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Rich Habits Podcast
Q&A: Multi-Level Marketing Schemes, Turn-Key Real Estate Investing & High-Interest Student Loans
00:46:06
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- [00:01]
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- [00:30]
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- [01:00]
Austin
Everyone and welcome back to the Rich Habits Podcast Question and Answer Edition. These are our Thursday episodes where we take your questions on Instagram at Rich Habits Podcast. You can DM them to us. You can also email us your questions at rich habits podcastmail.com or you can ask us your questions inside of the Rich Habits Network where we always answer them. For more information about the Rich Habits Network in the seven day free trial, be sure to click the link in the show notes below. But Robert, we've got I think six or seven questions teed up. A couple questions actually came from inside side of Spotify's comment section of of last week's episode that I thought were worth mentioning. So we'll get to those. But I'm excited. I love our Q A episodes. Again, these are just Robert and I sharing our perspectives off the dome. Nothing is really scripted here. We obviously do a little bit of research here and there, but these are my favorite episodes.
- [01:48]
Robert
Yeah, I like it because when we started these we were really skeptical like are people going to engage with this? Are they going to enjoy hearing questions from other people? And these episodes have grown and grown and grown. So I'm very excited and I always look forward to filming these episodes because we don't know what we're going to from the questions ahead of time. So it's always fun to really see where everyone is at. I think that's one of the things we do best at the Rich Habits Podcast is digging into people's issues and things that they're dealing with on a daily basis from all walks of life. And that's what makes it so special.
- [02:21]
Austin
Because anyone can submit a question, I 100% agree. Now, before we jump into our first question, let's take a moment to hear from this episode sponsor public.com because if you're looking for an online brokerage platform that was actually built during this century, you need to give public.com a try on Public. You can invest in almost anything. 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.
- [02:50]
Robert
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- [03:23]
Austin
So our first question I can't pronounce this person's username, but they are a listener on Spotify and they they shared this question about a week ago on one of our episodes. They said, is there any chance that you all can talk about having significant student debt? I recently found out that I apparently took out multiple lo for college at an insane 10 to 11% interest rate. Now that I'm in my postgraduate years, I'm realizing I need to figure this all out, which could include refinancing the debt. I have good credit, but I have no idea how to go about refinancing. Payments start next month and they will be 66% of my monthly take home pay. Thankfully, I'm living at home for now, but I do not want to be 40 years old still living at home because of the student loan debt. Any advice is great. I have my MBA and I'm in an entry analyst role. I 100% hear you. This could be super intimidating. I've got friends that have about a quarter million dollars of student loan debt as well. However, they're doctors, they're lawyers, they're going to be high earners. Therefore their income will be able to substantially offset what the student loan repayment process will look like. If you are someone who is like, listen, I've got these loans, I need to just see my options. I need to refinancing to figure this stuff out There's a website that I've been recommending and using personally when I had student loans. It's called sparrowfi.com s p a r r o w f I dot com. So essentially what they do is, you know how you can like use Google flights to type in like the airport you're at in the airport you want to end up at and the dates you want to travel, and they show you all the airlines, the times, the nonstops. Like Sparrow Fi, in my opinion is like Google flights for student loans. You log in and tell them what kind of degree you have, how much debt you have, the interest rates, and they just shop your student loans and like, okay, here's where you are. These like six different lenders can give you a better rate. Maybe you want to lower your monthly pay. So you want a longer term. Like they've got a really cool backend system there that allows you to sort of shop and refinance your student loans in a way that's more meaningful to you, that will allow you to have them maybe not make up 66%. But I think this college really important, Robert, because unfortunately it's where a lot of people are. I think every recent college graduates graduating with like 35 to $45,000 of student loans, which if you want to just a rough ballpark on what that looks like, you take that first two numbers of 35,035 and you add a zero to it, and that's your monthly minimum payment on average as to what that could look like for you. So if you are in college and you're like, wow, I've got $70,000 of student loans right now, I don't know what that's going to turn into. It's probably going to turn into about $700 a month of a minimum payment there. To this point, this person's got significant amounts of student debt. I would imagine that's well over six figures, which means thousands of dollars or more. And then the other thing that I want to call out to Robert is that not only are we like trying to help you figure out this like refinancing thing, right? But more importantly, what you need to figure out is getting money invested so that you comfortable paying off these student loans. Dave Ramsey's entire thing is pay off the debt, get out of debt, get out of debt. Knowing that in this situation it could take you half a decade, maybe an entire decade to pay off these student loans. Considering the interest rate and all the other things around it. The last thing I want you to do is sit here at the earliest ages of your life and not invest a dime for a decade because you want to put all your extra money to pay down debt. We want you to at least be maxing out your Roth IRA at that $7,000 a year, every single year while you're paying down your debt. Because what's important to remember here is that like, debt can go to zero. Which means that if you had $150,000 of student loan debt and you paid it all off, congrats, theoretically your net worth went up by 150,000. But if you took that same 150,000 and invested it in the stock market, yeah, your net worth went up by that same 150 in the same period of time, but in seven years it's going to double to 300 and then double again to 600 and then double again to 1.2 million. Because that's how compound interest works. Compound interest is much more favorable than the simple interest debt that you have with student loans.
