Q&A: Secular Growth Trends, Trading Options, & Rebalancing for Retirement

Summary

Rich Habits Podcast: Q&A Edition
Episode: Secular Growth Trends, Trading Options, & Rebalancing for Retirement
Release Date: June 12, 2025

Hosts: Austin Hankwitz and Robert Croak

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Introduction

In this Q&A edition of the Rich Habits Podcast, hosts Austin Hankwitz and Robert Croak address various listener questions related to financial strategies, investing, retirement planning, and more. Drawing from their extensive experience, Robert, a decamillionaire with over 30 years in business, and Austin, a passionate young entrepreneur, provide insightful and actionable advice to help listeners take control of their finances.

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1. Saving for a House and Future Business Ventures

Listener: Logan
Timestamp: [03:59]

Question:
Logan, a 17-year-old earning approximately $2,000 monthly with significant savings and assets, seeks advice on saving for a house and potentially buying a business in the future.

Response:
Robert commends Logan's financial discipline, highlighting the rarity of his substantial savings at such a young age. He recommends:

• Investing Matured CD Funds: "Take that $30,000, go open up a public.com brokerage account and put it in there. Get that money invested into the index funds and ETFs we talk about specifically." ([07:08] A)

• Optimizing Savings: Suggests reallocating a portion of Logan's $40,000 savings from a standard savings account to investments that can yield higher returns.

Austin emphasizes the importance of balancing financial ambition with personal well-being:

• Enjoying Life While Investing: "Don’t forget why we do these things. We all invest and have these rich habits and are so strategic with how we're saving and investing our money." ([09:22] A)

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2. Understanding NEOS Funds and Investment Risks

Listener: Alexa
Timestamp: [12:05]

Question:
Alexa is interested in adding NEOS funds to her portfolio but encounters risk warnings on Fidelity. She seeks clarification on the associated risks.

Response:
Robert clarifies that NEOS funds are sophisticated, options-based ETFs designed for tax-efficient income:

• Separate Investments: "If you have a hundred thousand dollars in cash and you invest fifty thousand dollars of that cash in the S&P 500 and fifty thousand in the NASDAQ... it has nothing to do with the money you invested somewhere else." ([14:23] A)

Austin adds that NEOS funds complement existing investments by providing additional income:

• Supplementary Income: "These funds pay me awesome monthly income. I'm getting like $1,500 a month now because of these funds." ([14:23] A)

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3. Capitalizing on Secular Growth Trends: AI, Nuclear Energy, and Robotics

Listener: Carson
Timestamp: [16:08]

Question:
Carson is bullish on secular growth trends such as nuclear energy, AI, and robotics and seeks recommendations on ETFs and stocks to invest in these areas.

Response:
Robert and Austin advocate for long-term investments in these sectors, emphasizing patience and consistency:

• Recommended Investments:

  • AI: Nvidia, Broadcom, AMD
  • Nuclear Energy: URA (uranium ETF), Constellation Energy Group (CEG), Oklo

• Long-Term Perspective:

  • Robert: "AI has a long way to go. Many more years of growth in the AI sector." ([17:28] B)
  • Austin draws parallels to the dot-com bubble, stressing the enduring impact of AI over decades. ([22:19] A)

Austin introduces the "Picks and Shovels" strategy, investing in companies that provide the necessary tools and infrastructure for these growing industries.

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4. The Risks and Rewards of Options Trading

Listener: Rudy H.
Timestamp: [23:59]

Question:
Rudy inquires about the viability of options trading as a high-risk, high-reward strategy to make significant money.

Response:
Robert strongly advises against options trading for those seeking to build long-term wealth:

• High Risk: "87% of day traders lose money in the first year." ([27:59] A)

• Expertise Required: Emphasizes the necessity of becoming an expert and warns it’s not suitable for passive investors focused on long-term growth.

Austin elaborates on the speculative nature of options trading, likening it to gambling and discouraging its use with retirement funds.

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5. Switching from 457B to Solo 401k for Enhanced Investment Options

Listener: Sadie N.
Timestamp: [29:09]

Question:
Sadie, a teacher contributing to a 457B and maxing out her Roth IRA, contemplates opening a Solo 401k for more investment flexibility.

Response:
Robert recommends maximizing employer matches in the 457B before diversifying:

• Maximize 457B Match: "Up to the match with the 457B." ([30:10] A)

Austin suggests leveraging platforms like Carrie.com to open a Solo 401k, enabling higher contribution limits and tax-efficient growth.

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6. Paying Off Rental Property vs. Investing in the Market

Listener: Justin P.
Timestamp: [33:38]

Question:
Justin is torn between paying off his duplex mortgage at a 5% interest rate or investing the funds in the stock market for potentially higher returns.

Response:
Robert and Austin advocate for investing in the market over paying down low-interest debt:

• Compounding Advantage:

  • Robert: "Compound interest is much more important than simple interest." ([34:45] A)

• Market Returns vs. Mortgage Interest:

  • Robert: "Why would you not want all that extra money going in your pocket versus pay down what is presumably a pretty low interest rate mortgage?" ([34:45] B)

Austin provides a detailed example of how investing can lead to exponential growth compared to the linear savings from paying off debt.

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7. Managing Debt and Saving for a Home

Listener: Melissa
Timestamp: [37:26]

Question:
Melissa, a 37-year-old single mother with $25,000 in personal loan debt and $7,000 saved, seeks advice on saving for a down payment on a house.

Response:
Robert advises prioritizing debt repayment before aggressive saving:

• Eliminate High-Interest Debt: Focus on paying off the $25,000 personal loan to stop high-interest payments. ([42:12] A)

• Building Savings Post-Debt: Once debt-free, increase savings for a down payment and emergency fund.

• Reallocate Contributions: Suggests prioritizing 457B matches and then directing additional funds to debt repayment and savings.

Austin emphasizes the importance of setting realistic goals and not overextending financially:

• Focus on Stability: "You're going to put yourself in harm's way if you try to go buy a property right now because your base isn't built." ([43:56] B)

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8. Enhancing Parents’ 401k Performance Beyond Target Date Funds

Listener: Lucas C.
Timestamp: [45:28]

Question:
Lucas seeks advice on reallocating his parents' 401k from underperforming target date funds to more growth-oriented ETFs.

