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Rich Habits Podcast
Q&A: Retirement Investing for Entrepreneurs, Medical School Debt, & Our Favorite Books and Podcasts
00:45:35
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- [00:02]
Robert
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- [00:25]
Austin
So good, so good, so good.
- [00:27]
Robert
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- [00:45]
Austin
Hey everyone and welcome back to the Rich Habits Podcast Question and Answer Edition brought to you by public.com and first and foremost we are wishing you a very Merry Christmas, a happy holiday or whatever you and your family and friends are celebrating and gathering together. For whatever that reason might be. We hope it is awesome, cheerful, joyful, peaceful, full of health and wealth and every other cool adjective and adverb out there that describes an incredible time at this time of year.
- [01:15]
Robert
100% it's been an incredible year for everyone here in the Rich Habits Network and the Rich Habits Podcast and we are sharing that cheer and joy and everything with all of you for the rest of the year and into 2026.
- [01:29]
Austin
So we're just wishing you a very warm, wonderful day. You guys are the best and we're super, super gr now, as you all might remember, these Thursday episodes are very much focused on answering your questions directly. If you have a question for us, you can email us@rich habitspodcastmail.com or you can DM us on Instagram at Rich Habits Podcast we have a ton of questions for you today. We think they're pretty good if we should say so ourselves. But before we jump into the actual questions, gotta give a shout out to Public, the investing platform for those who take it seriously. On public you can build a multi asset portfolio of stocks on bonds, crypto options and now generated assets which allow you to turn any idea into an investable index using AI.
- [02:15]
Robert
And it all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year. You can literally type any prompt and put the AI to work and it screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500 all within just a few clicks.
- [02:38]
Austin
Generated assets are like ETFs with infinite possibilities. They're completely customizable and based on your thesis not someone else's. So go to public.comforward/rich habits and earn an uncapped 1% bonus when you transfer your portfolio. Again, that is public.com rich habits paid.
- [02:55]
Robert
For by Public Investing. Full disclosure in the podcast description and.
- [02:59]
Austin
Robert and I pulled together some fun generated asset strategies here and they are all completely unlocked and offered to everyone in Inside of the Rich Habits Network. So if you join the Rich Habits Network or you're already in the Rich Habits Network and you've not yet seen some of our generated asset strategies specifically built for our Rich Habits Network, go give that a try. There's 13 of them in there and the best performing one I'm looking at it right now. Robert, when you back test it over the last 10 years with the S&P 500 is founder led ownership Champions which might be skewed with Nvidia and Meta, but one that actually surprised me was R and D heavy investors to find as companies spending more than 15% of their market cap on research and development. Very interesting strategy on that one. Little freebie for y' all here.
- [03:44]
Robert
Listening yes, all of these strategies from Public are in the Rich Habits Network. So if you want to treat yourself on this holiday, check out the seven day free trial in the show notes below.
- [03:55]
Austin
Now let's jump into our first question. So our first question comes from E.C. e.C. Says hi Austin and Robert. Your podcast is awesome. My name is Ec. We're a couple of 49 and 46 year olds with two kids, 7 and 5. We started our more stable professional life and family in our mid to late 30s. I work in high tech with a yearly salary of 210,000. I have 160,000 in cash, 50,000 in stocks. My wife is a college professor making 75,000 a year and between our Roth IRAs and traditional 401ks we have 650,000 invested. I also have a brokerage account containing $125,000 invested mostly in the stock of the company I work for. And of course we're doing some 529 action for our kids. We owe $400,000 on our mortgage at a 2.6% interest rate. We have seven years left of payments over there, but besides that, no other debt. The house is worth 900,000. So my main question for you all is what can we do in order to maximize our financial stability as we work toward an early retirement? Considering that the tech industry is very volatile, should we keep investing into our retirement funds, including our backdoor Roth IRAs, knowing that we can't access this money until 59 and a half. Do we maybe do some real estate estate investing? We live in the state of Washington. Real estate is very expensive here. I'm just not too sure what to focus on, knowing that we're optimizing for financial stability. What a really good question from EC and congrats, EC on being a wonderful earner. You and your wife together here making almost $300,000 a year. That is absolutely incredible. Couple of kids, you're doing the 529. You all are definitely trending in the right direction. So, Robert, let's talk about maximizing financial stability. Because financial stability is different than financial outcome or financial growth or financial, you know, wealth. Right. It's. It's stability. So I'll let you kick this one off.
- [05:54]
Robert
Yeah, I think the key word here is stability, and I really like it because obviously EC and company, they are crushing it. They've done a really good job and they've laid the groundwork. They have the 529, they have the 401ks, they have all of this stuff rocking and rolling. But when it comes to stability, I think you want to have further diversification, but again, not so risk on with all of the big tech and all of these things that do have a lot of volatility. So I like where your head's at. I do like the idea of adding some real estate. It could be through rates, it could be through fundrise, someone like that. We do a lot of work with them. But I think it is good to consider more diversification in case we do go into a bear market for 18 months or something like that to where you have more stability. But don't go so diversified that you get yourself in harm's way and lose that comfort that you've already built for the future because you guys have a long investing window ahead to continue to grow your wealth while still being stability in it. So I like real estate, I like precious metals, some of these other things without being so risk on in big tech. I love where you're going.