- [07:20]
Robert
Wow, that was an incredible, incredible take. I love this and it really brings me just to one point. So many people are in this boat of high student loan debt with high interest, and they're not going to get out of it till 40 or 45 years old. I remember an interview Mark Cuban said a few years back, and he said, if you want to fix the United States economy, you have to get younger people investing earlier. And Austin and I talk about this every single day, investing early and often. And I think it's a great take because you don't want to spend the next 10 years strictly focusing on the student loan debt and not investing, because then you're taking away 10 years of compounding. And that is really, really important to understand. And then the only other thing I would add to this is make sure you research anything with deferment plans or forbearance plans where you might be able to do something else to be able to put yourself in a better position for a few years to be able to do. What Austin said is that, and that is start investing. Get the Roth IRA maxed out. Because this can wreak havoc on so many people's personal finances when they're paying off these high interest student loans for years and sometimes decades.
- [08:32]
Austin
Yeah. As a personal anecdote, I recently helped one of my friends figure out the sort of forbearance parents navigation there. So, for example, I think she has like 130 or $150,000 of student loans. She's a doctor. Like she's doing Whatever, she's crushing it. But she's not investing. And she didn't have an emergency fund. She had nothing. She was just paying her student loans of like $2,000 a month. And she's like, yep, I'm on this track where if I pay 2, 000amonth for the next, like 12 years, I'll have all my student loans paid. And so I'm just gonna focus on that and live my life. And I'm like, okay, great. Like, are you maxing out your Roth ira? Are you investing? Like, do you have any investments? She's in her late 20s. I think she turns 30 this year. She goes, no, and I' you're about to turn 30, and the $2,000 a month that you're paying is going to go to student loans. And you have no wiggle room in your margin or, you know, your budget to invest. You're going to be now entering your early 40s with nothing invested but, like, no student loans. Like, that's great from a student loan perspective. We don't want that forever. But why don't you try and figure out a way to pause the student loans like you were mentioning, Robert Forbearance, take that same $2,000 a month for the next two years and put it in the stock market, which will get you about $50,000. Then you can go back to doing the student loan stuff, whatever. But you $50,000 now growing for you over this next decade, which should turn into 100, 120, 130,000. And that's what she did. I convinced her to do this about 18 months ago. 12, 18 months ago she's been doing it and now she's got like, I think it's north of 30 or 35,000 invested across her Roth IRA, her bridge account. She got the emergency fund now, but she would have no idea that it's important to invest. Because we're taught, unfortunately, oh, we're in debt, let's pay off the debt, no matter, like, at what cost. And you have to understand what that cost is.
- [10:09]
Robert
That is one of the biggest things that I struggle with emotionally. Single day is when I see the influencers, these fake influencers. We talk about telling people, don't waste your time investing 100, 200, 300amonth. They don't know what they're talking about. When you can get compound interest involved in your life early on, even if it's only 200amonth, while you're dealing with student loan debt, while you're dealing with other things, and you Stay consistent even with those smaller amounts, you can still end up with millions of dollars 30 to 40 years down the road. And that's one of the biggest messages we're always promoting is you have to be consistent and invest early and often, even if it's smaller amounts.
- [10:50]
Austin
And this next question that actually came from inside the Rich Habits Network from Juan T is kind of a piggyback on this idea of student loans. So Juan says, my wife needs to pay back about 120,000 of student loans. We have 170,000 invested in the stock market, which is amazing. We both max out our Roth IRAs every year. I've got a 401k with a 6% match. I'm doing the 529 account, all that fun stuff. But my question is, is it a good idea to use dividend stocks to pay back my student loans each month? I want my assets paying for my student loans, but I'm not sure the best way to go about this. Robert and I are always going to tell you if you can have an asset paying for your debt, like that's cool. That means the asset is a good asset. It's cash flowing, it's, it's supporting your lifestyle, whatever that might be. We believe the NEOS funds do a great job of this, right? They're always paying back about 1 to 1.2% on a monthly basis, which annualizes to 12 to 15% depending on the fund. And they're very tax efficient. So I would say if you really want to do this one, check out the NEOS funds. But here's the mistake you don't want to make. You don't want to make the mistake of going further into debt to try and roll the dice on an asset that you don't know will or will not cash flow. So for example, if you told me you wanted to go borrow a quarter million dollars to buy a cash flowing business or something that's, you know, around you that you think is going to not just pay off your student loans but put some extra money in your pocket. I would say like that could be a good idea, but it seems like a dice roll in the sense that one, is this business actually going you back enough to cover your student loans and your time and energy for running it. But number two, you're now going further into debt when the whole example here was to get out of debt. So for me it really comes down to how you implement this. I think the NEOS funds are probably your best bet. They pay consistently, they pay monthly. It's tax efficient. They do a great job of that. So, one, if I were you, I would look into SPYI or qqqy, maybe IYRI as something that could begin to supplement your monthly income if you want to stay invested that way. But, Robert, what's your take on this? Buying an asset, try and use it to pay off debt.
