Q&A: Buying Bitcoin at $100K, When to Close a Business, & HSA vs. Roth IRA
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Everyone and welcome back to the rich have its podcast question and answer addition robbert. We are almost there. Twenty twenty five is right around the corner. I'm so excited to sit down and build some new year's resolutions upon all the cool stuff that happened in twenty and twenty four and rebaLanced mi portfolio.

So this is everyone's annual reminder to sit down and rebaLance portfolio, understand what performed well in twenty twenty four, what didn't perform well in two and twenty four, kind of make that rebaLance, maybe cut some of those lords out of your portfolio or maybe add some new single stocks or etf to your portfolio. And Robert, just remind everyone to on november eighteen th of twenty twenty four, we published episode ninety one, how to conduct a portfolio performance review where we talk about all the fun stuff. As IT relates to looking at these numbers and figuring out am I performing with the markets and I not performing well as IT relates to the markets and everything else that off and a ruber talk about.

So give that episode, sten, if you've not listen just yet and just give you guys a quick breakdown, right? I like to look at my persons portfolio every three months. This allows me to have a real active management, but i'm a little bit on the nerdy side. So maybe every six months or twelve months is a good time for you. All you have to do is sit down, listen til the episode and fall .

the instructions we share. And i'll be honest, I do a lot of this type of work when no one's around. So I do IT on flights. I do IT late at night.

I just do IT when I have good alone time, so I can really focus and not have all the distractions, so I can really dig in and understand what is best for me in my future. So before we jump into the episode, I just want to give you guys a quick heads up. Interest strates are falling, but you can still walk in a six that are higher yield with a bond account at public dot com. That's a pretty big deal because when rates drop, so can the interest you earn on your investment.

A bond account from public document allows you to lock in a six percent or higher yield with versified portfolio of high yield and investment de corporate bonds. So while other people are watching their returns shrink and their high yield savings accounts, you can sit back with regular interest payments from a bond account on public alcove.

But you might want to act fast because your yield is not like until you actually invest. The good news IT only takes a couple minutes to sign up a public dot com lock in a six percent or higher yield with a bond account, only a public dot com forward slash rich habits.

This is brought to by public investing member feature and S I P. C. This is as of december second, twenty twenty four.

The average analysis to wash across the bond account is greater than at six percent. You the diverse is not guarantee, this is not investment recommendation or investing involves rist. Please visit public dock m flash disclosures flash bond dash account for more information. Yes, bond accounts super, super important in public is the best way to get access to these investment grade corporate bonds to allow you to smooth out the volatility that we might see in twenty twenty five in our portfolios. Now our first question, I think, is an awesome.

When Robert IT comes from marie, from inside the rich habits network, and he says, is anyone still dollar cost averaging in the cypher currency at these Prices? I asked this question recently during the live stream that Robert Norman host, and I thought their answers were really interesting. So I wanted to ask you again to see if anything has changed.

Now that xr. p. Is close to three dollars. Now that big coin is close to one hundred thousand dollars, i'm just trying to understand, do we still buy at these Prices?

If you had a thousand dollars a month to invest in the crypto o currency, how would you invested today? Would you be buying something as blue ship in the large as bitcoin? Or maybe roll the dice on something a little bit more speculative.

And at what Prices would you stop buying? Robert, I think is a really interesting question by me. How do you take the first step at IT?

yes. The answer is yes. You should always be dollar costs to averaging. And for me, I don't really care what the data day Prices are in an asset that i'm invested in or investing in for the long term.

I know that shocking to hear that coming from me, but that is the whole reason dollar cost averaging is so important and so critical for long term investing. So many people, and trust me, I get dms, at least fifty of them a month, that say, hey, I just came into a thousand dollars, five thousand, one hundred thousand and million dollars. Should I sit on the sidelines and wait for the drawdown, wait for a pull back before I start investing this lump sum of money? And the answer is always no.