- [07:02]
Austin
I think that's a good start for sure. Tactically speaking, a couple ways to create some financial stability. Ec, in your situation, you mentioned you have a brokerage account with $125,000 invested in the stock of the company you work for. If I you, I would consider cashing out the majority of that and reallocating that to just general index funds and ETFs, or maybe something even more of a low volatility, like a real estate, like a precious metals, something of that nature, I think having so much of your money tied up in one single stock is not financially stable. That is financially unstable. Right. That's very aggressive. So clarification here. Actually, I read this wrong and I just realized it in the email. You said, I work in high tech with a yearly salary of 210. That's total compensation of 210. You actually make 160,000 in cash and 50,000 in company stock. So I messed that up. Sorry. You don't have 160,000 in cash just sitting in a high yield savings. You get that as a salary. Okay, so you, between you and your wife, you're actually making closer to, you know, 230, 240,000 a year, not the close to 300 like I thought. So my bad. All that to say though, I would make sure that you've got four, five, six months of your expenses in a high yield savings account. You can open up a high yield cash account on public.com and earn, you know, your three and a half, four and a half percent, whatever it is. Right now I know the Fed's cutting rates, but get your, get your couple percentage points regardless. The thing I wouldn't do, you know, if we're optimizing for financial stability is I wouldn't pay off this mortgage. I know some people get excited about paying off a mortgage to encourage financial stability. I get excited about that knowing that the interest rate is 5, 6, 7%. But at 2 and a half percent, I don't think it makes any sense in the world to do that. However, maybe if you were someone that's really trying to optimize for financial stability, you can recast your mortgage. Mortgage. Because when you bought the house, I'm sure you probably borrowed 700, 800,000. I guess maybe depending on, you know, what the house was worth at that time, maybe 5, 6, 700, something like that. But now that it's down to 400, maybe you can put a little lump sum of like 5 or 10,000, which would then allow you to do something called a mortgage recast. And you have to put down a lump sum, unfortunately, to recast the mortgage. So yeah, you would be, you know, paying it down a little bit. But regardless, what that would do is it allows you to reset your amortization on your new mortgage balance without refinancing. So you keep the 2.6% interest rate. Your monthly payments might go from the 3,500amonth or 4,000amonth. It was back when you borrowed the 750,000, 800,000. But now that it's half that, your monthly payment might be able to come down to 2,500 or 2,000 or something different. Right. 400,000 at 2 1/2 percent, I'm sure is just a couple thousand dollars. So if you're really trying to optimize for financial stability, knowing that and you called this out, tech industry is volatile, which means like, hey guys, I might lose my job. I don't know what's going to come the next year. Having that low monthly payment for your mortgage could be a really good idea. So I would consider learning more about a recast. Now, if you have an fha, a VA loan, and I think one other type of loan, you can't recast the mortgage. At least that's my understanding. Robert, you're the mortgage guy.
- [10:10]
Robert
Yeah. I don't know which ones you can and can't recast, but I do want to click back on this because I think it's a great thing for us to touch a little bit further on. And that is so many people want to be debt free. But you have to always understand if the positive arbitrage of borrowing money is in your favor, like in this instance with a 2.6% mortgage interest rate, I would never pay that off. I would keep it as long as humanly possible because the goal is always for you to make the most money you can with your cash, not by paying off assets that you already have, a low interest rate mortgage. So I just wanted to click back on that for a second because so many people want to pay it down to get rid of it. And I understand it emotionally, but I think it's really good to keep it because it's so low interest.
- [10:53]
Austin
You see, we're rooting for you. We think you're in a really good spot here. I think we called out a couple things to do right. Diversify away from the single stock of the company you work for, maybe consider recasting the mortgage, beef up that emergency fund. You guys are going to be just fine. So our next question comes from John N. John says, I love your show. I'm a farm manager and recently my boss told me that I should look into starting an llc. And essentially he would pay my llc, then I would pay myself from my llc. He mentioned paying myself a modest salary. Then at the end of the year, I pay myself the rest in the form of dividends. He said my LLC could take up to 25% of the money and put it into a SEP IRA. Is this something you think would be Beneficial for me. Does it really reduce taxable income? Have you heard of people doing this? Any thoughts or advice is very much appreciated. Thanks again. God bless and Merry Christmas, Jonathan. Well, Jonathan, Merry Christmas back to you because this episode is getting published on Christmas. So what a timely time to say that. Robert, why don't you walk through for John here how the S corporation election works and how the sort of tax advantages that the S corp with the LLC can allow John here to do in a situation.
