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Rich Habits Podcast
Q&A: Investing During Times of War, Vanguard's Drawbacks, & Buying a House at 62
00:33:07
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- [00:02]
Robert
Race the rudders. Raise the sails. Race the sails.
- [00:05]
Austin
Captain, an unidentified ship is approaching. Over.
- [00:08]
Robert
Roger, wait. Is that an enterprise sales solution?
- [00:13]
Austin
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- [00:30]
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- [01:00]
Austin
Hey everyone and welcome back to the room. Rich Habits Podcast Question and Answer Edition Brought to you by public.com these are our Thursday episodes where we answer your questions that you ask us via Instagram dms@rich habits Podcast on Instagram or email us@richhabitspodcastmail.com as you can see, we're in a studio today which is really exciting and we cannot wait to jump into some of these incredible questions you all have asked us. But Robert, before we jump into this episode, I think we need to remind our listeners about something very important.
- [01:30]
Robert
That is absolutely correct. Austin and I have a very special announcement to make. You all have asked for more content and more episodes and we're delivering debuting on Friday, August 1st, we're so excited to announce the introduction of a new Friday episode we're calling the Rich Habits Radar. These new Friday morning episodes will be Austin and myself breaking down the biggest headlines that have impacted your portfolio that week.
- [01:56]
Austin
We are so excited for these episodes. That means every Friday we'll be walking you all through the most consequential market, moving headlines and happenings. We want this new episode to become your go to weekly summary of the stock market, economic news and headlines that matter most to you and your money.
- [02:14]
Robert
We all know Dave Ramsey's entire message is paying off debt. Well, we're doubling down on our own identity and messaging of earning more money. So the Q and A section of these Friday episodes we'll be answering your questions from side hustles, solopreneurs, small business owners and anyone else out there trying to earn more money.
- [02:34]
Austin
Robert has earned hundreds of millions of dollars. I've earned millions of dollars, and we want to help you do the same. So if you have a question to ask us for these new Rich Habits Radar episodes, be sure to send it now via email@richhabitspodcastmail.com or DM it to us on Instagram at Rich Habits Podcast. And do not forget to click the subscrib, whatever button you're watching us on right now. If It's Spotify or YouTube or Apple, just subscribe and get notified for these new episodes because they're going to be a blast and we cannot wait. Friday, August 1st. We're going to see you there. All right, Robert, let's now jump into this episode. We've got a ton of really cool questions to answer coming from I see Tammy, I see Kate, I see Andy, I see Rachel. We got a ton of exciting people here today. So our first question comes from Tammy via Instagram. Tammy says, Hi, guys. I'm 62 years old, working full time, making $150,000 a year. I have $1.8 million in my combined 401k individual account and 90,000 of that sitting in a Roth IRA. I'm maximizing my annual contributions, but I make too much to contribute to a Roth ira. I'm single and I'm considering buying a home. I've got three quick questions. Do you think it's too late for me to buy a home now that I'm 62? What is the best way for me to contribute and max out my Roth every year? And are there any other investments I should be considering now? Robert, why don't you Talk about the 62 wants to buy a home. You cover that and then I'll jump in as it relates to the Roth ira.
- [04:01]
Robert
I love it. And then let's both give our takeaway on other types of investments. So are you too old? Is it too late to buy that home? Absolutely not. I love this idea. You've already dialed in your retirement. You have a lot of money. You've got it set up there so we know that you can follow the 4% rule and live comfortably. So I love the idea of buying a home. Now, how much home should you buy? I think that's going to be the critical factor. We don't know how you're currently living and what your lifestyle looks like, but I would want you to really focus in on buying a home that is going to meet your criteria of what you're currently paying or close to it in the mortgage and total cost of ownership. I think that would be a great strategy because at the end of the day, you're still quite young and over the next 10 years you can really pay that home down and have a solid place and foundation for your retirement or with your own personal home. I love that idea.