Response:
Robert and Austin recommend diversifying investments to improve returns:

• Avoid Target Date Funds: Criticize their underperformance and high fees. ([50:04] A)

• Strategic Allocation:

  • Index Funds & ETFs: Suggest shifting to S&P 500 (VOO), NASDAQ (QQQ), and other growth-focused funds.
  • Diversification: Include bonds (BNDI) and low allocations to cryptocurrency for added growth potential.

• Long-Term Growth Focus: Emphasize maintaining a balanced portfolio that aligns with a 15-year retirement horizon, leveraging the power of compound interest. ([50:04] A)

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Conclusion

Throughout this episode, Austin and Robert underscore the importance of strategic, long-term investing over short-term, high-risk endeavors. Key takeaways include:

• Maximize Employer Contributions: Always take full advantage of employer matches in retirement accounts.
• Diversify Investments: Utilize a mix of index funds, ETFs, and select high-income funds like NEOS to optimize returns.
• Avoid High-Risk Trading for Primary Investments: Focus on building wealth through steady, informed investments rather than speculative trading.
• Balance Financial Goals with Personal Well-being: Ensure that financial pursuits do not overshadow personal life and happiness.
• Educate and Proactively Manage Investments: Regularly review and adjust investment portfolios to align with evolving financial goals and market conditions.

By following these principles, listeners can build robust financial habits that pave the way for enduring wealth and financial freedom.

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Notable Quotes:

• Robert on Logan's Savings: "It's like mind boggling how some of these kids now these teenagers, it's just so different than what it was 10 years ago." ([07:08] A)

• Austin on Enjoying Life: "Live in the moment. Don't forget why we do these things." ([09:22] A)

• Robert on Long-Term Investing: "The longer you can look at these secular growth trends and the more Consistent you can be and stay in and be able to be a long term investor, the better off you're going to be." ([22:19] B)

• Austin on Options Trading Risks: "87% of day traders lose money in the first year." ([27:59] A)

• Robert on Target Date Funds: "A 401k is not a retirement strategy. It is better than nothing because you're getting the free money from the match. But generally there are limited options and they underperform." ([50:04] B)

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For more insights and resources, listeners are encouraged to subscribe to the Rich Habits Newsletter and join the Rich Habits Network community.

Transcript

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Is on the way. So you can be on yours. Uber on our way. Hey everyone, and welcome back to the Rich Habits Podcast brought to you by public.com a top 10 business podcast on Spotify. Question and Answer Edition. What a mouthful now that that has become. But these are our Thursday episodes, which means you ask us questions via email at rich habits podcastmail.com or via Instagram dms@rich habits Podcast. And we answer them. We answer your questions as if we were in your own shoes and we give you our perspective. If it's what we would do with money, what we would do in your situation, anything and everything counts here. We always give you our honest opinion as to what's going on in your life.

[B]

Yeah, I love the Thursday episodes. I'm so grateful that they've grown to be so big and enjoyed by tens and tens of thousands of people every week. And it's just fun because we take these answers right from the dome, right from our experience, what we believe is the right decision for everyone to make as it relates to doing it for their own lives. Because personal finance is personal. But there are certain things and strategies that you should follow in order to build wealth and financial freedom. So I love these episodes and I know the audience does too. So let's dig in.

[A]

Well, it's not just that, but it's also like, people don't know what they don't know. And that's totally okay because we were not taught financial literacy in high school or in college. And if you don't come from a a good relationship with money, right. Your parents didn't have money. Someone in your family didn't. You know, if you don't have that, it's hard to know what you don't know. And so that's what's so fun about these episodes is it's, it's one thing for Robert and I to come out every Monday with these like strategies and ideas and tips and interviews and things like that. But learning about a strategy and actually applying it are two different things. And so we think these Thursday episodes, right, which are us giving our perspectives on people that might be applying these strategies or different situations in ways that they could apply different strategies, is always a really fun, interactive way to walk through some of our teachings. So I'm pumped to jump into this episode. But before we do, want to give a quick shout out to our sponsor public.com these Thursday episodes are brought to you by public.com because they are the best online brokerage platform and they were actually built during this century. So go 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, which you should three to six months of expenses. Now you should be taking advantage of the 4.1% APY that's offered by their High Yield Cash account.

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[A]

So our first question is coming from Logan via email. Again, that's rich habitspodcastmail.com Logan says hello Robert Noston My name's Logan and I'm 17 years old. I wanted to start off by giving you guys a big thanks for all that you do. This is so much needed in America today. So my question is what should I be doing with my money to save up for a house and hopefully buy a business one day? Here's some background information. I'm currently working as many hours as I possibly can, making about $2,000 a month. And now with summer here, that's going to be able to increase. Currently I $30,000 parked in a 12 month CD with the bank earning about 5 1/2 percent. However, that's about to mature and I want to figure out what to do with that money. I've maxed out my Roth IRA for the last two years and even the year before that. I put $3,000 into it. I have a $17,000 truck that is fully paid off and I have a motorcycle that's paid off as well. If I need to, I can sell both of these and go buy a cheaper truck to invest even more. But I'm not sure about that one. On top of my CD, I've got $40,000 savings accounts. As of now, I'm not planning to go to college. Any advice would be greatly appreciated, especially as I look to buy a house one day and buy a business. Thanks in advance. What an awesome situation. Robert, Let me just say this, like as someone who's 29 years old and I'm looking at Logan here and I'm listening to things that he's saying. It's like mind boggling how different, stark different. Some people's amount of money that they have at a young age is compared to me. When I was 17, I had about $500 in my checking account. I was lifeguarding at the country club during the summertimes and I was trying to enjoy myself, cut some grass, do whatever, right? But it's like I didn't have $40,000 in a savings. I don't have a paid off truck. Like, it is mind boggling to me how some of these kids now these teenagers, it's just so different than what it was 10 years ago, 12 years ago when I was a teenager. And I'm sure even you know, when you were a teenager, Robert, it's just like there's so many opportunities now that people who are in their teens, early 20s can go earn money, set themselves up for financial success. And it's really inspiring. So here's a couple things I would do for you, Logan. Right? The first thing is when your CD finally matures and you can cash out your money, take that $30,000, go open up a public.com brokerage account and put it in there. Get that money invested into the index funds and ETFs we talk about specifically. That's the S&P 500, the NASDAQ, VTI, AIQ VUG, right? Some of these big ETFs that are going to continue to grow over a long period of time. You mentioned the Roth ira. Congrats on that. Just want to make sure it's getting invested correctly. Same index funds and ETFs we talk about. And the last thing I'll call out here, Robert, is when it comes to this 40,000 in savings I think that's a lot. I think that's too much in savings, way too much, to be honest with you. So if you want to take maybe like 15,000 of that, keep it in your savings account. That's, that's awesome. I think, you know, 10, maybe 15 grand. But the other, let's call it 25 or 30,000, go put that as well into the public account, get that invested and working for you more aggressively. Then call it a 3 1/2 or 4% rate you might be getting in a savings account right now.