No one can time the market. Can you look at the news cycles and maybe you know right before the election that that makes sense to hold off for a week to see who won? That's a different story. But in most instances, dollar cost averaging is your best strategy. So in this instance and in this question, the answer is yes, I would be dollar cost averaging that thousand dollars a month and just have a well baLance portfolio because at the end of the day, no one can time the market. And IT is Better to always have your money working rather than trying to sit on the sidelines figuring out when there's gonna a dept.

all of them a rubber t muri. To answer question very simply, I think dollar cost averaging at these Prices make sense, but I would make sure that you have a number in mind that you say i'm not buying at that number. I'm selling at that number and i'm going to take those profits, pay my aces and reinvest them into the S P. Five hundred, maybe amazon or google or other big wonderful trillion dollar companies that are onna be here. If you ten, 10， twenty, twenty five years where we don't know what the next new coin is going to do in the next six months.

I think that's a great takeaway because it's two sides of the fence. In the way I look at IT is this as long as you understand what your investment thesis and you have a profit taking strategy, then you never fall victim to the person that wrote IT up and wrote IT back down and never took profits along the way. And that is something that is so important.

I know we've been talking about profit taking strategies a lot lately, but it's because we're in this bull run with crypto to currency. And I want to make sure, just like Austin, that all of you know what you're doing with all of this new found on realize gains and know how to extract them over time the right way. Because one of the biggest things that hurts people as well in investing like these times is when they get in, they get super excited, they doubled their money, they get out and IT keeps going because you don't want to be in a position.

And I really want to make sure we want understands this. Never look in the review mirror if you can avoid IT. Because if you make money and you beat the benchMarks and you're crushing IT with your bitcoin or your theory, your X R P, and you're taking those profits along the way, you are beating ninety five percent of the people out there that aren't listening, that aren't putting in the work, aren't following the rich habits podcast. So it's so important that you really do understand these strategies that we talk about.

Yeah I mean, Robert, when you were talking about X R P just a month ago was about forty five, fifty cents. Now it's two dollars and seventy five cents. So that's a five x return in a month.

I mean, I people listening took profits or are taking profits are saying, okay, well, okay, all on my thousand dollars now were seven thousand, six thousand dollars. I want to take three thousand off the top and redemption IT into my roth ira or like you maybe beef up my emergency phone summer whenever that might look like for you as an investor. But knowing that it's okay to take profits, the only way people got rich is if they took the profits that in get redy.

So the phrase goes robbert, pigs get fat, hogs get slaughtered. We all want to be fat pigs. I hope that happens to me. But i'd never want to get you slaughtered as a hog because i'm getting too greedy.

Yeah and if you look back off in even to the last ball run for you, I remember you telling a story about a year and a half ago about chaining where you were up just a tn, but you didn't take any money off the top back then. And then I went back down in, languished for years. Now the good thing is we still both believe in chain link. You have a much bigger bag than me, but you had some opportunity costs lost there because you didn't take profits back in the day. So this is why we want to make sure everyone understands our profit taking strategies and why they're important time.

And I will never make that mistake again with any investment. And IT takes every investor that three years of just hating yourself for not making that trade until you realize i'll never due again. We're going to make mistakes as investors. Robert and i've made a mistake in the book. We just hope that us sharing the mistakes can help you all not make I just comes, you listen to, or really .

illustrates why we are so incredibly qualified in sharing our stories in our experience and our learnings to be able to help other people learn from our mistakes and not make them themselves.

So next question comes from deal. Bill says, hey guys, i've been listening to the podcast for six months now and I love you, show you make things easy to understand, and you give me the confidence to take action. I clearly owned two properties, the one I live in, which has a mortgage with a very low interest rate and a rental property that I have four hundred thousand dollars of equity in.

And I has a high interest rate. I have about sixty five percent of my net worth in property, and I want to baLance this out a little bit more though, by selling rental, investing that four hundred thousand dollars equity into the etf crypt of currencies, precious medals and artwork that you guys talk about. My question is, how do I dollar cost average the four hundred thousand dollars into these different asset classes? Do I split into the equal amounts and invested all over a twel month period? Do I dump at all in straight a way to maximize to my time in the market, or maybe something in between?

Perspective on this. I love this question, especially because that leads us right into what we just talked about. And the answer is yes. I unless there was something like we just discussed, like the election coming up or something like that, I think the next twelve months are gonna be life changing for so many people that are taking notes and taking action.