- [04:55]
Austin
So something that we talk about, right, is unfortunately, a lot of people go into their retirement years and they've got this big mortgage payment still, and it's 2, 3, 4, $5,000 a month. It's eating into their, you know, lifestyle expectations and they're now having to pull more and more money out of their retirement accounts to float this payment. And so what I would love to see Tammy have is, is a home, a modest home, 250, 3, 50, $400,000 that she pays for out of this 1.8 million. Now, if you want to go do that right now, right now, interest rates are six and a half, seven and a half, eight and a half percent, depending on what your credit is. And of course, the, the rates will hopefully begin coming down in the next 2, 3, 4, 5 years. To reiterate what Robert said, it's not too late for you to buy a home, but what you need to be is very methodical as to how you do it, right? Because like, here's the deal, you don't want to be 78 years old and still have this monthly mortgage payment when you've got $3 million in your retirement account. That doesn't make any sense. Tammy, if I were you, I would run some numbers. I'd say, okay, what can I afford from a purchase price perspective, right? What does that translate into? A monthly mortgage? And if that number is just too high and this home's 350, $400,000, I would really consider saying, okay, maybe it's time for me to cash out some of this Roth, cash out some of this 401k, maybe, maybe some of this individual, figure that out and say, I'm going to go now have a million and a half dollars in this retirement accounts combined for me to live off of and a paid for home that's not at a seven and a half, eight and a half percent interest rate. Like if you're doing that at 62, 65, 67, you're having a really good retirement.
- [06:30]
Robert
Yeah. I think the key takeaway here is understanding, like right now, if she's paying $2,500 a month in rent, I don't want to see her go buy a home that's $4,500 for the mortgage payment and the all in ownership cost. So I think it's okay to buy the home like you said, as long as she staying within what she's already paying. So she's not eating away at her retirement just to own a primary home. So I think it was great coverage and that's exactly what I would do. So speak to our audience about the Roth component now of what do you think she should do, the best way to contribute to the Roth and what other investments we should both cover.
- [07:04]
Austin
Tammy mentioned that she makes too much money to contribute to her Roth individual retirement account. As you guys know, they do have some income limits there if you're single. Tammy mentioned she was. I'm pretty positive the annual income limits about 150,000. And so Tammy's cake. And she's making some great money. But with that being said, she cannot contribute directly to the Roth ira. But that's okay because there's a backdoor component to the Roth ira, which essentially means what Tammy, what you're going to do here is you're going to open up a traditional IRA, you're going to deposit $7,000 into your traditional IRA, convert it into a Roth IRA and then go invest the money. So bank account traditional, convert traditional into a Roth, then the money gets invested. If you do that, you do what millions of Americans do, that make too much money to contribute to the Roth ira, including myself. Now, as it relates to other investments, I mean, Robert and I say after you build your base of $100,000, it's always a good idea to diversify that diversification can come in many forms. If it's real estate, right. You can think of REITs that are publicly traded, like Vici Properties Realty Income Corporation or just Vanguard's REIT Index vnq. You can also think about fundrise, which is more of like a robo advis. They give you a lot of exposure to a bunch of different types of real estate. But then you can also think about precious metals. There's cryptocurrency, there's, you know, startup investments. There's some very high risk and low risk types of ways to diversify your portfolio. What are a couple of your favorites, Robert?
- [08:28]
Robert
Yeah, I would say you already listed them. I would love to see her have a portion of her net worth in cryptocurrency. Just the basics though, nothing crazy. No meme coins, none of these new coins that are dropping every day. I'd love to see you own four or five of the top cryptos like Bitcoin ethereum, xrp, maybe some chain links, something like that in a nice portfolio, maybe 2 to 5% of your net worth. But also, I think it'd be really smart right now to get some of that money working in precious metals. You could keep it super simple. You could do gold and silver, and you could use the ETFs GLD and SLV. Gold and silver are outperforming almost all asset classes right now. So I think that'd be a good idea as well. And I think you're on your way. You've done a great job putting yourself in this position you're in leading up to retirement. And that's just it. I would diversify a little bit. Make sure if you're buying a primary home home that you do it right. Or you could even go one step further with the home. Buy a duplex. Buy something where you have a neighbor that pays a lot of the mortgage, keeping your expenses down. So there's a lot of things you can do here. Great question. We really appreciate you.
- [09:34]
Austin
Good question, Tammy. Now our next question comes from Hayden on Instagram. Again, if you have a question to ask us, DM it on Rich Habits Podcast on Instagram or rich habits podcastmail.com Hayden says. Hey, guys, my name's Hayden. I'm 28 years old and I live in San Francisco. I just want to say how grateful I am for your show. I. It's completely changed my outlook on financial success. Until recently, I only had a 401k through my work. But after listening to your show, I finally opened a Roth IRA. I'm excited to start contributing $500 a month. Let's go, Hayden.