- [12:00]
Robert
Yeah, I think this is a great question, John, and, and I think your boss is right. The only thing distinction wise that I want to make sure everyone understands is that I don't recommend someone get an LLC with an S election if they're not making over 80 or $100,000 a year because it does cost more to operate in a selection and does take more work to do your filings and everything else. Now here is one other distinction I want to touch on. You can open an LLC and make it an S election later on once you start making more money, but you can't open an S corp and then move it over to being an llc. It just doesn't work out that way. So make sure everyone understands that as well. So for me, I think it's a great strategy if you're making over a hundred thousand dollars a year. There are a lot of benefits to this and he is spot on with paying yourself first and then paying yourself the rest in dividends at the end of the year because it does get you into a better overall tax situation for your end of year tax benefits. So I definitely think that's a great strategy if you're making a hundred thousand dollars a year. Plus, I really like this.
- [13:06]
Austin
So let's keep going on that. Assuming you are making a hundred thousand dollars and you've got this profit, right? This is a hundred thousand of profit paid to your llc. You can put yourself on a modest reasonable salary, which in your situation might be 40, 50, $60,000 a year. You know what that number is, not me. That will come with some payroll expenses like on gusto. I mean you are going to pay some stuff, right? So the reason why Robert said 100,000 is because it costs between 2 to 4,000 a year to operate one of these L.L.C. s corp elections, right? But let's walk through this even more so, right? You got the 100,000. You're putting yourself on this modest salary. 40, 50, 60,000. Let's assume 60, right? Let's say that's a good salary for a farm manager with this LLC and the other $40,000 is now paid to you in those dividend distributions that you had mentioned here. So the 60,000, you're going to pay, all your normal taxes, Medicare, Social Security, federal income tax, all that stuff is tied to the 60,000, but only federal income tax is tied to the 40, which means you're saving about 15.5% in taxes on that $40,000, which is just over $6,000. Now, of that 6,000 that you're saving, of course, you have to pay 2, 3, $4,000 in operating expenses, which is what Robert had alluded to, with those extra costs to operate a S Corp. So you will net a couple thousand dollars more per year by running this through an S Corp. That makes sense. And then you had mentioned the SEP ira, which is essentially a way for like a small business owner solopreneur to kind of invest toward their own retirement. Because I'm assuming what's happening here is your employer at this farm, it does not offer a 401k, but he's trying to help you figure out how to get money in your retirement with that. Specifically, you're actually allowed to contribute up to 25% of your compensation or up to $69,000, whatever is the lesser value there. So 25% of your $60,000 salary is actually $15,000. Right. This is W2 wages only, does not include the other 40,000. Right. And you can actually write off that 15,000 doll contribution against your business's income. So, right. Essentially you're thinking this hundred thousand dollars, it's now 85 that you're taxed at because you contributed 15,000 there. And then of course, the same distributions and all this stuff, it really makes a lot more sense when you're making hundreds of thousands. Right. So for me, for example, I make a lot of money every year. I do the S Corp thing, I pay myself a wonderful salary, but then I do all these distributions. On top of that, I save tens of thousands, if not well over a hundred thousand in sort of double taxation here because of the way that I'm running it through. But at just this a hundred thousand level, it's, it's. You got to really find and figure out what those numbers are for you. It might not be worth the squeeze. However, if you're really trying to figure out how to invest toward a retirement account because your guy's not offering you a 401k, I would consider this S Corp election with your LLC and run it through this way so you can contribute to something of that nature.
- [16:05]
Robert
I love that breakdown, Austin. And I think it's just really important, and I do this with a lot of my employees across the country, is to have a boss. It's really cool if you have a boss that is sharing these strategies that has helped him build wealth and help him be successful with his employees and people that he cares about. So I just wanted to kind of click back on that for a second because, you know, so many people are so concerned with their own money that they're not trying to help those that help them. And so I really enjoyed this question.
- [16:34]
Austin
Yeah, I mean, that's a great message for small business owners that are listening to this episode right now. If you have employees that are contract workers, 1099, like people of that nature that you are paying more than $100,000 a year, make sure that they know about the ESCORP election and how they could potentially save on taxes and even turbocharge some retirement investing with this way of compensating them through an S Corp.
- [16:57]
Robert
Yeah, I remember a couple months ago when I was in Toledo, Austin, I was sitting at a lunch table with two new 1099 workers that worked in the construction company and they were asking me about how to get started and I literally helped them at the table get their public.com account set up. I showed them how to buy crypto in there, get their high yield and they were like just so appreciative because even though they're not big earners and wouldn't qualify to do all these other strategies, it was good to see them do their first investment and get started.