[B]

Yeah, I love this. And I want to go back to your original reaction, and I'm glad we opened the episode with this question because Logan is crushing it. I don't know where the money came from. I'm guessing he's been working a lot or he got some inheritance or whatever. But the main point for me, and I preach this every day to my workers, whether it's at the pizza store, the construction company or wherever, is the sooner you get started thinking like an investor, the better off your life is going to be for decades to come. Because I see it every day and I work on it every day with people I run into where they're 32, 33, 27, and they have zero investments. They don't know what a Roth IRA is. They've heard of cryptocurrency, but only put a hundred bucks into it, into some meme coin. Logan is doing it right. So anyone out there that's listening that's under 30 years old and you haven't gotten started yet, this is your wake up call to get started. Think like an investor, start getting the Roth IRA set up, start getting some cryptocurrency purchased through public.com and really lay the groundwork for your future. So that's my take and I love this question. And then the only thing I would add to what Austin alluded to is I would Also in that public.com account at 17 years old, you should be risk on. I would get some cryptocurrency going. I would buy some xrp. I would probably buy some chainlink bitcoin and have a decent sum in cryptocurrency, maybe 5% of your total investable capital. I would do that. And I also agree 100%. You have no need to have $40,000 sitting in savings. I would trim that way back, get that a little more aggressive in some of these funds we've talked about, because then that way this money is going to grow quicker. So when you're ready to buy that first property, let's say after you get your first hundred thousand dollars saved and invested, that money can be the money you use to do so. But I love your situation, Logan. I'm so excited when I see younger people ask us these questions. Get engaged in the Rich Habits podcast and in the Rich Habits network because it means you're taking your money seriously and setting yourself up for the future. And I love it.

[A]

And I think the only additional comment I would make is, Logan, I would really encourage to enjoy your childhood, enjoy your teens and your early twenties. Right? It seems like you're working really hard. It seems like you're very much focused on becoming this very wealthy human being. And I hope you achieve that goal. But make sure that you're not trying to achieve that goal at the cost of making memories with your friends, going on vacations with your family, you know, doing kid things like going back and thinking about when I was 17. Oh, man, I would do anything to go be back 17 years old again. Right? That'd be so much fun. And I'm sure I'll feel that same way when I'm, you know, 20 years into the future when I'm 49. Oh, I'd do anything to go be 29 again. I guess a reminder for everyone, like, live in the moment. Don't forget why we do these things. We all invest and have these rich habits and, and are so strategic with how we're saving and investing our money. So that. Right? What's the so that? Is it so that you can go spend more time with your family, so that you can go on that vacation, so that you and your spouse can go, you know, whatever, right? Never forget about the so that. And then also when you specifically mentioned buying a house, buying a business, buy the duplex, go use the 5% down Fannie Mae mortgage, do a duplex house hack for two, three, four, five years. That's going to be the easiest and most cost effective way in my opinion, Logan, that you'll be able to build equity in real estate. And then when you're 22, 23, 24, 25, figure out what business do you want to get into? What hard skills and soft skills do you excel at? What specific unique experiences can you use to leverage and build a business? Build equity in this business, perhaps owner's financing is how you're going to be able to buy it. Who knows? But I would first focus on the house, but only after, to Robert's point, you have your base built. Incredible progress, Logan. And we are rooting for you, my friend. So our next question comes from Alexa. Alexa says, Good afternoon gentlemen. I've been listening to your podcast for six months now and I've recently started investing in stocks covering the basics like the S&P 500, the NASDAQ and a few others. You've mentioned NEOs funds, ETFs and they seem like something that I want to add to my portfolio. However, when I try to invest into these ETFs on fidelity, I get a pop up window that mentions something about advanced investors and risk. Do you know why these pop ups appear before making the purchases? And would the risks be losing the rest of my portfolio? Your podcast is very helpful. Thank you Robert. Let me kick this one off, Alexa. You are not going to lose the rest of your portfolio by buying a NEOS fund or really any fund, right? So let's like just make sure we understand how that works. If you have a hundred thousand dollars in cash and you invest fifty thousand dollars of that cash in the S&P five hundred and fifty thousand of the other cash in the NASDAQ, the fifty thousand that you invested in the NASDAQ, it's go up or down. But no matter how much it goes up, no matter how much it goes down has nothing to do with the money you invested somewhere else. So if you're buying neo's, funds like Robert and I are investing in, those funds are not going to have an impact on other money in your portfolio. And the reason you're seeing a pop up window like that come up is because NEOS funds are pretty sophisticated products. Right? We're talking about an options based actively managed ETF that is doing everything they can to ensure that their investors are getting tax efficient income by selling covered call option contracts actively against an index like the S and P or the nasdaq. That very well is a more sophisticated strategy than just buying the S&P 500 or just buying the NASDAQ for example. So that's why you're seeing the pop up window. But I would argue there's no like increase risk. I've got well over a hundred thousand dollars invested into these funds myself. I get my monthly income payments, it's very normal. And I'm not worried about other money in my portfolio because of these NEOS funds.

