Rich Habits Podcast – Episode Summary Episode: Q&A: Leveraged ETFs, Losing Rental Property, & Our Bitcoin Exit Strategy
Release Date: May 1, 2025
Hosts: Austin Hankwitz & Robert Croak
Guest: Zade Admani

Overview

In this special Q&A episode of the Rich Habits Podcast, hosts Austin Hankwitz and Robert Croak invite Zade Admani, the host of "The Rundown by Public," to delve into a range of financial topics. The episode covers leveraged ETFs, real estate challenges, and strategic approaches to Bitcoin investments. Through insightful discussions and expert opinions, the hosts aim to equip listeners with the knowledge to make informed financial decisions.

Guest Introduction

Austin (00:26):
"We very much appreciate it. Now, Robert, this episode is going to be a little bit different because we actually have a special guest, Zade."
Zade Admani joins the hosts, bringing his expertise in financial markets and providing an additional perspective to the conversation.

Deep Dive: Google's Market Position

Zade (03:02):
"Our most recent deep dive was about Google and the antitrust lawsuits they're facing. We explored whether these challenges could lead to a breakup or if Google would mirror Microsoft's situation in the '90s."
The discussion highlights Google's robust financial health despite regulatory pressures, emphasizing their continued investment in AI and cloud segments.

Robert (04:19):
"Google reported $50 billion in search revenue for Q1, which dispels speculations that AI models like ChatGPT would overshadow their business."
The hosts affirm Google's resilience and strategic positioning in the market, underscoring their capacity to maintain profitability and invest in future technologies.

Q&A Session

1. Leveraged ETFs

Question from Lynn V. ([07:40]) – Understanding Leveraged ETFs and Their Risks

Austin (08:50):
"Remember, in these leverage ETFs, you're going to have the same multiple of downside risk as well. Make sure you understand that, especially in volatile markets."
Austin advises caution, highlighting the amplified risks associated with leveraged ETFs.

Robert (09:55):
"Upro offers a daily 3x leverage on the S&P 500, meaning if the index is up 1%, the ETF is up 3%, and vice versa. This can lead to significant losses if the market moves against you."
Robert explains the mechanics and potential pitfalls of leveraged ETFs, discouraging their use for long-term or inexperienced investors.

Zade (12:27):
"Leveraged ETFs are designed for day traders, not for buy-and-hold investors. The decay over time makes them unsuitable for long-term strategies."
Zade concurs, emphasizing the unsuitability of leveraged ETFs for most investors due to their volatility and complexity.

2. Leasing vs. Buying a Car

Question from Jordan C. ([07:40]) – Evaluating the Financial Implications of Leasing a New Tesla

Austin (14:16):
"If you want something new and you're going to drive it regularly, lease it. Otherwise, don't buy new cars."
Austin advocates for leasing as a practical approach to maintaining vehicle value without incurring excessive maintenance costs.

Robert (15:41):
"Keeping the Tesla paid off eliminates monthly payments, allowing you to invest that money instead. Leasing ties you into perpetual payments, which can hinder wealth accumulation."
Robert suggests paying off existing loans and investing the freed-up funds rather than committing to a new lease.

Zade (16:14):
"If your goal is to have a newer car for personal satisfaction, leasing makes sense. Otherwise, maintaining ownership of your current vehicle might be more financially prudent."
Zade highlights the personal motivations behind such decisions, reinforcing that financial strategies should align with individual goals.

3. Investing $600,000

Question from Dan C. ([22:46]) – Strategic Allocation of a Large Investment Fund

Austin (24:24):
"You're playing it a little too safe with that much in a money market. Consider private equity, pre-IPO investments, or real estate for higher returns."
Austin encourages diversification into higher-yield investments to maximize the potential of the $600,000.

Robert (26:47):
"With a net worth over $2 million and substantial real estate, you have leverage to invest more aggressively. Sitting in cash for 10-15 years could mean missing significant growth opportunities."
Robert emphasizes the importance of leveraging available resources to enhance investment returns rather than maintaining a purely conservative portfolio.

Zade (27:51):
"Adjust your portfolio allocation to include more equities or alternative investments. A balanced approach can offer better growth while managing risk."
Zade advises a strategic reallocation to balance risk and reward, suggesting a mix of stocks, real estate, and other investment vehicles.