- [17:28]
Austin
So our next question comes from Jay. Jay says, hi, Austin and Robert. I'm hoping to stay anonymous, so please just call me Jay. Huge fan of the show, Love listening to every episode. I'm hoping I can get some advice. And I'm sorry, I'm trying to be brief, but I know it's a lot to unpack. My wife and I are 33. We're debt free. Besides our mortgage, we have 65,000 each in our Roth IRAs, 320,000 combined between our two 401ks. And my wife is maxing hers out every single year. A hundred thousand dollars is sitting in a money market for our emergency fund. This is significantly more than what we would need for a four month emergency fund. And I realized that and I have 425,000 in a bridge account in everything you guys talk about, Jay Sundays, I'm a 20% owner in an S Corp and my distribution this year was $400,000 free and clear of taxes. This is dou than any previous distribution I have received. So last year I received a $200,000 distribution and we were able to take that money and invest a ton of it. And it felt amazing being able to do that. So now I'm wondering what your thoughts would be on using some of this $400,000 distribution I got this year to pay off my mortgage where we owe $175,000 on it at a 3% interest rate. And then I would invest the other 225,000 minus funding some trips and funding a donor advice fund. I know it's a low interest debt debt and the 175,000 will return more than the 3% being invested in the markets. But emotionally, I simply cannot get over the idea of being debt free, including our mortgage and having over 1 million in the market at 33. So time can still be on our side and we can still invest a huge chunk of the money into the markets. Thanks for all your help and I appreciate your perspectives. Listen, Jay, if you are emotionally attached to this idea of paying off a 3% mortgage because you want to be debt free, then do what's best for your emotions. At the end of the day, it's your mental health. It is your. It's your life that you're living, right? We're just two guys on the Internet trying to help you understand money. And if your understanding of money, plus your mental emotional feelings and all the things that come together mean Jay is most happy with no mortgage and a million invested, then do what makes you most happy. Robert says it seven times an episode. Personal finances. Personal. So. And I'm surprised he hasn't said it yet in this episode, but, like, this is literally the definition of that. Your personal financial situation is personal to you. Your emotions, your relationship with money, your relationship with your family, how you want to be a provider, how you want to navigate life. And if that means paying off low interest debt like your mortgage, then congrats. You have money. Do what you want to do. If it means keeping it around, cool. Do what you want to do. Like, it's totally up to you. You. Would I do it? Probably not. Would Robert do it? Definitely not. But again, it's. It's all. It's your money. You figure it out along the way and you do what you want to do.
- [20:13]
Robert
That's a great breakdown. And look, the math is not in your favor to do this, but again, if your emotions get the best of you and you just want to feel that, that House has paid off and feel better about it, go for it. But here's the challenge and here's what I want you to do. I want you to take the $400,000 and I want you to put it into chat, GPT or whatever you use. And I want you to ask it at an 8% annualized return for the next 25, 30 years, whatever time frame you want to put in, what would that money turn into? So let's say the 400k gets invested into the S P 500 and you guys are 33 years old. So you say for 30 years, what is that outcome? Then I want you to do the same thing with the difference. If you paid off the house, see what the difference is so you can understand that arbitrage in your favor and against you to make sure that that number that you come up with is enough of a difference that you understand it's the better move to not pay off the house and keep the low interest. Or if it's not enough to change your mind and you want that peace of mind, pay off the house. You guys are crushing it. You're young, you have a very long window ahead of you to continue investing. And it's all about what makes you feel happy. Some people love paid off assets. I get it totally fine. But when you have low interest rates like this, you have to always understand the arbitrage difference that if the S and P makes 8, 9, 10, 11, 12% a year and you can borrow money for 3%, I'm always going to borrow money and keep chunking away into my investment portfolios so I have more money at the end. That would be my take. I agree with Austin. I wouldn't do this. I would keep the mortgage and invest all the money.
- [21:58]
Austin
And at the end of the day, Robert, you know, it seems like our friend Jay here is going to continue to get these big distributions as a 20% owner in this S corporation. And yeah, I mean, here's the deal, Jay. You can invest this money. You could use this money to pay off your house. You could probably burn this money. You will still be a multi millionaire in your 60s. If you're making 400,000 in these distributions. You already have, you know, hundreds of thousands invested. Like you guys are going to be multi millionaires regardless. Now it just comes down to what's going to help you feel the best and sleep the best. In the mornings when you wake up and in bed when you go to sleep. Is it a paid off mortgage? Is it more money on your computer screen? And a brokerage account, is it like whatever, right? If it's the more money, then it's the more money. If it's the paid off mortgage, is the paid off mortgage. Only you know the answer to that. I don't think either of these is going to materially impact your ability to have millions of dollars in retirement. So that's a cool place to be because now you get to make an emotional decision versus a mathematical one.
- [22:57]
Robert
And for everyone else out there, understand this. We always say personal finance is personal. There you have it. I said it. But nobody is perfect. No investment strategy from anyone on earth, from billionaires down to people like Austin and myself. No one is perfect. Do what works for you. As long as you understand the math of your decisions and how it affects your future, you're going to be just fine.