[B]

Yeah, I would say the pop ups exactly what Austin alluded to are just to warn you that you are investing in a more sophisticated product. For instance, Neos just launched a brand new fund that we love. You've been hearing me talk about gold for years. And now Neos has their same really awesome strategies in a gold ETF. Its ticker is IAUI, so make sure you check it out at neosfunds.com get a little plug in there for them. But yes, we love the Neos funds. We've been doing very well with them for the past couple years and just really love what they do with these funds and how they provide additional income in sectors we're already investing in. So that's why you hear us talk about these Neos funds all the time like spyi, qqqi. It's not in place of owning like VOO or qqq. It's addition to, to get you that additional income. That is why we love these funds. I would not worry about it. There's nothing wrong with investing in these funds. They have performed very well in the past couple years and I believe they will continue to do so. But great question. We're always here to help you guys. Whether it's something good, bad, or you're just not sure what to do. We're always here for you.

[A]

Yeah, I think the big thing to call out and shout out to iaui, which is their new gold tax efficient high monthly income ETF, it's the exact same thing as the S&P 500, 500 with spyi or the NASDAQ with QQQI. Instead of holding and tracking the specific index like the S and P or nasdaq, they're doing that now with gold. So you can, you know, track the total return of gold while turning some of that into a tax efficient monthly income payment straight to your brokerage account. Which is really exciting. But I really want to emphasize what Robert said before. These NEOS funds are a compliment, not a substitution. I very well have have a lot of money in the index funds and ETFs we talk about including the S, P and the NASDAQ and things like that. But I also have spyi, I also have qqqi, I have btci. I have these specific NEOS funds in my portfolio to complement the existing positions in these index funds because to Robert's point, they pay me awesome monthly income. I love the monthly income. I'm getting like 1500 bucks a month now because of these funds. So really cool stuff. Major shout out to NEOs and IAUI as well. Really really excited to cover that one more deeply inside the Rich Habits network this week. So our next question comes from Carson. Oh, Carson says I love your show and I appreciate you answering questions I've had in the past. I've implemented your suggestions and it's been very helpful. My question today revolves around a couple key secular growth trends that I'm learning about. I'm very bullish on these and I want to understand what ETFs and stocks you all recommend I learn more about with secular growth trends. They're nuclear energy, AI and robotics. Looking forward to learning more about your thoughts. Robert, you want to kick this one off?

[B]

Yeah, I think you're in the right place, Carson. We have been very bullish on these secular growth trends as well. And some of our favorites continue to be Nvidia Palantir ura, which is a great uranium ETF that is really important for the nuclear reactors. We believe that one is a really good play long term. But then also Constellation Energy Group CEG is one of my favorites as well. And then also oklo, oklo, those are some of the call outs. But I think it's more important to understand why we believe AI has a long way to go. Many, many more years of growth in the AI sector. And I just want to make sure everyone understands this. Austin and I speak on this a lot, that people are so hurry to jump in, make money and jump out of a secular trend and it's just really not a smart play. When you look at AI, it is still early in AI, even though we've been talking about it for years now. And that's why I want to make sure everyone slows down and really lets their winners win because too many people get in, make money and get out because they're looking for the next shiny ball. And it doesn't always have to be that way. We still love AI, robotics and nuclear and think for years to come it will be great sectors to be in. And those are just some of the call outs that we like right now. Now.

[A]

So I want to explain two concepts here, with the first one being piggybacking. Now, on what you just said about AI and the many more years to come, I would imagine and Robert, maybe you can speak toward this because you actually lived through it. I certainly was a baby. But back in 1999, 2000, the dot com bubble, I would imagine back then a lot of people were like, oh, this Internet fad, it's here. Could be here for a couple years. Let's all make some money. But it's not going to be here forever. Like what's, what's the next big thing? What an absolute crazy concept to think that the Internet was going to be a fad. Everything now, every single thing is now built online on the Internet, in the clouds, right? Everything. And that's not changing, that's not changing anytime soon. And so just imagine if you were on the right side of history for the last 25 years. You had the Amazons, you had the Microsofts, you had the Apples, you had the, you had the Googles of the world in your portfolio for the last 25 years. Imagine how much money you would have made because you were right about the Internet. And not just write about the Internet for a two year period, but write about the Internet for 25 years. Right? Artificial intelligence is the exact same thing. It's only been about two years now that we've been really leveraging and using this new technology for business use cases. But this is going to be here for not just another two years, but another 20 years, another 30 years, right? And so over the next 25 years, right? Just like the Internet's been around for about 25 years or so since the dot com bubble, AI will be here for 25 years plus I want to be on the right side of that trade. I want to have the artificial intelligence big winners in my own portfolio, like Nvidia, like Broadcom, like Taiwan, semi like amd. So you know, the hardware as well as a lot of the software, like the Palantirs, Cloudflare, the cybersecurity names, things of that nature. When Robert and I talk about big things like AI and different things that we're investing into, it's very important. And Robert says when in doubt, zoom out. It's not just when in doubt, just like all the time zoom out all the time. Think about over the last 10, 15, 20, 25, 40 years, American capitalism has continued to propel us forward as a country and as a equities market. And it's very important to keep that perspective when it comes to a new technology. It's not just a couple years, it's a couple decades. And the question is, are you patient enough enough to ride the wave for a couple decades to make generational wealth for you and your family? I am, I very much am. Nvidia is going to get to a point where they're making hundreds of billions, if not over a trillion dollars a year in revenue. There's a point where Nvidia in 5, 10, 15, 20, 25 years is going to be the company that is powering all of AI around the whole world, if they're not already doing it today. So I guess like wrap up this thought about how important it is to be on the right side of a secular growth Trend. It's not just about a 2, 3, 4, 5 year period. It's about 10, 15, 20, 25 years and just staying invested during that time. And the other thing I want to call out too, Robert, and we talk about this all the time, but I didn't know people weren't familiar with it until we got questions about it during a live stream inside the Rich Habits Network, which is the picks and shovels investing strategy. So back during the California gold rush when everyone was leaving their hometowns and they were traveling across the country to hopefully find golden nuggets over in California back in the 1800s, right, the people that struck real gold were not the ones that were looking and spending all day trying to pan for gold, find their nugget and make it big. It was not the miners that made all the money. It was the salespeople that were selling the miners, the picks and the shovels and the dream of going to go make these big bets and make all this money with gold. And so whenever you think about the picks in shovels investing strategies, it's not about perhaps the Googles and the Microsofts and the open AIs that make a lot of money, which they do, but instead it's the Nvidias that are selling them the infrastructure and the ability to go figure out how to make money with AI. And so by investing into the people who are building the infrastructure and allowing other companies to take advantage of this new technology like Broadcom, like Nvidia, like nuclear energy and other things that are going to power this entire new technological revolution that is the, the picks and shovels investing strategy. Because everyone wants Nvidia's GPUs, everyone wants Nvidia's chips now to go do their own thing with AI. And having that understanding when it comes to any investing strategy is really, really important. Where's the demand going to come from? And are you the person selling the picks and the shovels or are you taking your picks and shovels to go and try and maybe find gold somewhere else?

