Rich Habits Podcast Summary Episode: Q&A: Vacation Rental Co-Ownership, Selling a Biz for $3.5M, & Retirement Contributions
Release Date: May 8, 2025
Hosts: Robert Croak and Austin Hankwitz

The Rich Habits Podcast, hosted by Robert Croak—a decamillionaire with over 30 years of business experience—and Austin Hankwitz, a budding entrepreneur in his 20s, delivers actionable financial literacy advice to help listeners take control of their finances. In the May 8, 2025 episode, the hosts engage in a comprehensive Q&A session, addressing diverse financial inquiries ranging from vacation rental co-ownership to strategic investment post-business sale.

1. Vacation Rental Co-Ownership with Picasso

Listener: Greg D.
Question: Greg inquires about Picasso's limited-time investment offer for vacation home co-ownership at $2.80 per share, claiming leadership in a low-penetration market.

Discussion: Robert cautions listeners to thoroughly understand the investment's intricacies, highlighting concerns about high risks and low liquidity. He states, “[04:24] I think it's a little high risk and a little low liquidity for me of how I like to invest in real estate.”

Austin complements this by emphasizing opportunity costs associated with investing in private companies versus publicly traded stocks. He advises, “[05:55] ...you need to be taking seriously that $2.80 per share and saying, should I instead put this in Berkshire Hathaway?... because you have complete liquidity on all publicly traded companies.”

Conclusion: While fractional shares in real estate platforms like Picasso offer accessibility, potential investors should weigh the risks, fees, and liquidity constraints against traditional investment avenues.

2. Paying Extra on Mortgage vs. Investing for Retirement

Listener: Mike
Question: Mike, a 58-year-old earning $101,000 annually with a $158,000 home mortgage at a 3% interest rate, asks whether to continue paying extra towards his mortgage or invest the surplus funds.

Discussion: Robert advocates for investing extra funds rather than accelerating mortgage payments, citing the favorable low interest rate. He explains, “[10:44] ...if you look at the S&P 500 on average, year over year, decade over decade, it makes about 10% a year. So if you're paying 3% on your house and you can make 10% with your money, that's why all the extra money should go into something like the S&P 500, because then all of those extra earnings are yours and not someone else's.”

Austin reinforces this by projecting potential investment growth, stating, “[12:39] ...if you deposit it into a public.com online brokerage and it is invested in the S&P 500... you'll have about a quarter million dollars extra sitting in this brokerage account for you.”

Conclusion: Given the current low mortgage interest rate, allocating extra funds towards investments, particularly in diversified index funds, can potentially yield higher returns, accelerating financial growth more effectively than early mortgage repayment.

3. Selling a Business for $3.5M and Achieving Financial Independence

Listener: Chuck M.
Question: Chuck is in the process of selling his business for $3.5 million and seeks advice on investing the proceeds to achieve financial independence, aiming for $5.3 million in investments. He also contemplates whether to pay off a $600,000 personal loan with a 5.5% interest rate.

Discussion: Robert emphasizes the importance of prudent investment and debt management. He advises, “[16:12] ...set yourself up for how can I grow this three and a half million dollars... I would put it somewhere very safe. It could be in a traditional brokerage account... that you're never going to touch it again money until it's time to retire in that five to seven years.”

Austin adds the significance of strategic debt repayment and consistent investing, suggesting, “[19:28] ...use a financial advisor... you could actually use a financial advisor for this... set yourself up for five or six, seven years... pay off this $600,000 debt... aggressively down this 600k debt.”

Conclusion: Chuck should invest the majority of the proceeds in low-risk, diversified portfolios while strategically paying down high-interest debt. Engaging a financial advisor can provide personalized strategies to balance growth and debt management effectively.

4. Retirement Contributions Amid Employment Transition

Listener: Heather M.
Question: Heather's husband recently accepted a job that delays 401(k) contributions for a year. They seek alternatives to compensate for the lost contributions and inquire about various investment platforms.

Discussion: Robert underscores the importance of continuing to invest even without immediate 401(k) access. He advises, “[27:38] ...invest and put that same amount of money you'd be putting in the 401k into that public.com account because then you're keeping the train moving.”