- [23:21]
Austin
So our next question comes from Max B. Max B says hi Austin and Robert. I hope this message finds you well. I have a question regarding my unique financial position and some different investment strategies that may be pertinent to me and other listeners. For context, I'm 25 years old, in my last year of medical school and I'll be joining the military afterwards on a medical scholarship. My expected yearly compensation will be 150,000 for the next three years. I have $60,000 invested across my Roth IRA and my individual brokerage account. 80% of this is in the S and P and the Nasdaq and then 20% is in individual stocks, gold and Bitcoin. I have 100,000 in student loans and I'm paying the monthly minimums on those. I have no credit card debt. My car is fully paid off and I have 30,000 in a high yield savings account that I'm using as a three month emergency fund and a potential new home fund. I'm looking to purchase a home sometime in the next year or two through a VA loan. I plan to live in this home during my military service, then rent it out after I exit the military. Since it is a VA loan, I don't need to save for a down payment, but I am slowly setting funds aside for realtor fees, due diligence and other first time home buyer expenses. My question is this. I met with a certified financial planner recently and he introduced the idea of separately managed accounts SMAs. I've been investing on my own, but I feel like this could be a really good idea as I start to make an actual big high income salary. I understand I have a lofty goal of purchasing a new home with a limited amount of capital and High amount of student loan debt. So I'd like to keep as much money in my pocket as possible by limiting my taxes, which is why the SMA could be important to me. At the same time, I could settle for renting over the next several years if it doesn't financially make sense to buy a home. Either way, do you recommend opening up an SMA or is my current strategy sound.
- [25:06]
Robert
Oof.
- [25:07]
Austin
Okay. So kind of weirded out that a cfp, a certified financial planner, right? They're definitely not fee only fiduciary if they're over here trying to pump you into an sma. So the separately managed account, the sma, it's essentially a high fee account that is manually be managed by some smart investor that's charging you one, one and a half percent on your money to hopefully outperform the s and P500. Like that's what it is, right? What I'm seeing, and I could be wrong here, Robert, but this CFP is like, ooh, Maxwell is a doctor. They're going to be making a lot of money. They're going to be putting a lot of money with me. I can charge them some high fees. I got this nice income stream now. My book of business can grow with these SMA people. Like this is going to be great for me. At the end of the day, Maxwell, what you need to do is, is avoid paying high fees as long as you possibly can, especially at 25 years old. You said you've got 80% in the S&P and the Nasdaq, 20% in gold, Bitcoin and some single stocks. Rock and roll, right? That is the strategy and you don't have to pay a dime to do it. Now when it comes to the home ownership side of the equation, I think what's the most important thing to realize and just keep account here is that no one should be buying a home unless you plan to stay in it for at least five to seven years so that the capital appreciation can begin to hold. If you're going to be with the military, I'm worried that you might move around and the rental situation might not work out with the VA thing. So like just do some research on that. I'll let Robert talk toward that. But when it comes to these separately managed accounts and tax loss harvesting or whatever's going on, like don't worry about any of that stuff. Just go put money in the S, P and the NASDAQ and some of the stocks and you know, commodities we talk about and close your eyes for 20 years. You're going to be a millionaire.
- [26:51]
Robert
Yeah, I agree with you totally on the SMAs. You know, I've been around these vehicles for 30 years or I don't even remember when they started getting introduced and they're pretty high fees and they're just going to put you into a blended portfolio that they created and they don't have to do any work. So just be careful. I'd rather see you at this point when you get to that, you know, next level of financial freedom. You know, go find yourself a fiduciary. Someone that's going to charge you less, that's going to actively manage and help you with your money. That's not just going to set it and forget it and collect the fees. Fees and then how this relates to the house. I agree with Austin 100%. If you're not sure where you're going to be stationed, how long you're going to be there, I don't know that you want to buy a house, turn it over to a property management company and hope for the best results. But just also keep in mind if you do use a VA loan or anyone out there does, you have to live in that property for at least a year before you can make it a long term rental. So make sure you understand all the guidelines. VA loans can be great, great, but there are stipulations you have to follow. So I hope this helps.