[B]

That is an incredible breakdown. And everyone listening needs to understand how important the last four minutes of what Austin said for your future and your portfolio. Because we see it every day. I talk to hundreds and hundreds of people a month and they think investing is this action sports movie with a lot of emotion. And you're getting in a stock, you're getting out of a stock, you're taking profits, you're selling a stock. It's not that. The longer you can look at these secular growth trends and the more Consistent you can be and stay in and be able to be a long term investor, the better off you're going to be. Think back now now of how many people probably bought Apple stock and Meta stock and Google stock and Amazon stock early on. It went up a hundred percent over the first two, three years. They sold it and they never got back in. Imagine those people if they took profits along the way but kept those stocks. We're in that right now. Should you take profits on Nvidia? Absolutely. Should you take profits on Palantir year? Absolutely. Oklo? Absolutely. But should you stay in those positions as well and continue to dollar cost average over time? Absolutely. So I think the last four or five minute conversation is probably one of the most important we've ever had to get people to understand long term investing. Do not get in and out with the shiny ball syndrome and these secular growth trends and understand you're not supposed to always jump in and jump out out but to build from it. So I love your takeaway on this, Austin. I think it's incredibly important for everyone listening to follow that strategy.

[A]

So our next question comes from Rudy H. Inside of the Rich Habits podcast. Instagram dms. Rudy says, what are your thoughts about options trading and doing quick trades? I know they're very high risk, but I also know they're very high reward. Should I learn how to do options trading to start making a lot of money? Robert, what do we think about this?

[B]

I think it's a terrible idea. I would say 25 years ago I used to day trade and swing trade. But you have to understand one very important thing. Like anything else, if you're going to do a strategy of this nature, you need to be all in. That means you need to study, you need to become an expert. You need a long sample size of testing to know if you're any good at it. But at the end of the day, if it's something you're passionate about, go for it. But if you're a passive investor who wants to build wealth but go about your life life and do other things. Have your side hustles, have your main career, have your family, whatever it is you enjoy, I would rather see you focus on becoming a long term investor rather than trying to get the quick hits and make the quick money through options trading. Can it be profitable? Yes. I have friends that do it every day. They work a few hours on it and they make really good money. But they've also spent 10, 15 years really plying their trade and becoming experts. That's my take I don't think it's a good idea to be an options trader. I don't do it. Austin doesn't do it that often. It's just not necessary to build wealth.

[A]

Let me kind of break down what options trading is. So all options trading is, is you are betting the stock price is either going to go up or go down before a specific date. That's all you're doing. You're making a bet that you believe Nvidia stock is going to go be $150 a share on or before 6-21-28. Right. Just quick example. And if it's above that, you make a lot of money. But if it's below it, you lose everything. It's literally an all or nothing trade. And so that is very much why we say it is gambling. I could go buy Nvidia stock, just straight up buy some shares of Nvidia stock, but if it's below 150, it doesn't matter. I still have all these shares of Nvidia stock that are worth something. And so it's just very important to understand what you're getting yourself into to the other side of the equation. You're probably listening and saying, what are you, what are you guys talking about? You just had Chris Camillo on the show a couple episodes ago. He's all about options trading. So he's built his $60 million portfolio is by making these big bets. Yes. Chris Camillo for the last 15 years has made some very risky high risk, high reward bets with some of his money and he's broken out big with it. I would argue he's an anomaly. I cannot do what he does. Robert can't do what he does. And I'd argue 99.9% of people can't do what he does. So if you are someone who you know is, is online and someone's like, hey, let me teach you to how to make a million dollars. Options trading. I would argue that person is trying to maybe sell you something or scam you or do something. So just be careful. But if you genuinely are like super curious and you're like, yeah, like I want to start taking 50 bucks or 100 bucks a month and practice options trading with some of these, you know, smaller names or whatever. And it's something that you genuinely want to try and figure out how to do. Go for it, learn. But just don't do it with long term retirement money. Do it with money that you've already have that maybe you cut back on your going out money for every Single month for the next three months. You've got $300 and you want to now go try and use that to make more or whatever and experiment with options trading. Do not use long term investment money to go gamble with options. Not a good strategy.

[B]

Yeah, I agree. It's one of those things. If you want to take a small portion your high risk bucket and learn options trading, go for it. But like I said, become an expert because it's not something you're going to be able to spend hour here, an hour there and become really good at it. You're better off just investing in the companies, doing it for the long term and you will make money over time rather than blowing up your account multiple times because that's what people end up doing when they're not serious and they're not experts in the field.

[A]

87% of day traders lose money in the first year. Yeah, that includes options.

[B]

Yeah.

[A]

So if you are someone who's going to try and do this, just know you are a statistic. If you are someone who's going to go do this, just know that statistic. Right. There's a 9 in 10 chance that you're going to lose money on this. So just be careful. Don't use money you need for rent or investing or things like that to try and gamble in the stock market. Not a good idea. So our next question comes from Sadie N. Sadie says, hey Robert and Austin, I'm a teacher and contribute to my teacher retirement. A 457B and I max out my Roth IRA. I'm also an ISR swim instructor and I have an LLC on the side. My question is, should I open a solo 401k and stop funding my 457b and instead use that money to fund my solo 401k? My 457b options are very limited and I like the idea of having more options not just with the investments, but also with Roth and traditional and other things that I can do with this solo 401k. Thank you all for everything you do. I love listening to your podcast on my commute to work. Very cool to hear that, Sadie. We very much appreciate you listening to the show. Robert, you want to kick this one off?