Austin discusses alternative investment platforms like Double Finance and Freck, highlighting their benefits for automated and strategic investing. He mentions, “[35:20] ...you could put it into a brokerage account and invest that money similar to how you would have automatically with a 401k.”

Conclusion: Despite the temporary pause in 401(k) contributions, Heather and her husband should maintain their investment momentum through alternative brokerage accounts and automated investment plans to ensure continued growth and financial security.

5. Paying Off a Car Loan vs. Investing for a Young Investor

Listener: William L., Age 21
Question: William, with a $5,000 CD nearing maturity and an $8,500 car loan at ~5% interest, asks whether to pay off the car loan or continue investing while maintaining his car payments.

Discussion: Robert advises maintaining investments over paying off low-interest debt, emphasizing the asset's depreciating nature versus the appreciating investments. He states, “[29:23] ...the car is going down in value every single month... investments are going to go up every month, over time.”

Austin echoes the sentiment, stressing the power of compound interest and the importance of investment continuity, “[30:19] ...keep the money invested for as long as you possibly can... your investments are going to keep growing.”

Conclusion: For young investors like William, continuing to invest while servicing low-interest debt can leverage compound growth over time, offering greater long-term financial benefits compared to early debt repayment.

6. Switching from Traditional to Roth 401(k)

Listener: Katie
Question: Katie contemplates switching her 10% traditional 401(k) contributions to a Roth 401(k), considering her employer’s 5% contribution.

Discussion: Robert highlights the advantages of incorporating a Roth component into investment strategies, stating, “[37:41] ...any Roth component you can have in your investment strategies is going to give you the blueprint to financial freedom down the road.”

Austin emphasizes maximizing investment contributions, recommending, “[38:22] ...make sure that you are investing 15, 20, 25%... very important... taking advantage of the Roth variant for these retirement accounts.”

Conclusion: Transitioning to a Roth 401(k) can be beneficial for individuals seeking tax-free growth and withdrawals in retirement. Katie should consider maintaining her traditional 401(k) while also contributing to a Roth variant to diversify her tax exposure and optimize long-term retirement benefits.

Key Takeaways and Insights

• Opportunity Cost: Prioritizing investments that yield higher returns over low-interest debt repayment can accelerate wealth accumulation.

• Diversification and Risk Management: Investing in diversified portfolios such as index funds (e.g., S&P 500) offers balanced growth potential with managed risks.

• Consistent Investing: Maintaining investment contributions, even during employment transitions or while holding debts, ensures sustained financial growth and capitalizes on compound interest.

• Strategic Debt Management: Balancing debt repayment with investment can optimize financial health, especially when managing high-interest obligations.

• Tax-Advantaged Accounts: Leveraging Roth accounts offers tax-free growth and withdrawals, providing flexibility and security in retirement planning.

• Professional Guidance: Engaging financial advisors can provide personalized strategies, ensuring informed decision-making aligned with individual financial goals.

Notable Quotes

• Robert Croak:
  “[10:44] if you look at the S&P 500 on average, year over year, decade over decade, it makes about 10% a year. So if you're paying 3% on your house and you can make 10% with your money, that's why all the extra money should go into something like the S&P 500, because then all of those extra earnings are yours and not someone else's.”

• Austin Hankwitz:
  “[12:39] at 58 years old, assuming that you take this $2,000 left over every single month and you deposit it into a public.com online brokerage and it is invested in the S&P 500... you'll have about a quarter million dollars extra sitting in this brokerage account for you.”

• Robert Croak:
  “[16:12] I would put it somewhere very safe. It could be in a traditional brokerage account that you already have... you're never going to touch it again money until it's time to retire in that five to seven years.”

• Austin Hankwitz:
  “[35:20] ...if you have the money to max out the Roth IRA and still invest toward a bridge account, you have my permission.”

This episode of the Rich Habits Podcast delivers valuable insights into optimizing investments, managing debts, and leveraging retirement accounts to build long-term wealth. Robert Croak and Austin Hankwitz provide pragmatic advice tailored to varied financial scenarios, empowering listeners to make informed decisions on their financial journeys.