So I like your idea of putting thirty three thousand dollars a month into these various investments and dollar cost averaging along the way, because you can always change the thesis, middle the road, if you say, oh, wow, there's this big event happening that I believe is gonna cause X, Y, Z action. Then you can always put in more or put in less. But the number one thing is, with dollar cost averaging, as you take out the situation of buying at the top, because no one knows where the top is or no one knows the bottom of the retraction.

So here's how I would do IT. If I were going to break IT down over a year, I would put the first thirty three in, but I would have the rest in a high yield cash account on public dot com, making that four and a half five percent. And then each month, you're taking from that and putting IT in to these other investments that way, you're double dipping in. You're making money along the way and not just having that money sit on the sidelines, but you're still dollar cost averaging, which then will benefit you over the long term.

That is exactly what I would do and maybe even open a bond account on public to get that six and a half one half percent yellow as well. And maybe that could be part of nine point folio. Maybe a months were throughout this thirty three thousand dollars, and you put IT into a bound account on public to make seven percent.

You can invest this in the crypto currency. You can certainly invest this into some single stocks. If you want that with the blue chips, highly, highly recommend them investing IT into these big index funds in E, T, fs. That we know and love, like V O O, V, G, T, V, T, I, Q, Q, Q, D, G, R, O, I, A, I.

V, U, G, M.

E, U, G. I mean, there's so many awesome etfs that you can buy and put in your portfolio. And all these etf are one position very well to continue to outperform the but more importantly, to have out performed the markets over the last five, ten years.

Look at V U G. For example, robbert V U G Price over the last ten years is up two hundred and ninety one percent. You can pd up to the hundred and eighty five.

He said that V O O has experienced in a total return and IT is just staggering. So we highly recommend this dollar cost average approach. And don't forget to give our friends master works a call, say, hey guys, I want to invest ten thousand and the artwork is my best strategy.

You go check out rise, go at ten thousand over there. And don't forget about the precious metals, right? Robert talks about silver and gold all the time.

GLD in S, L, V are two etf that track both of those precious metals Prices. So adding some of that into your broker account is a great idea. At the end of the day, I love how you say. You said sixty five percent of my portfolios in property, and I want to baLance this out.

That's all Robert now are trying to do, is make sure everyone as a baLanced portfolio that one can weather a good storm, but more importantly, to perform well when the markets are ripping like they have been for the last called at two years. Now the markets are up sixty five seventy percent since the beginning of twenty twenty three. And Robert I both agree that twenty twenty five is likely going to be another good year. B, so we're really excited. We're rooting for years and we can't wait .

to see what you do. And I love this row in a really illustrates something that i've been talking about a lot with private clients. And then also in the rich habits network is getting people to understand the mindset shift from being like a gambler investor to a true long term investor. Because right now you see all this euphoria in the markets. In your man, i'm going to pull all of my money out of my four o one care of my bridge account, put IT all into these high flying cryptology like everyone wanted to do last year.

And I get asked all the time if you believe in a AI so much, because I talk about the video and paleo and all this, but then also cypher, why are you not fully invested just in those few things? And the reason is, and you guys here, me talk about IT, it's not being bragging is I can't go broke because I don't break my own rules. I stay highly diversified because I would rather have some stuff over here making ten or fifteen percent in, some stuff over here making one hundred, two hundred percent, because I know over time, IT baLances me out and keeps me diversified.

So I never get in a bad position where I end up losing money in a bull market. So, so important. I'm lad. We ve got to touch on IT. So thanks for the question darrow.

So next question comes from gennet are from inside the rich habits network. Gennet says, hey guys, my employer tesler gave me a bonus two thousand dollars. He said I can neither vested in their stock and have two thousand dollars more of tesla stock, or I can have IT as cash.

If I take you out as cash, I will use all two thousand dollars and put IT in my roth I array, allowing me to max IT out for twenty twenty four. So what do you think? Do I take the tesla stock in my broker account? Or do I take the cash and max out my roth Robert take.

oh, man. Normally I would say max, the rough array, but I think tesla is. So many people have been hating on tesla for a year and a half, and I think it's going to be one of my biggest winners over the next three years.

So in this instance, I think you can't beat against iran. You can't beat against humanoid robotics and the taxi division and everything that's happening. So I would say take the stock, keep IT invested, do your thing and worry about the rough later in this instance because I just love tesla moving forward and I think it's a great stock to have.

