's the best 18th birthday present you could give. But then also all of you that don't have a Roth IRA set up and maybe just have your 401k or your traditional bridge account set up, please get the Roth IRA set up. Because we never know what the taxes are going to be on our money down the road. And with having the Roth set up, it just puts you in such a better situation because it's all after tax growth for the rest of your career. Career and the rest of your life. So please do that. I love the breakdown, Austin, but get a Roth IRA set up. It is so, so important.

[Austin]

Yeah. For example, back in 1945, 94% tax rate was the highest tax bracket federal income tax bracket. And then in 1981 it was 69%. Right. So it's like right now it's sitting around this like 37ish percent I think is somewhere where we're at right now. But it's important to remember to Robert's point, all that has to happen is a law gets passed or something, something happens. And the highest tax bracket or how you're taxed, your effective tax rate might go from 18 to 23 or 23% to 28 or whatever. Right. And so when that happens, you know, that's an extra 5, 6, 7, $10,000 a year that you now have to pay that you weren't expecting for assuming that it is not in a Roth IRA and you have no control over it because taxation is just another conversation we can have. Next question now comes from Jake V. Again, this was an email. Jake says, good evening, my name is Jake and I am single, not married, 26 year old. And I am a law enforcement officer who makes a base salary of $76,000 a year. But I should make between 85 and 95,000 after overtime and bonuses. I just bought a house. My mortgage is $2,100 a month. I pay $600 a month in student loans at a 7.1% interest rate. I have a 457B through Nationwide that I contribute 300amonth with and I invest in their strategy. I have about $6,000 in the stock market through a Schwab account and another 4,500 in my emergency fund through Discover. I contribute about 3% of my paychecks to my pension plan, which will pay 90% of the average of the highest five years annually when I retire, which might be 55 or so. Here's my question. Keeping it to the account that I would still like to have some money left over every month to enjoy my life, take vacations, things of that nature. How could I manage my money better? Should I open up a Roth IRA as well and contribute over there? Or is my pension and my 450 enough? Should I pay off my student loan debt faster or should I focus on increasing the balance in my emergency fund? Any advice you guys have is greatly appreciated. I thoroughly enjoy listening to your podcast. Thanks in advance, Jake. Robert, you want to kick this one off?

[Robert]

Yeah. This is a confusing one because although he's a high earner and I love that because that's going to continue to grow, I definitely think you shouldn't just have the 457B just because you don't have full autonomy over that account. You don't have autonomy over what it's invested in and many times it might underperform the markets over the years. So at your age, I definitely think you should get the Roth IRA set up as soon as possible. But before you start maxing out the Roth ira, I would make sure to get all of your high interest debt paid off because at the end of the day you hear Austin and I say every single week you can't out invest high interest interest debt. So I would start there, but get the Roth set up and as soon as the high interest debt is under control and gone, then I would start maxing out the Roth IRA to make sure you have that after tax money going into retirement. Because right now at 26 years old, it's an incredible time for you to get started early, invest consistently in the Roth IRA and really set yourself up for financial freedom later on.

[Austin]

Yeah, so I agree and I want to like walk you through step by step here. You know, you're 26, you're a law enforcement Officer. Officer. Appreciate you protecting your community. I think that's really noble of you. And shout out to all of our law enforcement officers, military firemen, shout out to my friend Jonathan, who's a fireman, he's pretty cool. But what's important here to understand is you are in a situation where you might have a pretty tight monthly budget. You're taking home just about $5,500 a month, if I did my math right, after taxes, contributions, things of that nature. And then once you take out the $600 a month in student loans, $2,100 mortgage, and probably just being a 26 year old like you might be, I'm not going to say you're living paycheck to paycheck, but you're pretty close, right? You might have wiggle room of maybe 500, $700 a month, which is cool and it's useful. But I just want to make sure, like, you know, that there are different things that we should do here to ensure that you have a little bit more breathing room. So the first thing I want to do is beef up this emergency fund. You've got $4,500 in there. I guarantee you that that is one month of savings, right? I want you to have three to six months of savings. So the big goal for this year between, you know, June when this comes out and Christmas in six months from now is to get this emergency fund to at least $10,000, maybe 12 or 15 if you can get there. But you want to have at least three months of expenses in this account. Because what's going to happen here is there's going to be a funeral. There's going to be a last minute something that goes wrong with your car, something your AC is going to. In a home that you own, something's gonna happen that's gonna be 3, 4, 6, $7,000. Or maybe it's a bunch of little things that happen over the course of two months that just wipe you out. And when it happens, it's gonna suck. Like, for example, I haven't even told Robert this yet. My microwave broke yesterday. So not only did my dishwasher break, but now my microwave's broken, so I gotta go buy a new microwave, right? Stuff like the joys of home ownership. What I'm saying here is the first thing is to get that emergency fund beefed up. That's the most important part. Because that's what's gonna give you some breathing room between. Between life and you. The next thing I want you to do is, yes, open up that Roth ira, Robert. And I think it is the best way that anyone can begin to save and invest for their retirement. Open it up on public, get the 1% match and max it out. That's like 500, $600 a month. You can absolutely do that once you're done beefing up that emergency fund. Okay, now once the Roth IRA is rocking and rolling, you've got probably at this time, 10, 20, $30,000 invested maybe across your 457, your pension, your Roth, you got this, you know, 10, 15,000 saved. Now maybe it's time to consider knocking out these student loans. 7% interest is nothing to sneeze at. Definitely right in the middle where it's like on the bleeding edge of like, I don't like the debt. It's getting kind of up there. $600 a month tells me you probably have 40, 50, 60, $70,000 of student loans. Just follow the rule of thumb that Robert and I always share when it comes to paying off student loans. Loans. Before you pay off your student loans aggressively, assuming a reasonable interest rate, which is what you have, make sure you have the equivalent amount invested across your account. That would be a bridge account. Maybe that's this 457B, your Roth IRA, your emergency fund, that's earning interest rate. Just make sure you have the equivalent amount of your student loans working for you before you now go take this tens of thousands of dollars of money that could be invested to go now pay off these loans. Because freeing up $600 a month for you, let's say you're able to do that in the next couple years, that $600 a month is your Roth IRA, right? That is what's going to turn into millions of dollars in retirement. So there's definitely a world where you can begin to open up some of the breathing room in your budget. Invest more aggressively in your 30s and become a multimillionaire by the time you're ready to retire.