- [12:51]
Robert
Yeah, I mean, first and foremost, Juan and his wife are killing it. It's awesome to see. We love it when people have a plan. But I feel like this strategy that Juan is asking us is a little too fancy for me because then you're adding additional risk to try and pay something off. And we have incomplete information because we don't know what the interest rate is on these student loans. But let's assume the interest rate's 4 or 5%, which is pretty traditional if we look at it that way. I think you nailed it. I would probably look at doing the NEOS funds, the ones you discussed, because I think that is the best strategy. I love the idea. That's exactly where my brain went, was like, SPYI or qqqi. And Juan, just don't get overly fancy. Obviously, you're doing a great job. You guys are really laying the groundwork for your future. And we just want to make sure you don't go backwards by overcomplicating something that is really, really smart to do.
- [13:41]
Austin
You know, Robert, I don't know if it was during a Rich Habits Network live stream or maybe it was during a podcast episode recently, but you were talking about how people always want to get fancy and they think they're like in an action movie or something, and they always got to be making moves and like, dodge like the Matrix, dodging bullets and all this crazy fun stuff in the markets to be successful. And you just nailed it. And Juan, I hope you take this advice. You don't have to be fancy. Right. Sometimes the fanciest, craziest things are sounding so fancy because they're scams, right? Like, there are some crazy ways that people try and make money out there. And turns out if it's hard to pronounce, you probably shouldn't do it. What's really important to Remember here is one. You achieved $170,000 invested already. You've got the Roth IRAs, the 529s. Like, you're doing all the right things already. So just continue to do that, but also pay off some of the student loans. That's the most important thing to remember here, is you've already laid the groundwork and done the important steps to get yourself to a situation where you can pay off these loans without feeling bad about it?
- [14:41]
Robert
Yeah, 100%. And that really leads us into an important part of this next question and that is understanding investments and the cost. Because sometimes getting too fancy is just not the right strategy.
- [14:53]
Austin
Well, let's jump into that question, Robert. So it's coming from Brandon L. Via email. Right. So rich habits podcastmail.com Brandon says. Robert Noston I absolutely love the show. I wish I would have learned from you both years ago. Thank you so much Brandon for the kind words. He says, my question is I would love to get into real estate investing. What are your thoughts on turnkey property companies like REI Nation and Rent to Retirement? Is it worthy to use them as a simple, simpler way to get into real estate investing? Robert, you know a ton about real estate investing. Why don't you start with by answering how you invest in real estate, how you recommend people to invest in real estate and then maybe what your take is on these sort of turnkey real estate investment syndications.
- [15:36]
Robert
Absolutely. So here's my take. How I invest in real estate and how I started 30 years ago is I started small. So anyone listening right now, if you really wanted to get into real estate, I would say find a local contractor that maybe you can partner with or a local investor find. If you don't have a friend, find somebody, go to a meetup and find a good real estate agent that can help you find these off market deals, find you stuff before it's too late. And you can buy something small, preferably a fixer upper in a neighborhood that's growing. That's the meat and potatoes of everything I do. I think that's a great way to start. But if you want to use one of these. My main concern with these REI Nation and Rent to Retirement companies is Austin and I did some research for you and everyone listening. We couldn't find the fee structure on any of these websites. We dug and dug and dug and we could not figure out what are they charging me off the top to invest in these projects. And the other part that scares me about these is just the headline on Rent to Retirement. It said buy today 40k below market value with as little as 5% down. That scares me because when they say that they can't guarantee it. There's probably not a world where it's as little as 5% down. So for me, I feel like these companies exist to be able to make a ton of fees off of people that want an easy entry into the real estate market. So that is why I don't use these kind of companies to put a bow on it. I think people should look at investing in real estate. Everyone should own real estate. But start small. Make sure you have enough budget to get the project done because every project takes longer and costs more than you think. And partner with people that know what they're doing and you'll be just fine in the real estate market.