I they agree, I think tesler is about to have this sort of ChatGPT moment as IT relates to human od robotics in the next twelve, twenty four months. Their optimists robots are very, very smart. They're already being used on the tesla assembly lines.

I mean, these are autonomists robots that are free labor essentially for the company. Think about what that's gonna to their margins, their profits, their cash low, everything in between and then how much money theyll start making when they are able to lease those other companies. So I totally agree.

I think it's hard though because like we are the biggest cheerleaders for the rough I we are we want people, we want everyone to max out the rough every single year. But I would argue that tesla is just one of those examples where it's like i'd rather have the tesla stock than have that two thousand dollars of V O O. Comes back to this idea of why do we own single stocks to begin with robbert.

And that's because we believe the single stocks is going to outperform the benchmark index that IT is within, right? So tesla is the sort of benchmark to the S M. P.

Five hundred, is a large profitable company, is a trillion dollars. So is the S. M. P. Five hundred gonna go up another twenty years, thirty percent next year? IT very well could.

But I absolutely we believe that tesla is gna go up twenty, thirty, forty, fifty percent next year, just considering everything that's been going in their way after the election. Now there's somebody be excited about for the company and not just for next year. I can think about twenty, twenty six, twenty twenty seven.

I mean, everything was very exciting. So I think having two thousand dollars of text stock s so next question comes from w inside the rehabs and network, Joshua says at the end of the year, i'm preparing to wrap up my first attempt at starting a small business. I started on a win just to jump in and get my hands dirty instead of sitting around waiting for a good idea to come my way.

But after being a project for six months now, i've realized that there is no market for what i'm trying to sell. And I actually hate working on what I do. It's an online candle business.

I'm a software engineer, and I would much rather just work on tech than design another candle during that time, come up with several other ideas i'm just much more excited about jumping into. So i've decided to close down the small candle business. And in this case, the choice seems obvious to me.

But in the future, with something i'm more passionate about, but might not be successful even after a long period of time, how do I know when to move on? I've heard tons of successful business, this also talking about how many times they had to fail before they finally had their big business success, and tons more talk about how they should have never given up on the idea in the first place. So i'm really confused, where do you draw the line? I would love to hear some criterial from those here that had a failed business and how they decided that IT .

was time to move on. Robert, do want you are you are, you know, in a great place you're understanding the failure in front of you with the candle business. Although I don't feel you should just simply close IT down, I would at least try to sell IT on flipper or bizz by cells somewhere because someone might be willing to buy IT because you do have some I P.

I'm assuming you have a name, a logo or website. The social media handles all of that. So there is some value that maybe you could recapture some of your investment from in IT.

But to ask the question, when do you know that line in the sand of when to close the business down, to move on? There is no line. I've been at this for thirty five years. There is no line. You know you just don't know you could be one client, one meeting or one sale away from a totally different future for your business, but you're never gona know what that is.

And you have to always in this is a mistake I made earlier in my career, understand the opportunity cost of your time in your investment when it's time to let go of that business because so many people will just growing the business and grind the business for years and years. Never really getting ahead, whether if they took their business elsewhere and their skills elsewhere, they could do much Better. So just understand that it's a very, very difficult kind of decision to make of when to close IT down.

So exhaust every option. And in your situation, I feel like you've done that because you just don't want to do IT anymore. That's why I would sell IT, forget about IT and move on.

I've probably had fifty or sixty failed businesses over the last thirty years, but i've also generated hundreds of millions of dollars with the ones that have worked. So it's always good to get those at bats in because too many people get married to an investment or married to a business idea or a business in general. That's a bad idea because you don't want to write IT down, down, down.

You'd Better off to have a job. So I hope that helps you, Joshua, and everyone else listening. And if you ever have a question relative to this, always DMi in the rich habits network.

I'll the robber in a couple additional things I want to mention, even highlight to that you already mentioned was like one, if you're not happy with this, like packed up, I think that people start side hustles.

They start these small businesses because it's a passion of theirs, right? It's really fun for some people to make websites or make you know leather goods or candles or whatever else side hustle they have, right? So IT IT makes them happy.