[B]

Sure. I love it. We have a saying here, Sadie, and you're spot on. Here's what I would do up to the match with the 457B. So you want to get that free money, go up to the match. Everything else is going to go into the Roth ira till that is maxed out. And then we want to also look at any leftover money that you want to use. You want to make sure to turbocharge your investments by having something where you get an account on Carrie.com and it is the easiest way that we know of to open that solo 401k. I think it's a great idea. I have one, Austin has one. And anytime you can get that solo 401k supercharged I think is a great way to accelerate your wealth towards retirement. But I think you're right on track. But just don't put the additional money over top the match in the 457B because generally you are going to have limited options and it is going to underperform. That's why we want everything else in the Solo 401K and the Roth component as well.

[A]

Yeah, I totally agree. Right. So up to the match on the 457B, max out the Roth IRA, ensure the Roth IRA is invested properly into the index funds and ETFs we talk about and then go to Carrie.com and open up a Roth Solo 401K. You can do a normal one if you want, but I think Roth is always the better variant if you're able to choose it. Which means now all the money, all the growth that happens in inside this solo 401k for the next 10, 15, 20, 25 years, whenever you retire is going to grow tax free. That's what I do. I have what's called a mega backdoor Roth Solo 401k which means I'm able to invest up to like 60 something thousand dollars a year toward it. It's got over a hundred something thousand dollars in this account. It is awesome. And it's all going to be tax free when I am 59 and a half years old and ready to tap into it. So Carrie.com is the name of that. Not sponsored. We just love what they do over there. And the Solo 401K is a great way for you to begin to turbocharge your ret. I guess just the only thing I would encourage you to do is not forget about the bridge account. So the goal here again is to like of course make sure we have a lot of money in retirement in our 60s and 70s. But if we are on track to have a lot of money in retirement already, let's say you've got hundreds of thousands of dollars now invested at maybe your 30s or you know, have well over a million invested in your 40s, maybe it's time to dial back the retirement account specific investing and start investing more specifically toward a bridge account on public.com so just make sure you got the bridge account somewhere in your strategy along the way. Our next question comes from Justin P. Justin says, I'm trying to determine if I should pay off my rental property, which is a duplex, as fast as possible, or if I should put all of that money into the market instead. My interest rate is 5% and I'll be keeping the rental property once it's paid off to earn rental income as extra cash flow. Really good question, Justin. Robert and I are always saying a phrase that is make sure your money is worth working as hard for you as you work to earn it. And when we say that phrase, we mean make sure that your money is earning as much possible money for you. Because we all work really hard to take money home every single paycheck. And when we say that, we really encourage people to apply that as a Don't let it just sit in a checking account. If it's going to be sitting in a savings account. Make sure it's a high yield savings account. Don't pay off low interest debt with your mortgage money. If you can go invest it somewhere else to make more money with your money than just saving on that 3, 4, 5% interest rate. So that's, you know, generally speaking what we mean when we say that phrase. I would argue that phrase right now, Justin, would apply to you. You have a 5% interest rate on a duplex and assuming the duplex is already cash flowing and it's already appreciating and doing all the normal fun stuff that rental real estate's supposed to do over a long period of time, taking money essentially out of the markets, which is what you're doing in this situation, to then pay off a dup plex to save 5% interest maybe isn't the best move. I would argue that you could earn 7, 10, 12% in the markets on an annualized basis over a long period of time, which is 5, 7% more than what you would save in simple interest on this mortgage. So my perspective is compounding in the markets, likely over a long period of time is going to be a better move than taking all of this money to pay off a duplex. But you really just have to run the numbers, make sure it's cash flowing, make sure it's appreciating all that fun stuff.

[B]

Agree with Austin 100%, Justin. With a 5% interest rate on your mortgage, I wouldn't pay a single penny extra in payments here's a quick illustration. The S&P 500 you hear us talk about Voo all the time has returned over 90% in the last five years. Years QQQ over 90% in the last 5 years. Bitcoin over 900% over the last 5 years. So we always talk about this making your money work as hard for you as you work to get it. But it also comes down to having the positive arbitrage be in your favor. And right now, if you're paying a 5% interest on your mortgage and you can make 10, 20% in the markets and sometimes higher with the bitcoins of the world, why would you not want all that extra money going in your pocket versus pay down what is presumably a pretty low interest rate mortgage? That's my opinion. I always want my money working as hard as possible, never letting it sit. And you're in a great situation with this 5% interest. I would not pay extra payments.

[A]

I really think the best way to think about this, Robert, is let's say it's a $300,000 account and the $300,000 is invested correctly across the index funds and ETFs we talk about. It's got some diversification, it's got some, you know, high growth names in there. It's also got some cryptocurrency and whatever else you have in your $300,000 account. I would argue that $300,000 account year to date would be up 6, 7, 8, 9% right now. Maybe it continues to go up even more beyond that, would you sell all stocks in that $300,000 account to take 300,000 in cash to pay off this mortgage at 5%, to lock in a guaranteed 5% per year for the, you know, rest of the time you own the mortgage? That's the question you're asking yourself. And the reason why, again, I don't think I would do it is because compound interest is much more important than simple interest. So on a mortgage of $300,000, a 5% interest rate is about $15,000 a year in interest. Well, let's now go forward one year. Let's say you know of your mortgage payments, it brought down your principal that you owe now to 295,000. You now owe 5% interest on 295,000, which is 14,007 50. So the amount of money of interest that you earned owe is going to go down every single year until you pay off this specific property. The flip side is happening when it's invested. Right? So let's say I earn 10% in the markets on this 300,000. That is $30,000. Now you're going to earn 10% on the 330,000 invested and then another 10% on the $363,000 invested. Right. So your money grows exponentially while your interest just goes down, down like a solid, you know, line. So it's just understanding compounding versus simple is like just it's such a life hack. It's crazy.

[B]

It is one of the biggest life hacks and I just love getting to dig into these questions and really answer and help people understand because so many people are trained to pay off debt as quick as possible and it's just not good advice with low interest debt, which I believe 5% is in that range of low interest debt. Especially because for the past three years, years the markets have been ripping with much higher returns. And that's why I just like to, you know, when in doubt, zoom out and look at it long term. So before we get into our next question, listen up folks. Time could be running out to lock in a 6% or higher yield at public.com you can lock in a 6% or higher yield with a bond account, but remember, your yield isn't locked in until the time of purchase, so make sure you act fast. Lock in a 6% or higher yield with a diversified portfolio portfolio of high yield and investment grade corporate bonds only at public.com forward/rich habits.