[Robert]

The only thing I want to add to this would be get your budget handled. We have a free budgeting tool that anyone can grab. It'll be linked in the show notes. Everyone needs to understand where they're at monthly so you can figure out how to get that high interest debt paid off. Get yourself on that honest budget we talk about all the the time and you will be set up for life. Get everything dialed in and you'll be good to go.

[Austin]

So our next question comes from Amanda on Instagram. Amanda says, should we take profits on single stocks inside of our Roth IRA? For example, I'm up over 100% on Oaklo because of you guys. Should I take profits and send those profits over into VOO and qqq? What should I do with it? I maxed out my 2025 contributions already. Robert, you want to kick this one off?

[Robert]

Yeah. I have a pretty straightforward approach to how I take stock profits. When it's up 50%, I take out 25% of the profits. When it's up another 50%, I take out another 25% and so on and so on. Because I want to have these positions when they're long term holds where I'm mostly, if not all, out of it with my own money. And then I'm simply living on house money and utilizing those gains to continue to grow that position. And in this instance, you're already up 100% on Oklo. Great job. I. I think it's a great idea to take 25, 50% of the profits out, flip that over into the voo or the QQQs, and keep on rolling and keep doing your thing. Because, you know, oklo's been great for all of us. We've done really well with it. But you always want to make sure you're taking profits along the way.

[Austin]

Yeah, totally agree. Roth ira. The whole mentality there is to ensure that it is a big bunch of big beautiful nest egg by the time you're 59, 69 years old, somewhere in that range when you're ready to retire. And the only way that I can pret guarantee it's going to get there is by just parking my money into American capitalism, aka the S&P 500 and the NASDAQ 100. Because I know over a long period of time, index funds and ETFs like this continue to trend up by 8, 10, 12% after adjusted for inflation. And so if I can just do that, I can project as to how many millions of dollars I'll have in this account. But when I begin buying and selling single stocks or I get a little risky, maybe I make a bad trade, another bad trade, another bad trade, and, and now I'm going backwards into an account that should only be going forward. So by taking profits, 100% return. That's amazing. Take that 100% return, put all of it into the S&P 500, the NASDAQ, whatever other ETFs and index funds you have, and ensure now that you've got more money trending higher for you over a long period of time. So our last question comes from David S. On Instagram, David says. Robert Nostin. Hello. Since following you, my family has figured out our budget. We've automated our savings and our investments, and we are so happy to feel so organized and will likely retire very wealthy when the time comes just because of your advice. So thank you, David. Let's go. Dude, that's amazing. David says. I'm 49 years old and I have a question. Ten years ago, I was sold on a whole life insurance policy. We've paid $10,000 every year and we're finally finished with our premiums. The cash value is about $111,000 and the death benefit is $324,000. I can borrow against my cash value at a 5.5% interest rate. My question is, do I, do I keep it or do I somehow cash it out? If I do cash it out, what do I do with the money? Thank you so much. Keep doing what you guys are doing and teaching us all about personal finance. Well, again, David, super big shout out to you and your family for getting right with your money, taking control of your money. It is the best feeling I talked about. Once you have complete control, autonomy and visibility into how much money you're making, what you're spending, what your projections are and you're able to forecast, it's like taking the limitless pill. You just see the world differently. It's amazing. So, Robert, I'll let you kick off this question. Question from David.