It's a way that they can monitise their spare time. And I think that is like a very number one. Like does your business till make you happy? Yes, no.

If no, then do something else that doesn't you happy, right? You said tech makes you happy, go be happy and tech like that's wonderful. So that's the first thing.

The second thing I want to go to, if your business is not making money is not a business, it's a hobby. And I think a lot of people forget about that and they don't want to swallow that pill. And it's hard to realize that i've had failed businesses.

I had A T shirt business that I made, you know, ten, twenty thousand dollars with what I was in high school and then in college, and then I reinvested all that inventory. And then I SAT on IT because I was like, I just not good. That's right.

So it's like people make business mistakes all the time. I'm not saying that, that's thing to ignore because that happens. And and it's not because the business idea was a bad idea, but because the person running the business that know what they were doing that happens all the time.

But that allows the person running the business, I didn't know what they were doing to figure out now what to do instead the next time. And that's what all that bats are about, rubber emain, fifty, sixty days at bats. I'd guarantee you learn something unique at every single one of that you were unable to apply to the next business.

So when when is the time to close a business? It's when you don't enjoy IT at all anymore too, when it's not making any money. And three, if there is an opportunity for you, then to them, say very clearly, I spent six hours this week on the business. I didn't make any money if I took that same six hours and flips burgers at mcDonald at fifteen dollars an hour, I could x amount of dollars, right? When the opportunity costigan to build up on the business, that's when you know .

it's time to call IT quits. And I want to add one more thing to this you highlighted that is fantastic. And that is understand this when you're early on in your career, even in the middle, and you're trying to get ahead and make money and build your network and become financially free, you don't have to be passionate about the business.

You don't have to be passionate about the cytosine. You just have to understand what is the best use of my time to extract the most amount of profits. So many people, I think, early on in their career say I want to own a candle business because I love candles, and I think it's going to be fantastic.

Or like your joke, Austin, about underwater basket waving that we talk about all the time being kind of a funny animal. You don't have to be passionate, but you do have to make advancements, learn and make profit because otherwise it's a hobbies. I wanted to touch on that.

Yeah, if you hate the business and do not making money, got time to go. Now if you hate the business and you're just taken like, suck IT up you that's right. Keep making the money.

Suck IT up, buttercup. yes.

But if you're not making any money and you hate IT like go find something else I told, agree is there are instance, Robert, where you close down one of these sixty businesses, like what was the the line in the sand for you in a recent example that you can remember where it's like, know, we did this, we tried this. What was an example.

a lot of times when its small businesses in their brick and mortar IT can be out of your control, if a neighborhood, you know, over a five or ten year period, all of a sun becomes undesirable. Let's say you have your barber shop there, you have your nail salon there, and everyone's go into the one across the bridge. That's what happened to me on some of my brick mortar businesses.

I had a thriving t shirt shop for twenty years. IT made me really good money every single year, and then I started not making me money. And IT went down, down, down, right around two thousand, fifteen, sixteen, seventeen.

And I decided to close IT after all those years, because IT was just one of those things, actually sold IT off. And then IT closed because I just wasn't worth the amount time I was putting into IT any longer. But yes, a lot of times these businesses can fail and IT might not be your fault, especially break in mortal.

But a lot of times they fail as well online because people think, well, I have a website, I have a product and I have a cool idea, and that's enough. And IT is not, at the end of the day, its effort, marketing are more important than almost everything else. So i've had many instances.

I had a restaurant that was doing so well for like two years in the road close for eighteen months. So our sales went down seventy cent because none of the people could get to us for those eighteen months. And then by the time the road reopened, IT was too late.

We had depleted our sales down so low and we never recovered to the pro closure and we just couldn't make money. So I sold that restaurant. So it's not always the owner Operators fault. A lot of times, IT is sometimes it's just out of your control. And so it's just important to understand when to cut your losses.

Appreciate that our next question comes from travis z. Travis says I often you're Austin, talk about if you can predict the cash flow, you can predict the stock Price when determining if you should invest in the stock. But how do you all evaluate some of these newer companies that are still with negative cashflow? I assume you look at quarter of a quarter growth, a year over a year growth.

But like how do you even think about that? Really good question, travis. So when ever I say follow the cash flow, i'm really talking about if you can predict what the free cash flow of a company's gonna be over the next twelve to eighteen months, you can likely predict where the stock Price is headed as well.