- [10:01]
Robert
Yes.
- [10:01]
Austin
Hayden says my portfolio is made up of voo, V X US and QQQ on Vanguard. The issue is, however, that Vanguard doesn't allow me to buy fractional shares of QQQ because it's not an ETF that they created, which means I can't automate that portion of my portfolio away. So what's the best way that I can handle this? Should I let part of my contribution sit in this, like, cash settlement fund until I can afford a full share of qqq? Or is there a better way to have this money invested instead of sitting idle for months? Thanks again. The show has made a huge difference in how I approach my financial future. Wow, Hayden. It's like, it's like as if there's more online brokers out there than Vanguard. It's like public.com doesn't also have a wonderful Roth IRA product. That is offering a 1% match now on all contrib. And you can automate fractional shares across the gambit. You kind of see where we're going with this, right? So, yes, Vanguard is very rigid in the sense that if you are not investing in their ETFs, right. If it, you know, Vanguard, whatever, ETF, Voo, Vti, VGT. You get the point. Those ETFs, you can do fractional shares because they're, you know, want to make sure that you buy them. But other ETFs, right. Q. Q. Q. Is Invesco. Right. And you'll see spy, that's spider. And so these other ETF issuers, they don't offer fractional shares where on the flip side, Public Docker does. And Public.com also offers investment plans, which means you can just automate a percentage to whatever specific ETF you want from. Let's say you, let's say you mentioned this $500 a month, right? I think it was 500. Yeah. So let's say 500amonth. Let's say half of that is going to go to Voo, 25% is going to go to VX US, and the other 25% is going to go to QQQ. That means that 25% of your 500 every month goes automatically. You don't have to let it settle. You don't have to wait for, you know, to buy a whole share of qqq. It gets invested immediately. So there are a ton of ways to go about this, but the easiest is to simply migrate off of Vanguard onto public, receive a 1% match on that deposit, which is amazing, and then rock and roll with your investment plans and just do the normal percentages that way.
- [12:08]
Robert
And just everyone needs to understand you can have multiple platforms. You can use many, many platforms for different aspects of your investing style and portfolios. I have multiple. I have Vanguard, I have Schwab, I have E Trade. We use Public. Public is probably our favorite. So just understand it's okay to have your money in different places as long as there's a purpose for it. Public is our favorite because they cover so many different aspects of investing, from high yield savings to crypto to fractional share ownership.
- [12:39]
Austin
Yeah. So for example, Robert, you know, to your point, having a brokerage platform for a specific reason, I have a Vanguard account. I have it for the 529 account. Right. That's the only thing I use Vanguard for because it's super simple, it's really easy. I deposit $200 a month. Into there and it gets invested into Voo and Vug and it's cool. So I totally agree. Right. Public.com is the easiest way for anyone to start investing. And now because they offer their retirement accounts, they got the crypto, the options, they got all these cool new features to their platform. They truly are head and shoulders above the Vanguards, the Schwabs and these others who haven't adopted yet fractional shares or investment plans and things like that.
- [13:17]
Robert
Yeah, I couldn't agree more. And Public is just a prime example of adapt to the audience. A lot of these incumbents like Vanguard, they just haven't made the changes necessary for retail investors who don't have thousands of dollars a week or thousands of dollars a month to invest. And so the fractional share part is just one of the great features that Public.com offers. And I really love that for the retail investors.
- [13:42]
Austin
So our next question comes from Pete on Instagram. Pete says, hey guys, Pete here. What's up, Pete?
- [13:48]
Robert
What's up?
- [13:48]
Austin
Pete says, so I just started investing a little bit. I'm 43. I'm a disabled veteran at 100% Service Connected. I manage a private sober living company and I've been doing that for five years. I make about $500 a month from my job, but I get free rent and I live on a lake, which isn't too bad. All my bills are completely paid for from this job. I'm a full time college student leveraging the GI Bill. My health care and dental are completely free because of the va. So what is your advice on what to do with my money? Say, on average, between the private sober living company I work for and everything else that's coming in, I'm making about 4,100 to $6,000 a month tax free, depending on my school schedule. With that being said, the GI bill ends November 2026. I've maxed out my Roth IRA for this year and it's sitting at $14,000. I also just opened up a brokerage account on Fidelity And I have 6,000 in that. And I have $125,000 in my high yield savings account earning 3.6% interest. Please tell me how to be smart with my money. I just sold 49 pairs of my shoe collection to get my savings up. How cool is that?