[A]

So our next question comes from Melissa on Instagram. Melissa says. Hi, my name is Melissa and I'm a 37 year old single mom who currently lives with her parents. I'm trying to save money for a down payment on a house. I have $7,000 saved so far and I've done this within the last five months. I have a pension, a 457B that I contribute 6% of each paycheck check to and get a 4% match on. I have $25,000 in debt via a personal loan and I just started looking into investing into Bitcoin and I also bought a small position in Boeing. I make $70,000 a year. Please tell me the reality of being able to purchase a home by the end of this year. I don't receive child support. What should I do? Anything helps me right now. Okay Melissa, first and foremost you got this. Take a deep breath. You are going to be just, just fine. 67 year old Melissa is going to be sitting on a beach drinking a margarita with a big beautiful retirement account and awesome children. Like you're going to be just Fine. So I know things might be tough right now, but I'm telling you, if you make a couple small changes and stay consistent, you are going to be great. So a couple things that I want to just call out here first. One $70,000 a year is an awesome income. That's amazing. It seems like you're a teacher or something of that nature because you said you have a 457B and you're contributing 6% of your paycheck check and 4% is matched. That's amazing. We're going to continue to do that. Let's make sure that we continue to invest into these retirement accounts and to log into the retirement account, review your investments and make sure you are invested into whatever the aggressive allocation is. This is likely going to be mostly equities, S&P 500, large cap, mid cap, whatever. But make sure it's invested and it's not sitting in bonds, it's not sitting in cash, it's not sitting in these different low performing funds. We want to make sure our money is working hard for us because that the only way we're going to retire. Right Melissa? So we've got that figured out. We're going to continue to do that. You talked about how you have $7,000 saved right now and you want to go buy a home. I would argue that you should probably flip a switch as it relates to your goals. I love that you have this goal that you want to buy a home. I think everyone should own a home one day and you're definitely working toward that and you've done a great job. $7,000 in five months is huge. How however, buying a house right now has never been more expensive. Renting is statistically cheaper right now than owning a home. And if you are really dead set on having some sort of place to yourself, I would argue having a apartment or maybe renting someone's home is probably a better bet in the short term than going and putting down $800,000, whatever 10, 15, 20% is on a home to go. Then have another mortgage payment of 2,500 bucks a month. Like that's not feasible in our situation right here. So just switch your goals away from right now just for a season of your life to I can't afford a home at the moment, not because I'm not making enough money or because I'm not good with money, but because homes are so expensive right now. So switch away from that to let's go figure out an apartment situation, a rental home situation of something like that. Because it is the smarter move right now. And the last thing I want to call out is this $25,000 of personal loan debt. I'm assuming that's from maybe some credit cards, some medical bills, things of that nature that have maybe carried over. Our goal is to get that paid off quick. I'm assuming the interest rate is 12, 14, 15% here on this personal loan debt because that's kind of what they're at right now and that is very much considered high interest debt. I'd love for you, Melissa, to maybe have this $7,000 of savings sitting in a high yield savings account. Let's pause that for a second. That's a good little emergency fund for now. And then start focusing all extra money that have instead of using it to beef up this savings account, let's get rid of this $25,000 of high interest debt. Because at 15%, that's over $300 a month that you're paying just in interest, right? That is eating you alive. So let's make sure we get rid of this personal loan debt. Let's make sure now that we're out of that debt, let's call it a year from now. Because you could do that in a year, maybe 18 months tops at this pace, for sure. And now you're out of that debt. Now we're going to beef up the 7,000 perhaps to 20,000, 15, 20,000. Have a good emergency, maybe save another 5 or 6,000 for a deposit on some sort of apartment or you know, rental home or thing of that nature. And then you now start saying, okay, I'm going to go build my base, I've got my emergency fund, I'm out of high interest debt, I'm ready to start investing aggressively. That's when you start doing some stock stuff and crypto stuff and things like that. I wouldn't worry about the crypto in the stock right now. It's not in the season. You are, it's not the chapter of your life. You need to focus elsewhere. But you're going to be just fine. 40 year old Melissa is going to to be caking, she's going to be just fine. You're doing everything right. Just want to make a couple little tweaks here along the way.

[B]

That's a great takeaway. And I'm going to add a couple more things. The 457B, I would just go up to the match because right now you're doing the 6% when they're only matching 4%. I would take that additional 2% and put it elsewhere. Like Austin said, you have to get this high interest personal loan debt taken care of and then go back to the beginning of something we talk about every, every day. You have to build your base. We would love to see that base be a hundred thousand dollars saved and invested. But let's say you're really, really bent and your mind is just stuck on buying a property so you can own a home. I would say get to 50,000 at the very minimum that is going to be invested for the future and not used towards this home. And then look at buying a duplex, triplex or a quadplex. Use the Fannie Mae 5% down mortgage when you get to that point. Point. But I agree with Austin 100%. You have to get everything else in order first because you're not there yet. I feel like right now having this high interest debt with the personal loan only having the 7k saved up so far, you're going to put yourself in harm's way if you try to go buy a property right now because your base isn't built, you're not ready and you're still paying on another personal loan. And remember, home purchases cost more and just take up way more money than you think. Because most people when they're budgeting for a home, they think down payment, HOA and closing costs, they forget about lawn care, pool care, air conditioners go out, dishwashers go out, what's the roof going to cost? All of these things that come into home ownership. So I wouldn't rush it. I would get everything dialed in and then come back to home ownership in two, three years from now. Like Austin said, when you're ready to go.