- [27:53]
Austin
And another call out too is like nothing wrong with renting rent for two, three years. You mentioned you've only got 60,000 invested. That's a great amount of money, but I'd love for that to be a hundred. Right. Build your base before you go make a decision like this. And you're also talking about like the no money down thing on the VA loan. Like maybe that could make sense. Like I'd really like weigh that, that option with like, like the interest rate and what that could do. Like I don't know, but that's a very specific situation type question there. I normally think having at least 10% down on a home purchase is probably a good thing to get rid of some sort of, you know, if it's a higher interest rate, you can do 20% for PMI depending on like what that looks like. So just do some research on that when the time comes. But at the end of the day, nothing wrong with renting without having a base built yet. I love where you're at with this. 30,000 in a high yield savings account. Keep rocking and rolling when it comes to investing and then fast forward two or three years. When you've got 100, 120 and you're like, okay, cool, I can afford a house now, I'm going to do the VA loan maybe. Or things change and you're now living somewhere else in two or three years from now and it's a completely different situation for you. So being in the military, I know is a little tricky. So our next question comes from Jordan H. Jordan says hello. I'm a huge fan of the show and I really appreciate all the knowledge and insight you two share. I'm 24 years old. I graduated with a civil engineering degree. I make 80,000 a year depending on my annual annual bonus. And I live in Kansas. My employer matches 0.5% for every 1%. I contribute up to 6 1/2%. I'm currently contributing that full 6 1/2% to a Roth 401K. I've got 6300 in a high yield savings 7100 in my bridge account, invested mostly into the ETFs you all talk about. And I try to keep my checking account lean and invest any surplus from each paycheck into these brokerage accounts so I can stay in control of my money. I have $12,000 in student loans at a 4% interest rate, so I'm making the minimum payment since the rate is low. I took out a $32,000 loan for a truck with help from my parents after my old car broke down. My parents are covering 30,000 of that loan, so I'll have about $15,000 remaining to pay off in roughly a year. I bought the truck because I'm an avid hunter and it fits my lifestyle. These are my only debts. All that said, I've developed a strong passion for real estate investing and hope to buy my first property, ideally a duplex, within the next couple of years. I've been reading extensively to build my knowledge base and would love your advice on how save for a down payment. Do I continue to grow my brokerage account and then sell when I have saved enough? Would it be better to set aside funds in a high Yield savings account specifically for the down payment? Do you have any other feedback? What is the best strategy here? Robert, I'll let you kick this one off.
- [30:34]
Robert
Yeah, I love where your head's at at 24 years old. Seems like you're doing really well. You're doing all the right things, but I think you're a little early. I would not consider buying a piece of real estate at this point in your career. Career until I Had the base built. I know we say this over and over again, but the problem is so many people are ready to get into real estate, and everyone should own real estate, but at the right time in their financial journey. Because here's the scenario a lot of people go through. They get their first 20, 30, $40,000. They go buy a duplex, they want a house hack, they put all that money down. The duplex doesn't cash flow like they thought, thought maybe the market downturns for a couple years so they don't have the capital appreciation, and then all of a sudden you're back to zero. We always want people to have the base. So you're making money while you sleep. And so I think you're a little early. I'd like to see you keep the high yield savings where it's at. Pour as much money as you can into that brokerage account, get it from 7,000, 100 to 30,000, 50,000 and up, and then reconvene and, and look at the real estate again. So if you could do all that over, let's say the next two, three years, and then you're 27 or 28 and buy that duplex, I think that's the better play, personally. Now, if you're not going to listen to that, then I would strongly suggest you look at an FHA loan like, or a Fannie Mae 5% down loan, where you're only putting 5% down, and find something that doesn't need a lot of renovation. Because again, you don't want to go broke renovating a property to be able to try to save money and build equity when you're starting out with such a low amount of invested capital elsewhere. So that's how I would handle it.
- [32:19]
Austin
So the goal, of course, is to get your base built, which, you know, fifty, eighty, a hundred thousand dollars invested across all of your brokerage accounts, your 401k, your Roth IRA, your Bridge account, everything. Like, go get a hundred thousand dollars invested into the index funds and ETFs we talk about. So you do not retire broke once. That is like, okay, checkbox, now it's time. You're like, okay, I want to go get this duplex. How do I save for that down payment? Depending on your timeline, there's two ways to do it. The first way you can do it is the very, like, safe way, which is just setting that money aside every month and putting it into a high yield savings account earning three and a half, four and a half percent, depending on what you got going on. So that'll be fine. It just goes up into the right over time, it's not really earning too much, but also it's not going down at all because it's not invested the other way to think about it, assuming the time horizon, horizon on actually getting this down payment saved is over three years, is putting the money in the s and P500 and letting it grow that way. So you're making about $6,000 a month, maybe a little bit less, maybe closer to 5,000 actually, because you're contributing 6% of your salary to your retirement account. So each month you're taking home, let's call it five grand of that 5,000. If you put 1200amonth in the S&P 500, earning an annual return of about 10%, and you do that for four years, you're going to have $70,000. At the end of that four year period of time, that 70,000 can be a down payment on, you know, whatever duplex you want to get. But that's also assuming the markets earn 10%. Right? Which means, okay, I've got to buy a house in 12 or 18 months. I should start, you know, de risking myself and taking money out of the markets. I got to think about taxes. Like, it gets a little bit more convoluted when you build it that way, but it can help you get there faster. Right, because that same twelve hundred dollars a month saved in a high yield savings account for four years is only 57. 7. Right. Compared to the 70. So we're talking about a $13,000 difference there. So our next question comes from Alex S. Alex says Austin and Robert. I've been listening since 2023 and it's been crazy to watch y' all grow. 2025 was an awesome year and I look forward to more market news, call outs, advice and insights in 2026. As we wrap up the year, I was wondering if you could share a few of your top books, podcasts or other resources from 2025. I'm always eager to learn, as is all of your audience. So I hope you can share what resources you have found most valuable. Thanks for all you do. That's a really good question, Robert. What for 2025 have been some of your most valuable resources.