- [14:57]
Robert
Yeah, I like it. I'll take this one first. I think 125,000 sitting in a high yield savings account is way too much. I don't know what it's there for. There's a saying that Austin and I use all the time, and that is, you need to make your money work as hard for you as you work to get it. And in this instance, I'm happy that it's in a high yield savings at making that three and a half percent, 3.6% interest. But you should be making more. You're not going to maximize your returns having so much sit in this high yield savings. So I'd rather you curb that down, get that down to maybe 25 or 30,000. Take the other hundred thousand, get that working in the markets. Maybe you open a traditional brokerage account like we Talked about on public.com, get you a basket of the index funds we talk about all the time. Maybe get some exposure to Bitcoin, maybe get some exposure to GLD and SLV, the two ETFs we love, for precious metals, for gold and silver. But right now that's what I do. You're so young, and I don't want you to leave too much money on the table every year by playing it so safe. So that's what I would do if I were in your shoes right now.
- [16:03]
Austin
So you're 43. You know, go to college, getting a good education, hopefully that turns into a really fruitful career. You're making four to six thousand dollars a month tax free, which is amazing. And you don't have any expenses. What you should be doing is taking four to $6,000 a month and investing it right? So you've done a great job. You've got 14,000 here in the Roth IRA. You've got 125,000 saved. You got 6,000 in your bridge account. So here's exactly what you should do. Max out the roth IRA for 2025 if you have not already, and make sure that that money is invested into voo, vgt, qqq, vti, aiq, all the things that we talk about for the Roth IRA. Now that you've maxed that out for 2025, I want you to start beefing up this account in fidelity that's got 6,000 in it. So let's say, for example, if you have 5,000amonth for the next six months, right, the rest of this year that you are now putting into this Fidelity account, you'll have 36 to $45,000 in this account by the end of the year, depending on the growth. That's amazing. And to Robert's point, you have this 125,000 in a savings account. If I were you, I'd have a plan for that. Either that Means let's get it invested right. The NASDAQ's up 7.5% this year. The S&P is up 5 and a half percent. Gold, silver, precious metals, things like that are up 20, 30%. So like, there's money to be made in these markets. So let's get this 125,000 invested. Maybe not all of it. Maybe you've got set aside five, maybe $10,000 for a true emergency fund for you. But let's call it the other 115. Let's get that working for you. Let's get that invested on your Fidelity account. And then also like once that base is built, do you want to be living and doing this for the rest of your life? Maybe there's a world where you want to own real estate one day. Maybe there's a world where you want to, you know, house hack and buy a duplex or a triplex. There's a lot of things to get excited about at 43 years old. You've got so much life ahead of you. It's just time now to make a plan now that you have some financial flexibility given your current situation. We got to remind people here real quick though, about public.com right? Public.com is this investing platform for those who take investing seriously. No gambling, no day trading, none of that stuff. If you're serious about investing toward your financial future, it's time that you learn about public.com because on public you can build a multi asset portfolio portfolio of stocks, bonds, options, cryptocurrency and more. And that's not all. Public's artificial intelligence isn't just a feature built into the platform. It's woven into the entire experience. From portfolio insights to earnings call recaps, Public gives you smarter context at every touch point of your investing journey.
- [18:32]
Robert
And for a limited time, you can earn a 1% match on all IRA deposits, IRA transfers and 401k rollovers. Let me say that again. 1% match on all IRA deposits or transfers and 401k rollovers. Fund your account in 5 minutes or less at public.com forward/rich habits Paid for by Public Investing.
- [18:54]
Austin
Full disclosure in the podcast description public.com/forward/rich Habits. You heard it here first. Ladies and gentlemen, our next question comes from Rachel on Instagram. Rachel says hi Austin and Robert, thank you so much for all you do. I've been listening to the show for just over a year now and have saved my 100k base. Have 529s for both my boys. 30,000 in my bridge account. And 50,000 in my 401k. Let's go Rachel. Boom. And I'm on track to max out my Roth IRA for the second year in a row as well. So here's my question. Can you guys delve into how to calculate the ROI for those of us who are managing our own investments? For an example, there's no real easy way for me to view this value through Fidelity. It actually requires a lot of computation that must be done by the actual owner of, of the stock. Thanks so much. I appreciate you guys more than words can say. It's a good question, Robert. Let's just start at the beginning.