Free cash love, very simply put, is defined as the net cash deposited or taken out of a company's bank account during a period of time. So if a company has a free cash flow of two billion dollars, that means during the last twelve months, two billion dollars of cash was deposited to their big account is very simple. Or if it's a negative two billion, that means over the last twelve months, two billion of cash left their bank account.

At the end of the day, as investors, businesses exist for one reason, and one reason only a mates to provide cash to their shareholders, I believe, cashes king profits cash after tax cash. The more cash a company has, the more valuable IT is to investors because it's making cash. And so if you can predict what that looks like, then you can predict with the stock Prices go, what if it's a negative cash flow and the company is not yet profitable.

There's two ways to think about this. If this is the case, you can look at free cash flow or you can look at Operating cash flow. The both pretty important. And if they're both negative, it's very important to say OK.

One is revenue still growing by at least thirty to forty percent because the only reason the'd be negative is if they were a unprofitable software company, if their revenues growing by that thirty forty percent range, then chances are they're na grow toward that free cash flow profitability in the next color, twelve to eighteen months. If it's not growing that fast, maybe it's not for you. But then another thing to keep an eye to is the company's adjusted ebata.

Adjusted ebata is another fancy word for like pretax profits essentially, but those pretax profits air the same as cash flow. Of course, h is more important, but adjusted eva is a lot more Elleney ans. So if they adjust in evita is positive.

But the cash los negative, that's a good sign that the company's moving in the right direction toward free cash low profitability. A free cash low. I'm telling you guys, if you can predict where it's going, it's going to allow you to make a tone of money in the future.

And i'm only gonna d one thing, you crushed IT travail s great question. When IT comes to evaluating newer companies. Another thing, you can look at this tam total addressable market, and this can really help you understand where is this company going because they might be unprofitable now, but how biggest market moving forward. So keep that in mind as well because that's just another metric you can integrate into your research to be able to help you figure out what's good and what's bad moving forward.

And I think another call out here, two is really simple to kind of conceptualized. Like, does this company have a larger competitor that's a bit more mature than they are? And has that competitor reached free cash, ful of profitability, power out networks and crowd strike or two great examples of this, right? So palo alto networks are very free cash positive.

It's a profitable company. They've been around for twenty five years. Crowd strike is a little bit less mature.

It's been around for like ten or twelve years and they they recently hit free cash, hollow profitability, right? So this is ten of different ways that you can look at. You know, has a company done this that similar in the past?

How do we benchmark these performances over time? They were into the native greedy rubber. And that's how get to a nerd like me.

IT also comes back to a really illustrates what you are talking about, is that you adapt or you die. So many people see a meta or an amazon spending billions of dollars to hunkered down and really build out their future, and they think it's a mistake. So they sell the stock and that might be OK for the short term.

But you don't want to have a situation where your blackberry or your codec and you refuse to adapt so you die. And that just something everyone needs understand as part of their analysis of these forward thinking moments when you're investing is understanding what is the you're onna look like four of this sector. And for a company that you are considering investing in.

i'm right there with you. It's super important now. I need you to listen up.

Time could be running out to lock in a six percent or higher yield at public 点 com。 You can lock in a six percent or higher yield with a bond account at publi C2Com. But remember, your yield does not locked in until you actually purchase IT.

So you might want to act fast because we don't know where bond Prices are head and lock in a six percent or higher yield with a diversified portfolio of high yield and investment grade corporate bonds only at public dot com forward slash rich habits. At public outcome forward slash rich habits. So our next question comes from annual b.

Daniel says he in a Robert, in a recent episode of your podcast titled how to unlock a bitcoins, twenty seven percent annual divided yield, you answered a question about investing in an H A and compared IT to a rough year. And I just follow up on your answer. I'm wondering if you could elaborate on why you recommend maxing out the ratha before maxing out the H.

R. A. I received advice previously that the hr a is the priority, given that IT is the most powerful saving vehicle that exists in terms of tax advantages.

Understand that you pay taxes if IT spent on non health expenses after a retirement, but I figure it's safe to assume that everyone's gonna extensive health expenses in retirement. So IT doesn't seem be much risk of over funding the ha. But i'm wondering if I missing something in making an unwise decision to take a step farther.