[A]

You also mentioned that you don't receive child care, child support. I would learn more about that one, try and figure out how to start doing that. If you have a child and the father is still alive and he's working and doing all those things like normal people do, but he's not in the child's life and isn't paying child support. That's super not fair. I don't not like that. Go figure that one out. That is that very well could turn into another thousand or two thousand dollars a month to add to this equation. So I'm sorry that you're going through that but Melissa, want to give you some hope here. There's so much to look to, forward forward to. You've got a plan now and you just have to execute on this plan for the next three years and your life will be completely different. So Our last question comes from Lucas C. Lucas says, I'm 24, I have a solid investing background and I've been a fan of the show for a while. Thank you so much for all you do. Recently, my parents, who are both in their mid-50s, have expressed concerns about their 401k performance. They've got $165,000 saved and they're contributing 600 per month, aiming to retire in about 15 years. Right now, nearly all of their money is in a 2040 target date fund, which hasn't performed well at all. Since they have limited investment knowledge, I've offered to help them shift their portfolio into better options with more growth, ideally ETFs that track the S&P 500 or total market indices. While I'm personally comfortable taking on these types of risks, I want to find the right balance for them, maximizing returns without exposing them to unnecessary risk, especially given today's market conditions. Any advice that you all might have on building a better allocation for them would be greatly appreciated. Thanks in advance. Robert, you want to kick this one off?

[B]

I do and I really appreciate it that Lucas, you're looking out for your parents because I see so many portfolios every week of people that are just in a Target Date fund. They don't know what it's invested in, they don't know if they have other options and they just don't pay attention to what's in their 401k and what's happening. So I'm really glad early enough you caught this to be able to say I all right, we're going to draw a line in the sand and we're going to do something about it. Because at the end of the day, my problem with target date funds are they underperform simply The S&P 500 and the NASDAQ, but also the fees are high and it doesn't take into consideration anything that's happening in the market. Because the goal of a Target Date fund is to preserve your cash, not grow it. And that is why they generally underperform the open markets. So I love where you're heads at and you're absolutely right. You need to see are there other options to get their money working as hard for them as they work to get it. And of course there will be. Maybe you find a situation where they stop putting this extra money in the 401k. They put in just the minimum to get the free money and everything else goes into the funds we talk about. They could have a bridge account that would help them and in that bridge account, take this additional money, the $600 a month that's over and above, and put that into the Voos, the QQQs, maybe the Vugs of the world, VTI. Some of these funds are really, really good funds and perform well. And then maybe they could have a small portion into some bond accounts. BNDI might be great for them, a NEOS fund that we like. But then also you could put a small portion maybe into Bitcoin and get some of the nice growth that's there. Because at the end of the day, they have another 10 investing horizon before retirement. And we want to make sure we can capitalize on as much growth as possible. Because I think the number one biggest mistake people have made for the past 30 or 40 years is thinking that a 401k is a retirement strategy. It is not. It is better than nothing because you're getting the free money from the match. But generally there are limited options and they underperform. So it really makes me happy, Lucas, that you're keeping it eye on it, helping them out and getting them the guidance they need to get better returns with better products.

[A]

I couldn't have said it better myself. My perspective is continue this $600 a month. And then to also remember though, like you mentioned, 15 years, right? 15 years is a long time for whatever tariff tantrum or 2022 bear market or you know, whatever volatility we're seeing in the markets. Right? Volatility. And normally lasts 13 to 15 months. That's the average length of a bear market before we're back to trending in the right direction again. And so just know that like that's a year to a year and a half. So by having a mentality of like, oh, I'm gonna go risk off 15 years before I retire so I can maybe try and preserve my capital. Like that to me is just like a little too much, right? So here's the statistic. There's an 85% chance that you can buy the S&P 500 on any given day, day, wait five years while reinvesting those dividends like we always tell you to do, that you will be in the green at the end of that five year period of time. You can literally just like throw a dart at a dartboard pick any day in history and that will be an 87% chance. And so why I share that statistic is if you're someone right now who's worried about where the S and P is going to be at in 15 years, statistically speaking, we're going to be much higher in the markets in 15 years and we're we are today. So there's no reason, in my humble opinion, that someone should go completely risk off with these target date funds and this capital preservation at such a long period of time away from their retirement age. I think to Robert's point, right, we always talk about this portfolio strategy of 65 to 85% of the portfolio invested into these index funds and ETFs we talk about and then the other 15 to 35% of the portfolio diversified across if it's some single stocks, some neos funds, some gold, some bonds, whatever you want to do from that, that perspective. So that's really where we're our heads are at. Let's really call it a 3070 split between some diversification and these index funds and ETFs that we talk about. I think that's an awesome strategy. I think that's a great weighting. And by taking this episode's answer and showing it to your parents, hopefully Robert and myself will be able to explain to them why a 2040 target date fund might be a little too risk off for their appetite at the moment.

[B]

And for everyone else listening that doesn't have an awesome son like Lucas. Make sure you Understand in your 401k or, or any brokerage accounts where you're getting help, make sure you understand the fee structure, what are you actually invested in and what are the returns year over year. Because so many people just turn a blind eye to their funds and say, hey, I'm putting all this money in, I'm going to be great. Because they see a little bit of growth from time to time, but they don't truly understand it. And that's why it's so important to dig in, have the hard conversations, understand what you're doing with your money because you want to make sure you're optimizing growth over time for the long term. I hope this helps some of you because it's so important to understand what your money's doing, where it's going, and is it the best solution for you everyone.

[A]

Thank you so much for joining us on this week's episode of the Rich Habits Podcast. Question and Answer Edition. A few reminders. We have a ton of free resources for you if you're curious on taking your wealth building journey to the next next level. The first one is of course this podcast. We come out with new episodes every Monday and Thursday. The second one is the Rich Habits Newsletter. We've got like 60 something thousand people who are subscribed to it now. New newsletter editions come out every single Thursday morning. There's gonna be a link in the show notes below or just type in Rich Habits newsletter on Google and it'll be the first link. And then finally, don't forget about the Rich Habits Network. This is a community for our biggest fans to interact with us every single week. We host two hour weekly live streams. We've got eight hours of coursework and we're always in the DMs. Getting back to your questions, so be sure to sign up for a seven day free trial. No strings attached, no questions asked. If you leave, it's all good on the Rich Habits Network using the link in the show notes below.

[B]

Thank you all for joining us every week and giving us all those five star reviews. It helps us grow, it doesn't cost you a dime, and we appreciate each and every one of you that supports the Rich Habits Network and the Rich Habits Podcast.

[A]

Thanks everyone and have a great rest of your week.