- [17:21]
Austin
Actually, Robert, that's a great segue. We created the Rich Habits real estate hacks PDF. It's like like 30 plus different considerations to take into account when it comes to doing fix and flips or house hacking or anything real estate related. So click the link in the show notes below. It's going to be big, bolded, starred. It's completely free. Go download that. You guys are going to love it. But I couldn't agree more. I did some research. You're right. REI Nation. I was able to really dig in there. They claim to have helped thousands of people, which is awesome. If that's the case, I just really want to emphasize what Robert said about the fee transparency. If you are comfortable paying fees which, like, fees are a part of life. I get it. Paying fees if it's to an advisor or carry on an investment or a property manager or like whatever, I understand everyone has to make money, but make sure that you're comfortable paying whatever fees that they offer you. If you're looking for an alternative to some of these like turnkey rental properties, I guess like there's two ways to think about it. One is the I don't actually own it. I'm just like enjoying the cash flow that comes from some of that. Fundrise is a wonderful way to enjoy that. And so is the VNQ ETF and the Iyri etf. On the flip side, if you actually, actually do want to own the property, it's in your name. You can walk there, you can screen tenants like that's your thing. I would encourage you to try and follow what Robert just suggested about like working with local people, doing as much as you can on your own at first before going out and paying whatever these fees might be for a turnkey property. Like we did find some numbers in the sense of like, I think it was 5% of the purchase price goes straight to the REI Nation or rent to retirement as like compensation. And they take like a 10% monthly fee on like your rent. Like there's a lot of stuff around that. So just like, be careful, understand what you're getting yourself into and just also understand the opportunity cost. Robert and I are big believers in a diversified portfolio which in our opinion is having 65 to 85% invested into the index funds and ETFs we love. And the other 15 to 35% diversified across blue chip single stocks, maybe some income producing ETFs, some real estate, some cryptocurrencies and precious metals, some private investments. Right, that's that 15 to 35% diversification bucket. And if this is a part of your diversification classification bucket, go right ahead. Just understand that, you know, there are things like iyri, like Realty Income Corporation, like Fundrise, like VNQ and other real estate focused investments that might be cheaper and can have more outsized returns. So just understand the pros and cons of using a turnkey property company like this, Brandon, and you'll be just fine.
- [19:56]
Robert
Yeah, I like it both ways, but I just like to see people start small because at the end of the day a lot of times when you're investing in these companies like mentioned, the fees are so high that profits are very low, the returns are very low for the investors. And you know, and that's something I don't like to see. Everything Austin and I talk about in the Rich Habits Network or we invest in and share with our members is always about really high returns if we can find them, and flushing out the best deals. So just always make sure you understand the fee structures and the red flags when they don't show them clearly because we couldn't find them on either one of these websites websites.
- [20:34]
Austin
So our next question comes from Zach H. Via email. Again, Rich Habits podcast gmail.com Zach says hello Robert and Austin, thank you for doing the show. I really enjoy and learn from your content. My questions are about alternative investments, especially private capital and private debt. What platforms do you recommend at, what allocations and do you have any guidance on what to look for in an investment or any resources I can use to learn more for context. My wife and I are professionals in our 40s. We are accredited investors by both income and net worth. We max out both our 401 1Ks and IRAs. We have a townhome as an investment property and significant investments in stock ETFs in a taxable brokerage account. Our goal is to have around 20% of our portfolio invested in alternatives. We invest in Bitcoin, in Fundrise, Ground Floor percent in Yield street at the moment, as well as a couple startups we found on we funder, StartEngine and Republic. Any Help is appreciated. Thank you so much. Good question, Zach. So it seems like that 20% falls directly in that 15 to 35% that I just said. So I think you're doing a great job to know that you're an accredited investor. Investor means that the two of you combined I think make 250 or $300,000 a year. And you also have that net worth of a million dollars or more, not including your primary residence. So you are doing great. You guys are crushing it here in your 40s, millionaires making a ton of money and you want to begin taking on some of those higher risk ideas. I love some of these platforms you recommended. Fundrise. Big, big fan of them. Ground Floor. I've heard good things, but I've never used them. Percent. I've heard great things. I have used them. They're awesome. I've also heard great things about yield you can do is on Titan. I think they have the Carlisle private credit fund as well. 8, 10, 12% somewhere in that range. So go check that one out. I've heard good things as it relates to guidance for these startups and any resources, things like that. Join the Rich Habits Network. We offer the opportunity to invest alongside Robert and I every four to six weeks in some of these companies that are worth hundreds of millions, if not billions of dollars because they're doing tens of millions if not hundreds of millions of dollars in annualized revenues, revenue that are on track to either IPO or get acquired at a much higher valuation. So be sure to join us over there. I think you're really going to like it. The we Funder, the start engine, the Republic. The reason I don't especially like using those is because anyone quote unquote can list their startup and try and raise money on those platforms. It's very much like Shark Tank for the town square, right? Anyone can just come in with their company, pitch the world on their thing and try and get some money. I guess what I'm saying is I've never made an investment on a we Funder on a start engine or Republic that that has been serious in my humble opinion. I've invested into some cool things like, oh, that sounds pretty cool. Yeah, throw them 100 bucks, right. Stuff like that. But when I make my serious investments, right, thousands, if not tens of thousands of dollars, they're alongside Robert as well as alongside professional venture capital firms that have raised billions of dollars in funding and have seen outsized returns via IPOs and acquisitions. Right. That's the type of investing I want to do. In the startup space. So again, Zach, join us on the Rich Habits Network. We can send you some of those ideas. But, Robert, what's your perspective to look out for with an investment?