[Robert]

Yeah, I don't like the situation. I think whole life insurance for me isn't the answer for a lot of people. And in your situation, I would rather see you take the cash out of the policy. Invest that into the Vos and the QQQs of the world. Have a balanced low cost ETF portfolio because even after fees, let's say you net $100,000 from the policy as your surrender value. That $100,000 over the next 20 years, years when you would be 69 years old would be infinitely more than $324,000. So that's what I would personally do. And then to make sure you still have insurance, then I would get a really good term life insurance policy which is more affordable and just makes much more sense for your situation. That's my opinion. Always consult with a professional, but don't consult with a professional that's trying to sell you something. Austin and I have nothing to sell. We're here to help people build financial freedom. And I don't the numbers yet. I'm sure Austin's going to have it calculated, but if you take that $100,000 for 20 years and invested in 8, 9, 10% return, it's definitely going to be infinitely more than $324,000.

[Austin]

Yeah, it's pretty close to about 700 to 800,000, depending on what those returns look like for the next 20 years. Obviously, we can't predict the future there, but assuming a 8, 9, 10% return, if you took that same $111,000 and you just parked it in the stock market, the S&P 500, you would have much closer to 700, 800,000 dol. Much higher than 324,000. Now here's the mistake you don't want to make. Before you cash out on this policy and forfeit this death benefit, you need to have term life insurance in place. Because the worst situation to be here is I cash it out and then I wait a couple weeks and then something happens and now my family loses out on this death benefit and there's no insurance. So don't do that before you cash it out. There'll be a link in the show notes below to go to shuriance.com rich habits go talk to Russ McBride or Robin McVeigh on their team. They're incredible people. We work closely with them because they are awesome proponents of term life insurance. They're going to shop the best rates for you. They sold me my term life insurance policy from Prudential. I've got a million dollar policy. I pay like 50 bucks a month. I mean it is, it is awesome. And so that's what you want to do. You want to go hit up shuriance.com richhabits link in the show notes below. They'll shop a policy for you. Tell me you want a million or a $2 million policy or half a million, I don't know, whatever works for you. And then pay 50, 75, 100 bucks a month in premiums versus nearly $1,000 a month in premiums like you have been with this whole life insurance policy. I'm sorry that you got bamboozled 10 years ago, but now is a great time to cash this thing out. Pay the fees, the surrender charges, whatever's going on there and get it invested. That's the key. Get this money invested and working for you. And hopefully by the time you are 70 years old, you'll have another 700 or $800,000 and an account for you to enjoy. And then say thank you rich habits for helping me make another couple hundred thousand with my money.

[Robert]

And I want to add too because it's so super trendy right now throughout all social media is be very careful of the new whole life insurance that everything is getting pushed around and that is indexed universal life. You're going to hear it called Iuls. Be careful of it. We don't like them, wealthy people don't use them and the commissions and the fees on these ponds policies are extremely high. So just be careful, do your research before you sign anything. And if you're not already a Rich Habits Network member, we're there every single week answering your questions in the school community. But just be careful with your money because there's so many things out there like whole life Iuls all of these different schemes that they're going to sell you as great for your future but at the end of the day they're making more money with your money than you are. So be careful out there everyone.

[Austin]

Thank you so much for tuning in to this week's episode of the Rich Habits Podcast Question and Answer edition. We love filming these episodes. We love answering your questions, giving you our perspectives of if we were in your shoes. So if you have a question to ask us, email us at rich habits podcast gmail.com literally 20,000 of you already have. Or send us a DM on Instagram @ Rich Habits Podcast over there. I know some of you have said that like the DM inbox is getting like kind of wonky because it's so flooded. So we appreciate any patience if you're having some weird errors on Instagram, but if you do get an error, send me us an email. Gmail is pretty reliable. And don't forget, to Robert's point, we have the Rich Habits Network. A link to join the Rich Habits Network will be in the show notes below. And this is our community for our biggest fans. Over 650 of you have joined the Rich Habits Network and we are connecting with you all every day and week over there. We host a two hour live stream every Tuesday night where we look at you face to face on Zoom. We bring you our biggest hits as it relates to what's going on in the markets that week, the economy, any headlines, what the Trump tariff tantrums going on, anything like that. We talk about it and then we answer your questions in real time just like this. But you get the opportunity to ask us face to face, add more context. It's a really cool conversation. We also have eight hours of video coursework over there and probably most importantly, you get to invest alongside of us into pre IPO companies as well as startups and real estate syndications. If Robert and I get presented an opportunity to invest and we like it, we open up the floodgates for you guys. And and we've had hundreds of you invest alongside of us now into probably about a dozen companies since we started this about a year ago. Millions of dollars has been invested from our listeners into these cool companies and syndications alongside of us. And it's so rewarding to know that we can unlock a new asset class to our listeners. So be sure to check that out in the link in the show notes below.

[Robert]

And if you learned something from this podcast and you've been following along, we love having you guys. It's been an incredible journey for us, Dawson and I, and we appreciate each and every one of you following along every week.

[Austin]

And don't forget to comment on Spotify. Vote in the poll. We're always trying to do funny little polls, so if you're on Spotify, which you should be on Spotify listening to this and watching the video here, comment something below, vote in the polls, do all the fun stuff and share it with a friend. Thanks everyone. We very much appreciate it and we'll see you on Monday.