4. Mortgage vs. HELOC

Question from Katie P. ([29:20]) – Exploring the Feasibility of Using a HELOC to Pay Off a Low-Interest Mortgage

Austin (30:14):
"Using a HELOC to pay off a 2.8% mortgage isn't advisable. The HELOC likely comes with a much higher interest rate, making the math unfavorable."
Austin cautions against replacing a low-interest mortgage with a higher-rate HELOC, highlighting the increased financial burden.

Robert (31:27):
"With a 2.8% mortgage rate, it's more beneficial to maintain the mortgage and invest surplus funds elsewhere where they can grow at a higher rate."
Robert supports maintaining the existing low-interest mortgage and focusing on investment opportunities that offer better returns.

Zade (33:58):
"Treating a low-interest mortgage as an asset can be beneficial. Borrowing cheaply allows you to invest the saved money in higher-yield opportunities."
Zade reinforces the strategy of leveraging low-interest debt to maximize investment growth, aligning with wealthy individuals' approaches.

5. Real Estate Loss

Question from Cameron B. ([36:06]) – Deciding Whether to Hold or Sell a Rental Property with Negative Cash Flow

Austin (37:46):
"I would keep the property for potential capital appreciation. Selling now would lock in the loss, whereas holding could allow for recovery if the market rebounds."
Austin advises maintaining ownership to benefit from potential future market improvements, despite current negative cash flow.

Robert (38:53):
"Given your solid financial position and diversified assets, holding the property could offer long-term gains. However, consider the ongoing costs and management challenges."
Robert acknowledges the complexity of the situation, suggesting a balanced consideration of financial stability and property management burdens.

Zade (40:46):
"Evaluate the property's potential for appreciation and the feasibility of managing it remotely. If the market trends improve, holding could be advantageous."
Zade emphasizes the importance of market research and management capabilities in making the decision to retain or sell the property.

6. Bitcoin Exit Strategy

Question from Kyren ([44:06]) – Assessing the Future of Bitcoin Investments and Exit Strategies

Austin (47:20):
"I'm a Bitcoin maximalist. I haven’t taken profits since 2017 and believe Bitcoin will reach at least $500,000 by 2030."
Austin expresses a strong bullish stance on Bitcoin, advocating for long-term holding without taking interim profits.

Robert (49:19):
"Bitcoin is currently slightly up year-to-date while major indices are down. This decoupling suggests Bitcoin might be acting as digital gold, providing a hedge against traditional markets."
Robert highlights Bitcoin's recent performance divergence from traditional markets, positioning it as a potential hedge.

Zade (50:31):
"Bitcoin is decoupling from the Nasdaq, indicating a shift in its correlation with traditional markets. This could signal increasing adoption by central banks and further price appreciation."
Zade observes the changing dynamics between Bitcoin and traditional financial markets, suggesting it may enhance Bitcoin's role as a stable asset.

Austin (52:32):
"Implementing an exit strategy, such as taking profits at certain milestones, ensures disciplined investing and prevents overexposure to speculative assets."
Austin underscores the importance of having a clear strategy for taking profits to manage risk and optimize returns.

Conclusion

In this comprehensive Q&A session, Austin and Robert, alongside guest Zade, provide valuable insights into various financial strategies. From the risks of leveraged ETFs and the nuances of leasing versus buying a vehicle to strategic investment allocations and nuanced approaches to Bitcoin, the episode equips listeners with actionable knowledge to enhance their financial literacy and decision-making.

Notable Quotes

• Austin on Leveraged ETFs (08:50):
  "Remember, in these leverage ETFs, you're going to have the same multiple of downside risk as well."

• Robert on Leasing vs. Buying (15:41):
  "Keeping the Tesla paid off eliminates monthly payments, allowing you to invest that money instead."

• Austin on Investing $600k (24:24):
  "Consider private equity, pre-IPO investments, or real estate for higher returns."

• Austin on Mortgage Strategy (30:14):
  "Using a HELOC to pay off a 2.8% mortgage isn't advisable."

• Austin on Real Estate Loss (37:46):
  "I would keep the property for potential capital appreciation."

• Austin on Bitcoin (47:20):
  "I believe Bitcoin will reach at least $500,000 by 2030."

• Robert on Bitcoin Decoupling (49:19):
  "Bitcoin might be acting as digital gold, providing a hedge against traditional markets."

This episode exemplifies the Rich Habits Podcast's commitment to demystifying financial concepts and providing practical advice to listeners seeking financial independence and literacy.