- [23:44]
Robert
I want to see track record. I want to see people that have done this before. Not that I won't take chances on a new quarterback or a new jockey, but for me, I want to understand and really stay away from people that don't have any history and don't have any experience for the most part. And that's why I think Austin nailed it. Zach, if you're going to be doing these investments, you want to do it in established ways. So many people, when they get involved in this type of venture investing and private investing, they start taking shots on random people that hit them up, up about an investment. The problem with that is either they don't know their numbers, they don't know how to build and scale a business, or worse, you're the last person. And that's why you're seeing the deal. Because all of the really good deals are going to go to the bigger names and the people like Austin and I that are in the mix that are well known in this world. And we're going to see the deals long before the retail person. And you just want to make sure you're not investing in something, something that doesn't have a really strong opportunity to really scale and do well. So I think that's the important takeaway is understand what you're investing in, understanding the numbers and understanding the team. Because at the end of the day, you want to find that tenacious founder or a group that has the experience that's going to make sure you win in the end with this project.
- [25:01]
Austin
So here's an example, just to add a little bit more color, as to a company that I recently invested into, literally this morning, and when I say invested, I invested $2,000. I'm not, not writing $50,000 checks or $100,000, but I'm adding a little bit more and taking my shots across these different types of companies. Here's like the numbers behind it, right? They're raising at a $350 million valuation. They're going to do $30 million in annual recurring revenue this year and projecting 55 million for next year. They have 5,900 customers and one of their co founders sold their previous company to Oracle and the other co founder worked at Cash app and into it. And then I'm also investing alongside General Catalyst, Google, the founder of YouTube substack, the founder of Uber Twitch, the founder of Hims and Hers and the founder of LegalZoom. So I'm not investing alone. I'm investing alongside some really smart people, which makes me feel good. And then also they're doing tens of millions of dollars in annual recurring revenue that should continue to go higher over time. Which makes me think, okay, this $350 million valuation they're raising at very well could turn into billions of dollars, right? A billion dollar 2 billion 3 billion valuation, which could be a 7, 10 15x return on my money in 5, 7, 10 years if they end up ipoing or getting acquired. Those are the types of companies you want to be investing into. Not the hot dog stands that might get listed on WE Funder or the I got an idea for an app that might get listed on StartEngine. You want to be investing into companies at these hundred million, 200, 300 million valuations that are are doing tens if not hundreds of millions of dollars in revenue already.
- [26:38]
Robert
Just be careful, understand what you're investing in. And you guys already have your base built, so you're in great shape. You can be doing these investments. Far too many people with less than $50,000 are investing in these crazy concepts because somebody pitched it to them. So just be careful because most of those are going to go to zero. And we just don't want to see anybody on our watch go backwards financially.
- [27:00]
Austin
So our next question comes from Rudy H. Rudy says, hey guys, I've been a listener for a few months and I've recently got approached by a worker to join Amway. I like the development side of it and their products are not bad, but there's a lot of skepticism on the business being a pyramid scheme. So I wanted to get any insights on this and if I should be doing this or not. Any feedback is much appreciated. Robert, you want to kick this one off?
- [27:21]
Robert
Oh, how nice do I have to be? That person is not your friend if they're your co worker and they're trying to talk you into this. The simple math is this. Less than 1% of Amway sellers and workers that are in the business, business make money. Less than 1%. Proven fact. It's an MLM. The only people are the people at the very top that make money. Everyone else breaks even or loses money. I know 10, 15 years ago was a hot topic as a side hustle. Throw the Amway parties, buy the goods, see what happens. But I strongly, strongly suggest everyone against Amway or any MLM like it because at the end of the day you're going to ruin your friends friendships. You're going to bother your friends and just really annoy them because they don't want to take part in it. And I think there's just much better ways as side hustles to make additional money in a way that is not annoying to everyone around you.
- [28:14]
Austin
Here's the stats for you, right? On average, and this is straight from the Internet, grok chat, GPT, all the deep research around it. 66% of the US based independent business owners make some amount of money of gross revenue revenue through Amway, which comes out to about $1,200 per year. But that's before expenses, after expenses. Fewer than 10% of them are actually in a net profit. So let's start with a whole pie, right? One third of the pie just straight up doesn't make any money and the other 2/3 of the pie make money, but not enough money to actually like have a profit, right? Because you're like, you're buying these products, then you're selling them to your friends. Fewer than 10% achieve a net profit and then only the top 1%, the top 1% make enough money to replace a 9 to 5 job. So to Robert's point that 99% of these participants are losing money on their time is 100% correct. You're better off driving for Uber, delivering for doordash, picking up a second job or a shift at your local ice cream parlor, or literally anything else to make consistent income than trying to join one of these multi level marketing type schemes. It just doesn't make any sense. If I were in your shoes and my friend brought this to me and say, hey listen, I'm excited for you. I'm really hoping that you're making a lot of money with this and if you show me some products and I genuinely like them, I might buy a couple from you. But this isn't for me. I don't want to sell to my friends, I don't want to have to recruit my neighbors and people like that and host these little parties. I would much rather go out and drive for Uber, deliver for door dash, learn a new skill, do some hard labor, pick up a shift somewhere and do that consistently and make my twelve hundred dollars per year like that to me is much more attainable. Because what you forget about too, and you mentioned this Robert, is like these people, they have to like buy into the system. They got to buy their inventory, they got to spe spend money before they even see a dollar. And so like that's not a good way to really think about a side hustle. A side hustle should be able to get up and after it. Very simple, very quickly, very cheaply. There's just a lot of better ways to go about making money than Amway.