- [34:41]
Robert
I would say Seeking Alpha. We both love that public.com with the generated assets they launched I think is just an incredible exercise and ability for people to really do well with their money. Also Google Finance with their new platform, it's in beta right now. Of all the tools they've Launched, I think is just incredible. Incredible. But then it's also like, you know, podcast. We like I like all in podcast. I think they do a good job. I think Chris Camillo does a good job. Austin, thank you for the, you know, introducing me to Chris Camillo so you guys can follow along with him. But, you know, as far as that goes for me, now and forever, anyone that's just getting started on their journey and wants to improve their financial literacy and their mindset and all of their that, I would start with these three books. Richest man in Babylon I think is a really good read and it's a very old school read, but it's a good short read. Number two to help with mindset and really getting in the right place would be Atomic Habits because I think that helps teach people the right ways to think. And then number three for me would be my favorite would be Think and Grow Rich. I think these are all great books for people that are just starting out or at that intermediate level and then on up from there. There's so many other great books, you know, Zero to One by Peter Thiel, some of these other more sophisticated books like One up on Wall street by Peter Lynch. So those would be my takeaways of how I learn what I think is a great resource and how it can help others.
- [36:12]
Austin
Echoing everything you said with Google Finance and generated assets and Seeking Alpha, all those, you know, tools and resources there. I also listen to the all in podcast every week, the rundown by public incredible daily podcast, Dumb Money, of course, with Chris Camillo. They do a wonderful job. Jordan and Dave, well, social Currency with Sammy Cohen. Incredible podcast, awesome interviews with really inspiring CEOs and C suite execs of awesome huge companies like Pinterest and other people that she, she interviews. I also really like the Tiger Sisters podcast. I think that's really good for like mental frameworks and like different ways to think about your career and relationships. If you're looking to like just reset your brain as an entrepreneur or someone really trying to just like figure out life, I swear where I come back to it at least once a year. Which is the podcast interview between Naval Ravikant and Joe Rogan from like four or five years ago. Let me see if I can find it. Yeah, it's six years ago. It's episode 1309 of the Joe Rogan Experience. It just, it's two hours long. I've listened to it probably seven or eight times now. Like just, just listen about it. It's very interesting because Naval has a wonderful sort of podcast series that he made several years ago as well. Well called how to Get Rich without being Lucky. Yeah, just type into YouTube naval ravon how to Get Rich podcast. It'll be the first one that pops up. It was published five years ago and it's a three and a half hour long just time of him sitting there and explaining to you how to get rich. And it's very simple fundamental principles like if you want to really get rich in life, you have to provide value to people at scale. You have to stop trading time for money. It's just because he had this incredible Twitter thread like 10 years ago. How to Get Rich without being Lucky. And it's, it's really cool. So highly recommend listening to that if you got some downtime here in the holiday season books. Oh my gosh, I've got a couple behind me here. Millionaire Mission by the Money Guys. Brian. That's a good one. The little Book of Common Sense Investing. Another incredible book. Oh, and how can we forget the five types of wealth from Sahil Sahil Bloom's Five Types of Wealth? It's another incredible book that's going to help you better understand and it has helped me a lot better understand and optimize my own relationships and my time and the way that I should be valuing things in my own life.
- [38:26]
Robert
Yeah, that is a really good list. But of course the Rich Habits podcast is always going to be my favorite podcast. We are here to bring you guys a ton of value each and every week and we appreciate every one of you.
- [38:37]
Austin
We appreciate y' all more than you know and we're super grateful that 77,000 of you had us at the the top podcast in your podcast rotation. That is. That's awesome. So our final question here comes from Crystal C. Crystal says. Hey, Austin and Robert, I appreciate all the advice you guys give.
- [38:53]
Robert
Give.