I've also been told not to use the ha for health expenses right now in order to to maximize taking advantage of that tax free growth. Is that wrong to be paying for help expenses out of pocket right now, even though there's lots of money in my H A really good question. To answer the second party question.

First, you're doing the right thing. You wanna allow your H S A to row in size throughout your life. Do not take money out of IT, but keep all the receipts, keep spending out of pocket, save all those receipts.

May be you have eighty thousand dollars of receipts over the next forty years, and then maybe in twenty thirty years you can say, great, i've got this eighty thousand dollars of receipts improve of medical expenses. I can now take eighty thousand dollars of tax free out of the account and put IT in in my checking account to reivers myself for that spending. You absolutely can do that.

That is what you should do. And i've seen a lot of people follow that playbook to a in degree, and they do a really good job of IT. So thugs up for me there.

Now, as IT relates to over funding the h can you fine? H right. I'm sure some people have over funded the hr. A, I don't know if you will overfunded the ha, but what I do think people make the mistake of is underfunding the rather area. People make the mistake all the time of not maxing out the rather.

And I would argue it's much more important to have this mistake waiting for you at sixty five years old of tax free retirement income than having an only health expense focused accounts that yeah you can spend IT after sixty five, we have to pay taxes on. There's a lot of like new to IT, but I think people make the mistake again, robbed of like under funding the rough I array, not putting enough money into IT throughout their lives. And if you're someone who can do both like, yet do both like, that's what I do, right? Rah, I A H A have a good time.

But if you're someone who can only afford one, I highly recommend the roth ira instead of the ha, because you need to have money in retirement, you need to have something when you're sixty five to say, great, I now have this tax free way that I can supplement my life now yeah sure. When you're sixty five, you can have the same sort of you know opportunity to you with the say, but it's not tax free. And so if you're funding IT with four thousand dollars a year and maybe let's say it's a million or a million five when you're sixty five and you want to take out three hundred thousand to go buy something or go somewhere spend or whatever you to pay taxes on that not going to be the same with the rough thi ray.

So again, do both. It's a wonderful idea always max out. The rough theory is going allowed to have that financial security in retirement, your sixties and seventies.

And the H. R. Say, again, it's snaking a provide .

that yeah I agree and I think you killed and i'll just add a little bit to this and that is I think the reason I prefer the routh over the ha is when you look at the h sa, you just really I think are leaving too much money on the table. But you also have to let's backtrack this for a second.

You have to look at what is your life look like if you're healthy and you're making money and you can afford good food and you have all the right medicine and supplements that you need, you're likely gonna need an h sa a lot less than somebody that is not living a healthy lifestyle. So in that instance, I think you're leaving too much money on the table over time by not maxing out the roth, if it's an either or and or. But I agree with Austin that I should be both because I look at IT that the H R C can be a great vehicle.

But I think the raw iwa overall is Better long term. And the way to look at the H. R A, in my opinion, is if already have medical issues and you're in your thirties are, then maybe the H R, A is the way to go, because it's going to help you right now. So for me, I just prefer the rough. Although they might both perform the same, there are limitations to the use of the funds in the ha that if you don't have those health issues that I talked about could hurt you over time by not being able to optimize those fans.

And I told me here, Daniel, saying, right, he is like, I assume that I ve once gona have, you know, health expenses, major health expenses and retirement and you're probably right, you are going to be right, right? We're all going to have health expenses in retirement and right there with you.

I just think that I can't imagine spending a million, some dollars on health expenses from sixty five to eighty or whenever I die, right, fifteen year period. But I absolutely could imagine enjoying a million dollars that in I A nest, a mind on travel, on this, on that, whatever want to do lifestyle supplementation, whatever, in attacks, free manner. So again, do both if you can afford IT, if you can only afford one.

I still entered the rough. Maybe there's a way you can do both there, but don't ever forget to max out that rather there every year. Our last question comes from Allen.

r. Allen says, hey, guys, i've been fallowing the podcast for a while and I love IT. Can you explain how investing margin works? What are the fees? What are the brokers that offer IT? Are there any tax implications? Exit up. Thanks so much. robbert.