- [30:18]
Robert
You can never convince me that Amway is a good idea. The numbers aren't there, the profit's not there. I feel like amway was the 20 year old version of now the IUL where only the people at the top, only the agents selling the goods to everybody else are the ones making money. So Amway is a big no for me. But listen up folks, time could be running out to lock in a 6% or higher yield@public.com and 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 graded corporate bonds only at public.com forward/rich habit.
- [31:00]
Austin
Definitely sign up for public. Go check out their bond account. 10 out of 10 recommend they are incredible. Now our next question comes from Jordan M. Jordan says, I have a slightly different style of a question for you guys. In the podcast it is mentioned to take notes while listening to the show. I agree taking notes can definitely help meld information into your brain. But I listen to the show while walking, driving or doing another activity. So how do you recommend I take notes on the podcast? Do you think I should just wait until later and to like write things down? Do I do something else?
- [31:28]
Robert
What?
- [31:28]
Austin
What do you guys think?
- [31:29]
Robert
There are transcribing apps that you can use? I looked up a couple Snipt, Momento and AIR with two Rs are three that came to mind. They all look pretty good. So I think you could use those apps and what it does is it transcribes all of the hot takes from the podcast episode. But also I think it's just old school wise you could just take these episodes if you're busy while you're listening to them, take the highlights, put them in your notes on your phone and then you have them as a reference. But for me I tell everyone that can re listen to the hot takes that you like or maybe as you're listening to it, if there's a hot take, just take a screenshot so you know when in the episode it was happening. That way you can go back to it, listen to it, write it down and take notes. I'd love it. For everyone that follows Us along all hundred thousand people a week to have a notepad just for Rich Habits Podcast and Rich Habits Network for all the notes and all the things we discuss. Because then you always have this reference to every everything that you enjoyed we shared with you.
- [32:29]
Austin
Yeah, I totally agree. Taking notes on anything in a specific notepad or, you know, notes app dedicated to learning and taking action is. Is wonderful. I think there's two types of learning, right? There's like actual I'm learning something, therefore I need to act upon what I've learned so I can change my life. Or I'm learning something because it's entertaining to me. I listen to podcasts all the time that are like learning and education based, but they're also entertaining to me. And I don't listen to them to change my life. Listen to them because, like, I get entertained by this type of information. I'm just a nerd, sorry to admit that, but that's what it is. And so this type of stuff like just is entertaining to me. Where other people entertainment might be podcasts about their favorite reality shows like the Vile Files, or maybe it's watching a documentary on something that happened a long time ago that they're super interested in. Right. I don't know. People are entertained by a bunch of different things. I get entertained by learning and information, things of that nature. So I would argue that if you watch our show as a way of like edutainment, right, you're entertained, but it's also education that's great. Like enjoy it. We love having you. We're glad you're here. If you're watching our show instead to take notes and like change your life, that's great too. We're glad you're here. I hope you change your life. Make sure though that you're writing down specific things that we talk about. If it's our summer rich habits that we talked about on Monday or if it's a specific answer that we had to a question that could also relate to a circumstance that you might be in. Anything like that. Just make sure that if you're trying to better your life by listening to the show, you have a razor thin gap between learning and taking action. And we learned that from Sahil Bloom when we had him on our show. The most successful people in the world have that razor thin gap between I just learned about this and now I'm going to implement it on my daily life so that my life will change.
- [34:11]
Robert
Yeah, I love it. And that is why we share, take notes and take action. Execution is where all of it comes from. So many people, they just learn, learn, learn, but they don't execute on anything. They don't take action. And that's so, so important.
- [34:25]
Austin
Well, I think there's like a big dopamine hit that we get from learning something new. We feel accomplished. We feel, whoa, look at that. See, I know those things. Now I, I can talk about this sub subject or I feel dangerous enough in this subject that I could go take action if I wanted to, but they never actually take that action. So we really hope that as we walk through, if it's an investing strategy, a budgeting strategy, or earlier we talked about the rich habits real estate hacks. Like, we hope you actually click the link in the show notes below, download that, read it, and then act upon it the next time you invest in real estate. Like, there's just so many ways and opportunities for you to better yourself on a daily, weekly, monthly basis through our show. But it comes down to actually doing the thing.
- [35:06]
Robert
Mic drop. Great job. I love that takeaway.