- [19:44]
Robert
Yeah.
- [19:44]
Austin
Okay, so let's say for example, you go out and you've got $1,000 and you want to buy 10 shares of some stock at $100 a share. So your investment is that $1,000. So ROI stands for Return on investment. So we know what our investment is, right, the $1,000. And now let's say those $100 per share stocks that we have 10 of go up to $150. So now it's been 6 months, 12 months, 18 months, they go up by 50% from $100 to $150. And so now our 1,000 is 1,500. Well, if we invested a thousand and now it is 1,500, that return on that original thousand dollar Investment has been $500. Therefore our ROI is 50%. Anything to add?
- [20:34]
Robert
Yeah, I would say people many times don't understand ROI at all, what it means. So that was a great explanation. But also take it one step further. We have to account for taxes. So you're either going to pay on those profits, either short term or long term capital gains taxes. So that is another way to determine and help you understand what is your net profit, the net ROI at the time of sale when you exit that position. And the other consideration for this would be is when your dollar costs averaging into these positions, you're going to have a different price for every purchase. So you have to take that into consideration overall because in your brokerage account you should be able to figure it out. It'll show you what you bought each one at. And when you have that breakdown, then you can come up with your overall roi, your return on investment, because it'll provide you with the individual share price you paid and then what the blended average is. So you can calculate your total return on that investment prior to taxes.
- [21:34]
Austin
And if you want to calculate that blended average for yourself, it's super simple how much money was invested and how many shares do I have? Right. So that's your average blended share cost that then you can say, okay, I paid 43, now it's worth 57. What is my ROI and how can I now begin to compute taxes and things of that nature as well, whenever you're trying to figure that out. So, Rachel, great question. Thank you so much for listening to the show. Our next question comes from Ayinda. Ayinda says, hey, Austin. Robert, with all of this war talk going on in Israel and Iran and America potentially getting involved, I wanted to know, should I still invest heavily into the ETFs you guys talk about, aka Vooqq, VGT, Spyi and others, or should I be redirecting my money into more defensive things like oil and gold and things that are hard assets that do well during times of volatility, I'd really appreciate your advice. This is a wonderful question. And honestly, I had a lot of people that asked us this question recently, right, because they're thinking, oh my gosh, like the markets are going crazy, Trump's tweeting, Iran's doing stuff, Israel's going nuts, like, what do I do with my money? Is it, is it still business as usual? And the answer is yes, it's always business as usual. So let's just take a step back and think about two other times that we experienced any of this sort of conflict. Most recent ones were Hamas and Israel and what happened then. And the market sold off about 2 or 3%, but then they rebounded back to where they were previously over the next month and a half. Before that, we had Russia and Ukraine markets sold off a little bit more dramatically and quickly. But they did rebound and now we're back to all time highs. So I guess the lesson to learn here is that generally speaking, there's always a headline, there's always geopolitical tension, conflict. There's always something that's going to move the markets up, down, left and right and in circles. But if you have a long term investing mentality and history tells us that we're going to be just fine, right, the markets have always hit new all time highs. American capitalism is winning. So as long as you have this long term mentality, no matter what might feel extreme in the moment, if it's war, if it's inflation, if it is a global financial collapse, like, I don't know, whatever feels extreme in the moment, you fast forward five years, everything's gonna be great.
- [23:52]
Robert
For me, the big takeaway, and I love this question and your Breakdown was phenomenal is to understand your time. What is the ROI for your time? I think everyone needs to understand that because so many people get in the weeds trying to think how do I time the market, how do I make these adjustments? What do I do? Because there's uncertainty, there's volatility, but at the end of the day you have to decide is it worth it for you to give up maybe your family life or your freedom or, you know, your hobbies, to be able to keep your eye on the prize all the time? And that's very difficult to do. Even professionals struggle with trying to time markets around the headlines and volatility that we see on a regular basis. So I think it's important to understand that because a lot of times we want you to have active management, we want you to keep an eye on your money, but we also want to make sure you're enjoying life and really living a meaningful life because you don't want to be looking at your accounts all day every day worrying about a headline, making knee jerk reactions because at the end of the day the market's always correct and go up and over to the right.