- [38:53]
Austin
My name is Crystal and I'll be 19 years old in March. My goal is to create passive income so I can do whatever I want like travel the world with my family. I have been paying into a 10 pay life policy that's worth half a million dollars and I pay $1,200 a month for 10 years. And after that the money just keeps growing and I stopped paying. I've been paying in it for three years now. I've heard of your viewpoints about getting rich off insurance policies not being possible, but I feel like this one is different because the cash value that' I also have a Roth IRA and I'm currently working as a cold caller in the insurance industry. I have a credit card, so I'm trying to slowly build my credit and I'm in the process of opening a high yield savings account on public. But I don't really find the urgency as of now, considering basically all of my money every month is going toward this life insurance policy. So I don't really have much left over. I want to get serious about providing AI automation services for business owners so I can start earning more income. Perhaps I should open a brokerage account when I get those profits and I can invest those profits into the stock market. I've heard your advice on benefits of an llc, so I was also thinking about maybe opening up one of those. Thank you all so much. Would love your feedback on my situation. Crystal, Crystal, Crystal. Okay, good news is you're 19. You're thinking about money. You're thinking about earning more of it. You're thinking about investing like you are decades ahead of a lot of your peers. Because a lot of people don't start thinking about investing until they're in their 30s or 40s. So I love where your head's at. You're just doing it wrong. And I don't mean that in a mean way. I just mean it in a mathematically factual way away, right? So here's your situation, right? You're saying, hey, my name's crystal. I'm putting 1200 bucks a month right now toward this life insurance policy that is getting invested for me and I'm gonna do it for 10 years and then I'm gonna have half a million at the end of it and I can have some cash value and I'm going to be great. Rock and roll, all that fun stuff. Unfortunately, someone bamboozled you for the fees and they are just getting rich off your $1200 month payments. So the bad news is you've already put in tens of thousands of dollars into this policy. The good news is it's never too late to pull out of it. Now let me clearly explain to you why you need to pull out of this policy, Crystal. You've been putting $1,200 a month into this policy with the idea of having this half a million dollar cash value or some sort of benefit at the end of the road in 10 years, right? And you just let it roll and it keeps growing or whatever. Two things are bad here. The first one is if you stop making those $1,200 pay payments, you're cooked. Money's gone, you don't get those benefits anymore. The second thing is that half million dollars that you're so excited about. It's not your money, it's the policy. If you want it, you have to borrow against the policy to actually have it given to you. Well, yeah, I can borrow it. It's going to be tax free because it's debt. Sure. If you're someone that is so obsessed with saving money on taxes that you are throwing away millions of dollars in retirement to save save 20,000, 50,000, $80,000 in taxes, I think you are walking over. What's the phrase, Robert? You're stepping over quarters, stepping over pennies.
- [41:55]
Robert
Why? Dollars fly by.
- [41:57]
Austin
That's the one. Right? So it's like that's what you're doing here, Crystal, if you are focused on the tax stuff and someone probably, I'm sure, mentioned that you're like, oh yeah, infinite baking, like, whatever. Let's talk about the numbers and why this is a bad idea. So let's say, for example, if you stop the policy and you now still had that twelve hundred dollars a month, you took that twelve hundred and from age, you put that twelve hundred dollars a month into the S&P 500, paying literally no fees, essentially through Voo, just buying it here. By the end of that ten year period of time, you'll have $275,000. Now let's pretend you stopped contributing to this brokerage account and that $275,000 grew at 9% from 29 to 65. At 65 years old in this brokerage account, you would have $7 million. Would you rather have 7 million million? That's your money, right? That you can give to your children or use for whatever you want, or half a million. That's not your money. You have to go borrow it. And when you die, it doesn't go to anybody. Right. So it's like, Crystal, reconsider your situation, your decision making process. Math is mathing in our favor and not in yours. I know you sell insurance. You work as a cold caller in the insurance industry. You've probably been brainwashed by your manager or someone to say, oh yeah, you got to get rich with insurance here. You can't do it. And if you don't believe us, go listen to our episode, I think it's 28 or 27 with George Camel, where we talked about all the whole life insurance policy stuff. We did a great job sort of demystifying all of that and debunking it all. And then also we just had an episode with the VP of Search from Google and her biggest financial takeaway was I got Tricked into buying these life insurance policies do not do it. She's the VP of Google and she got tricked, but she, she got smart enough to realize life insurance, you don't get rich off life insurance. You get rich off investing in your own, your own accounts here. So, Robert, take us away.
- [43:53]
Robert
I just love how passionate you and I both are about this question. Anything related to these Iuls and all of these crazy insurance structures. At the end of the day, if it was truly an investment and you missed three payments, your money would still be there and still be growing. But unfortunately, in a lot of these structures, when you stop making payments, the money goes away and they keep it because it's not really an investment. And unfortunately, the math here is not in your favor. Our way is way better. You own the money, someone's not getting rich off your money because the fees are so low. And you can grow all of this wealth because putting twelve hundred dollars away at nineteen years old is amazing. That is an incredible, incredible feat in itself. But if you do the same thing like Austin broke the down 10 years of that $1200 a month, keep it invested until retirement, you're a very rich person and you're not making other people rich with your money. So everyone out there, be careful with these Iuls and all of these crazy insurance scams. They're not good investments. And it's. You can really tell too because when you go on the Internet and you go on Instagram and TikTok, you have all these guys that are pushing these bragging about how the insurance industry makes more millionaires than any other industry. Guess what? They're making themselves millionaires. Millionaires off of the backs of hard working people that are out there working really hard and just want to get ahead. So be careful, understand the numbers and.
- [45:20]
Austin
I hope this helps everybody. Thank you so much for tuning into this week's episode of the Rich Habits podcast, Question and answer edition. We're wishing you a very merry Christmas, happy holidays or whatever you celebrate with your friends and family. We love you, we appreciate you, thank you for coming back every single week week supporting what we're building here. And we're wishing you all the best. And don't forget tomorrow we will not have a Rich Habits radar episode. We normally film those the day before and I'm not going to film an episode on Christmas. I will be in New Jersey with my fiance's family. I will not be here in Nashville. So no episode tomorrow, but there will be an episode on Monday. So we'll see you then. Sam.