- [35:08]
Austin
So our next question comes from Truett F. Truett says. Good morning guys. I discovered your podcast a month ago and I love it. I've been listening to all the old episodes to catch up and new ones as they come out. I'm still a baby investor and trying to figure things out. My question is, how do you know when something may have reached a plateau and it may be time to sell high or invest in a better opportunity? For example, in 2020 I put a thousand dollars each into MP, PC, XOM and COP. And I've had great success with each of These names growing. 382%, 157% and 172% respectively. But how do I know if these returns have kind of maxed out? Should I sell them and reinvest the proceeds into something more AI or tech related, hold on to these and slowly invest more over time? What's your perspective? It's a good question, Robert. You want to kick us off?
- [35:57]
Robert
Yeah, I love this and I look at it it this way. Take profits along the way is the most important part of this. So many people, they ride a stock up and they feel like it's getting frothy or it's overvalued, but they don't take profits along the way. So how I do it in my portfolios is once I'm up 50% on a position, I take 25% off the top. Then when I get up 50% again, I take another 25% and so on and so on. You also have to look at it and say, have the markets changed? Is this technology or this company going in the right direction for the future? Is AI going to take market share from this company? What's the total addressable market of this company moving forward? Because we do live in a fast paced world where many companies that were great five years ago may not be great five years from now. And you have to be able to understand that to know where these companies are going. I do a lot of very long term holds, but they're always with companies that I feel are going in the right direction for the long term and they're not turning into antiquated companies who are just not growing in the right direction. That's the way I do it. You've done a great job so far, but you have to take profits along the way.
- [37:08]
Austin
I love that answer, Robert. I think for me it all comes back to why I invested in the company to begin with. If I invested into this company because I had a firm conviction that over the next three to five years they're going to achieve achieve X financial outcome, which theoretically would increase their stock price by X multiple. And it happened. Congrats. I did what I said I was going to do. I'm going to close my position, realize those profits and then redeploy them elsewhere in my portfolio. On the flip side, if that did not happen and I lost money, congrats, Austin, you were wrong. It happens. I'm going to close the position, take the money I have left and redeploy it elsewhere in my portfolio. Now this is again for like specific names and trades, right? But having a clear reason why you got in and a clear objective as to where you think it's going to go, where it makes sense then to close that position in your portfolio and reallocate the funds elsewhere. That's the key term, reallocating the money. You don't want to just sit in cash. That to me is how I would approach this. Now let me be very clear. There's a difference between having a entry strategy and an exit strategy on a specific position in a portfolio versus just buying, buying relentlessly, dollar cost averaging into a ETF or single stock because you believe in it for the long term. I never plan to sell my Tesla stock. I never plan to sell my Amazon stock or my Microsoft or my Apple. Like, right. Things like that. I 100% believe over the next 10 years it will be multiples higher than it is right now. Right. So like that's not like a Trade to me. But there's a company right now that Robert and I have been talking about for about three or four months called Oscar Health. Oscar very much could be a company that I own for two to three years and then I get out of it. Hims and hers is a great example of this. I wrote analysis back in 2022 why I thought Hims and Hers Health was going to go up dramatically. It very much did. I took some profits, redeployed it elsewhere and then like that's how I've gone about it. So to answer your question, if this was an investment that you made specifically to make it and then close it and redeploy it. Rock and roll. If this is something that you want to like blindly just continue to relentlessly deploy money into because you believe in these specific names Roc roll. But have a clear conviction as to what strategy you're following. Right. We never want to just invest with no plan. Having an entry strategy and an exit strategy with these sort of like long term trades per se, three, four, five years is how people continuously make money over a long period of time when it comes to investing.
- [39:34]
Robert
Yeah, I think that was great coverage because at the end of the day I think the biggest thing people do lack is having that entry and exit plan and a strategy of why they're doing it. It's usually they hear a hot tip or they read a clickbaity headline and they just want to in understand why you're doing it and you will do so much better over the long term.
- [39:52]
Austin
So our last question comes from Shush Shush on Instagram says I have a question and I need your guidance. I work in the aviation industry for a well known airline making $45,000 a year and I have another two years left on my contract. I'm also investing about 500amonth into the ETFs and index funds you talk about. Financially I'm doing okay because the only debt I have is on my mortgage which I pay about a thousand dollars a month for. Because of my travel though I am renting it out making about 25,000 DOL dollars a year. And I split this with my mom because she actually bought the house. Now what I want advice about is if I should open a Pilates studio and a mini cafe next to my house. I currently attend classes in a studio about 30 minutes away. There are no studios nearby, which is what made me think about opening one in the first place. I've got $15,000 in my savings account but not enough money to open A studio. I'd probably need between 40 and $50,000 to start the business. I'm thinking about taking out a personal loan to fund the business, but don't know if this is the right route to go. I need your advice if this is a or not, Robert.