- [24:58]
Austin
So our next question comes from Andy P. On Instagram and he says, hey guys, thank you all so much for your content. My self directed account with the ETFs that you have suggested is crushing it. Right now I'm inquiring for my son who is 18 and just graduated high school school. He's attending college in the fall and we were fortunate enough to get a scholarship for grades and income. He's been saving up all of his money for school and our agreement is that we would pay half of his school and he would pay the other half now in order to give his money more time to grow instead of splitting it year by year, we're going to pay for the first two years and then he's going to pay for the second two years. He's got $10,000 right now sitting in Chase's money market fund earning 5% interest. Since he's young and without much income, but will be needing his money for school. We wanted his money to gain risk free, which is why it's in a savings account. But if he doesn't plan on touching this money for the next couple of years, are we missing out on better gains by not having it parked in the markets, including the ETFs you guys talk about? What should we do with this $10,000 for the next two years? Thank you so much for everything, Andy P. Andy, that is so cool. That's actually a very similar, like deal I had with my parents. Yeah. So I love this. Giving your son some skin in the game, some. Oh, wow. You failed a class and you paid for that class and you failed it. Your money just went down the drain. I'm a believer in that. So here's what I would do, right? You've got this $10,000. It's earning interest, it's parked in this money market. I don't think there's a world where you need to invest it two years from now. I want to say, fingers crossed, the markets are going to be up higher. But also like if you had asked, if you had done this in 2020, two years after 2020 was the 2022 bear market. Right. And so that was a 38% pullback in the NASDAQ and a 32% pullback in the S and P. So I guess what I'm trying to say here is if you have, we've talked about this. When you have any sort of planned expense, right, Saving for a down payment on a home, if that expense is five, four, maybe three years away, two and a half years away. But once you start getting to that 12, 18, 24 month range, in my opinion, it's time to start peeling some money out of the markets. If it was invested, park it in these high yield savings accounts so they can grow still. Make sure you've got some tax stuff figured out there. But again, we can't predict where the markets are going to be in six months, 12 months, 18 months or 24 months from now. But we do know in five, 10, 15 years, they're going to be up and to the right. What I think you got going on here is pretty good. But if you did want to switch things up a little bit, maybe there's a world where this could be deposited into a 529 account, can grow the same inside of that. And maybe there's some like tax benefits depending on the state you live in. Definitely look into that. But I like the setup.
- [27:31]
Robert
I think it's fantastic. I wish more parents would think like this because that's really smart for them to pay upfront and then have the Sun's money grow over the two years. And I agree with Austin 100%. The time horizon is too short. I would not invest the money. I would keep it Safe. Making that 5%. I think it's a really, really smart way to do things. And I wouldn't touch it because when we enter a bear market, sometimes they can last 18 to 24 months. And if something were to happen and we have some black swan event or whatever could happen with the market markets now, I would hate for you guys to get that money active and then have yourself go backwards on his money. So I love exactly what you're doing. I wouldn't change a single thing. And great job helping him out. And it's a really smart way of.
- [28:17]
Austin
Doing it and even thinking about this for a second further, like let's say they were saving for a down payment on a mortgage if we had a bear market. Cool. You just don't buy a house for another six more months. Like that's all good. Your son's got to go to class.
- [28:30]
Robert
Right?
- [28:30]
Austin
Right. So it's like someone's got to pay this tuition. Either we're going into debt for it because we don't have the money because the markets took it, or we do have the money and we're going to pay for it that way. And it's all good because it's figured out. So, you know, having that, that just forward looking of like, wait, if this does get invested and we do have a meaningful pullback like how will we fund Andy Jr. S college? Right. What are we going to do there? So just really, really good situation here and thanks again for the listening to the show. So our last question comes from Kate on Instagram. Kate says hello, Austin and Robert. I'm 26 years old, currently living rent free. I make about $2,700 a month after taxes and I currently work for a small bank, but I've been in the banking industry for seven years. I didn't go to college because I didn't want to put money toward education that I was not sure if I was going to use down the road. Smart. I have $42,000 in a high yield savings account that has an interest rate of 3.6%, $23,000 in a 401k, 14,000 in a brokerage account where I have it invest S&P 500 and the NASDAQ 100 and all the other great stocks you've talked about. Now here's my question. I'm thinking about house hacking and I want to know your thoughts on my current situation. The average duplex near me is half a million dollars and I want to have some side income that I earn while I sleep, AKA house hacking. But I just don't know if that's the best course of action for me at this moment. Any thoughts are greatly appreciated. I love the podcast. Thank you in advance. Robert I'll kick this one off.