You will take this one. I don't know enough about the fees to really speak on the fees. I just don't use margin. And I don't think anyone should because you're basically gambling that you're gonna be right in all of these sites want you to do that.

And you have to understand if you're wrong on a trade that you're in margin and they do a margin call against that trade because you're upside down, it's gonna reach your account and possibly take you below zero. So for me, I don't personally use margin unless I find something in the middle of the night and or I don't have immediate funds available that next morning to make a when the markets opening. Otherwise, I just don't use margin. So i'm definitely not an expert at IT.

Yeah, I don't use margin either, but took kind of break IT down for you. So what are the fees the fees you're paying on margin is the interest because this is dead. The broker just saying, oh, cool, we got a couple hundred thousand here. If you wanted an extra fifty thousand dollars of cash, we could loan to you at a nine percent interest or a seven percent interest rate that we would be happy to do that you just pay us back the interest, you know, every single month, but you keep the total fifty thousand.

So for example, I guess at the seven percent hypothetical interest ate and if you borrow ed fifty thousand dollars, you would have to pay back two hundred and twenty hours a month to them to keep this fifty thousand in your account to be trading, weather or investing with or whatever. Which means if you invest fifty thousand dollars in the tesla s stock and IT went up by twenty percent a week, well, you more than offset that two hundred and ninety dollar, you know, payment back to the broker that lends you the money. And then you can sell IT all payback all the money, whatever. congrats.

Just made some money here. Holy crap is out. Rescue, though, goes down, right? What a tesler doesn't go up. What if all these things happen? Because we know markets are crazy sometimes. And now they are saying, hey, wo you took our fifty thousand and you bought tesla stock with IT that fifty thousand we lend you?

Now, according to our records here, say it's only worth forty two thousand and we need you to cough up eight thousand dollars in the next twenty four hours or we're going to liquidate this whole thing and sue you for the eight thousand dollars, right? That's how that IT works as well. So please, please be careful with margin.

Do not use margin. I do not use margin if you do use margin. I've heard of people using IT for a way to. Date high interest that elsewhere, right, go out and take a margin loan against another two hundred thousand dollars of their stocks. They say they want to borrow twenty thousand dollars at a seven percent interest rate.

They withdraw to their checking account, use IT to pay off their high interest that credit cards thirty percent, allowing them to now just out twenty thousand back to the broker at the seven percent interest rate, which who knows how that get paid back or whatever. But i've heard that, that makes sense to me. It's it's like a deck consolidation one.

I but at the end of the day, it's not a good idea to use margin. We highly recommend not using margin. Just take your after tax dollars that you work hard to earn, invest IT and then grow IT inside that routh, your bridge country or whatever else and become wealthy that way.

Yeah, I look at IT to wrap this up. I look at margin. If you're buying securities on margin, it's kind of like if you are using a credit card to buy crypto to currency, some people say one to get a credit card, not in a max on my credit card to buy ycl ypo to currency.

You know, in your pain, thirty percent interest on that credit card. Could you make a profit in that transaction? absolutely.

Is that the right way to invest? Absolutely not. So that's the way I look at IT. And I know margin is a lot less expensive to use than a credit card and everyone thinks you're going to beat the market and beat the interest rate, but just be careful out there because of that. And I just don't agree using margin to build your portfolio.

Everyone thinks so much for turning into this week's episode of the rich up its podcast. Don't forget to check out the rich have its newsletter. This is our weekly newsletters that Robert q right?

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But man, Robert, how could IT be rust to head one hundred thousand subscribers? Twenty twenty five. That be amazing.

I think we're gona get there. People are winning. People are loving the podcast. Everyone that reaches out to me is just so grateful and thankful for all the information we put out on a weekly in a daily basis in the rich habits network.

And so for me, I think it's gonna so cool to pass that milestone. And I think we're going to see IT sooner than later just because people want to win and people are really waking up to the opportunities that are right in front of them. This podcast costs zero dollars.

And if you just watch them digitally, the amount of information you can gain and save and put into that notebook we talk about is just incredible to help you and your family for the future. So i'm super excited for twenty, twenty five and everything we're doing and what we're building. And just watching the rich habits network grow has been just an incredible journey for both of us. It's gonna a great year.

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