- [40:52]
Robert
Well, you know I'm the king of small businesses. I love entrepreneurship and owning small businesses, but in this instance, shush. I don't think you're ready. If you've never run a business, you've never built a business, you've never opened a business, I don't think you have the financial backing just yet. You don't have that base built that we talk about where you should take this big of a risk on your own to open up a Pilates studio. I just feel it's very, very risky. And the rate of failure in Pilates studios is really, really high. So the only way I could give you that thumbs up on this idea is if you brought in a financial partner that also has operational expertise in the field of Pilates. So if you found a Pilates instructor that's done it for years that maybe has run their own studio in the past, something like that, I think it's a great idea. Otherwise, doing it on your own and draining most of your savings I think is a bad idea and a recipe for failure because it's going to take longer to build than you think and cost more than you think to build it on itself.
- [41:53]
Austin
What I think about immediately is you work for an aviation company and you make 45,000 a year, and you're traveling so much with this aviation company that you can rent out your primary residence to make passive income that way. Which means, like, maybe you went to a Pilates class back home recently, but you don't actually live back home because you're traveling so much. If you actually did live back home, you would live in your primary residence, but you don't. So you're renting it out, right? So, like, how could you travel and then also open up a Pilates studio? I'm just not seeing. Maybe I'm missing something. But, like, this seems to me like, hey, I just had this crazy good idea. I saw all these people at Pilates. I should go own a Pilates studio. And I love that mentality. We always want to encourage people to think more deeply as it relates to everyday life. If it's being an investor, not just a consumer looking at problems in real time and trying to solve them, like an entrepreneur, like, we love that. And I'm really excited that you're beginning to do that to yourself and just like in your everyday life. But to me, I just don't see how the puzzle pieces come together where a PIL studio makes sense. With your current situation, I would much rather see you finish your two year contract, make enough money to begin to beef up this brokerage account, Roth IRA, all the stuff you're doing here with that $500 a month, that's incredible. Get those maxed out for the next two years and then say, okay, do I want to continue doing this aviation stuff, making 45,000 a year, or instead do I want to move back into my primary residence where my mortgage is only $1,000 a month, and then maybe begin to find a business that has done Pilates workout studios before, has experience with the cafe stuff, maybe they have experience remodeling buildings and things like that. So you could begin to really, you know, breathe life into this idea from a perspective of information, facts and projections versus like a reaction to a good studio time you had when you were back home visiting family for Mother's Day or something. Right. So like, I love the idea. I just want to make sure that you're not executing upon the idea at an inopportune time. That that could unfortunately make a awesome idea turn into a disaster because you didn't plan accordingly, if that makes sense.
- [44:08]
Robert
Yeah. So many small business owners and entrepreneurs that are first getting started are underfunded. They think it's going to take 35 grand, then they run into some problems and it takes 75 grand. So then they're out scrambling to find the money to finish it. And I just think you hit on one of the key points. If he lived next to a building full time in an area that, that was growing, and he knew a lot of people were really, really interested in having a Pilates studio nearby and he had experience in opening a business and opening a cafe, then I love it. But it sounds like with all the travel and this and the lack of funding, it is just setting him up for failure. And I just think it is a bad idea and I wouldn't go through with it.
- [44:47]
Austin
Yeah, I agree. I think there's a world where it could come to life. But at this current moment in time, I think you'd be setting yourself up for failure as well. Go through the next two years of, of this contract, get your money, max out your accounts, continue to build some wealth, and then revisit this idea when you have a little bit more flexibility and structure as to how you can actually breathe life into this. We're wishing you all the best. Of course, we never want to like shoot down ideas. We think any entrepreneurship is awesome, but just we want to also make sure that you're not going into something blindly and then, oh, no, you know, I just invested five years of my life into this idea. It was a disaster because I was still traveling for work and ended up going backwards in my net worth because of this. And it's just been a disaster. So we don't, we don't want that to happen.
- [45:31]
Robert
What a great episode. So many incredible questions and I just love filming these and just helping people in their journey because, you know, I've lost millions and millions of dollars over the years thinking that I had a winner as well. So especially in the entrepreneur journey and small business journey, I just love to share all sides of it so people can understand what they're really getting themselves into. Because a lot of people are like, oh, it's only going to be 50,000. But they don't take in the consideration that five year lease that they're signing. Guess what? They're on the hook for that for five years whether they make it or don't. And it's really hard in some states to get out of leases. So there's a million ways to cover the problem with this formula of what Shoosh is trying to do here. So I'm glad we get to uncover it and give some experience and some insight to help them make good, solid decisions based on real experience.
- [46:21]
Austin
Everyone, thank you so much for tuning in to this week's episode of the Rich Habits podcast, Question and Answer Edition. If you've not yet signed up for the Rich Habits News newsletter, it's completely free. Drop in your email address using the link in the show notes below. Go download the Rich Habits Real Estate Hacks workbook. It's about 30 plus different hacks and ideas that are going to help you guys be successful as a real estate investor. And don't forget, we're still offering a seven day free trial to join the Rich Habits Network. And specifically to our friend Zach, who's looking for actual cool investments to make that aren't just on we funder, StartEngine and Republic, join the Rich Habits Network and get access to Robert and I's Deal Flow as well as eight hours of video coursework and our two hour long weekly live streams that happen every Tuesday night. Thanks everyone for tuning in and we'll see you next week.