- [29:51]
Robert
I think this is a great place and timing for her to look at the Fannie Mae 5% down mortgage because that way she's not depleting the 42,000 she has in the high yield savings account. She can likely lower her monthly expenses by getting a duplex and letting someone else rent the other side helping her with the mortgage payment. And then that way, even though she's not fully at her base yet of the hundred thousand dollars, it could be a really good situation for her depending on how much she's currently paying for rent. Because we don't want to see you if, let's say you're currently paying $1,200 and then go buy this duplex and then your new payment for the duplex is 3500 and let's say the average rental for the other half is going to be $1200. That would leave you with $2300 in mortgage, almost doubling what you're currently paying. And that's where we need to be careful. Too many people buy too much house too early and end up being house broke. And we want to make sure you don't do that. So without having the total numbers, I like this concept and idea a lot. As long as you're willing to look at the Fannie Mae 5% down mortgage, because I would hate for you to put 10 or 20% down and get rid of all of the savings that you've worked so hard to create. Because at the end of the day, if you can qualify for the 5% down mortgage, you still have a lot of money being invested and kept on the sidelines so you don't become house broke.
- [31:12]
Austin
Here's my thing, you know, Kate, you're 26, you make $2,700 a month, you don't have any rent, you've got, got 42,000 saved, 23,000 invested, another 14,000 invested. If I were you, I would keep doing what you're doing for the next two or three years until you get your base built. I really think that, you know, you're, you're, you've got some wonderful momentum. I think, gosh, 26 years old, you're crushing it for your age. So continue doing what you're doing until you're 28, maybe 29. Then once you're now 29, 30, maybe you've, you've found a partner, you guys are going to get married and instead of, you know, buying a single family home together, now you think about go buying the duplex. Right. Let's say that duplex is sold at half million. Maybe it's appreciated to 550 or something of that nature. But your payment could also be lower depending on the interest rate 2, 3, 4 years in advance. So, long story short, there's a world where you can continue to invest your money, build your base and set yourself up for long term financial success as well as be responsible when it comes to owning real estate for the first time. With this duplex, you absolutely can, in my opinion, get to a place where you're now in your early 30s. You and your partner now maybe want to start having some kids and you guys are ready to go get that single family home. You have two rentals now, right, both sides of that duplex. And maybe you refinance that. The interest rates came down like you are sitting pretty in your early 30s and with this situation and you've got a couple hundred thousand invested like you're rocking and rolling. So, Kate, congratulations on your situation. Everything that you've accomplished here, we're rooting for you. You absolutely are going to do awesome, awesome stuff. Stuff.
- [32:41]
Robert
This was an incredible episode.
- [32:43]
Austin
I had fun.
- [32:44]
Robert
It's very different for me being in studio live with you, not knowing where to look. The cameras are amazing, the lighting is great. We're used to sitting in our places, just chilling in our pajamas. So this is pretty awesome and just a lot of great questions. So this was just so much fun. And don't forget everyone, we are running a seven day free trial right now for the Rich Habits Network. So you can get in, kick the tires, join one of our lives, check out some of the investments we have happening right now. You can check out our eight hours of coursework and modules. We are actually filming more right now as we speak this week. While I'm here, lots of great things happening with the Rich Habits Network. We appreciate you all stopping by each and every week, giving us those five star reviews and always remember to share the podcast with a friend. We all have someone that's struggling financially or with Mindset or their businesses and we are here to provide value. So thank you all for stopping by each and every week.
- [33:38]
Austin
What another incredible Q and A episode and how special we got to do this now together in Nashville, Tennessee, downtown. It's just super, super exciting to get to film these episodes in person. If you learned something from this episode, please consider subscribing, sharing it with a friend, leaving us a five star review that means the world to us. You guys are our marketing strategy. We don't spend money on marketing. You are our marketing. So please continue to help us grow the show by sharing it with all the people that you know and love. And we will see you on Monday.