108: How We're Approaching Volatility in 2025

26:29And that's what I think we get excited about, to be able to support the needs of investors and new innovations along the way and having the White House be supportive to emerging asset classes. Sure, allows us to help bring more product to market. Now, before we ask Garrett our final question, let's take a moment to hear from this episode's sponsor, Roy. Roy is the best way to track and grow your net worth all in one place. If you are tired of apps that miss different accounts or disconnect from your different platforms and brokers, Roy will not do that. They track everything. Stocks, cash, crypto, bonds, and even company equity in real time.

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27:48Get ROI.app or search ROI in the app store. Again, their app is pronounced ROI, but it is spelled ROI, like return on investment. So go check out ROI. It's a great way to track your net worth and your finances in general. All right, let's now jump back to our interview with Garrett. So I love that. And let's unpack it a little bit further. You guys are always coming out with new products to meet every investor's needs. And that's what we love about what you guys do. So why don't you give us a quick rapid fire on any of the new products that you're excited about and just a brief explanation of what they are.

28:25Sure. So recently we launched our real estate high-income ETF, IYRI. So it gives you exposure to diversified US real estate across all spectrums. but is looking to generate roughly 10 % to 12 % in yield. So if you're thinking about being allocated to REITs, then that's at 3-ish percent. In the current market environment, this is going to give you that 10 % to 12%. Thinking about QQQH, we love it. That's not a new product, but obviously a new brand of the ticker. Excited about that because of just where the market conditions have really been at the moment. And the increase of volatility lets people sleep more at night and a lot of conversations from investors around that product.

29:04We did add a 20-plus-year Treasury bond fund with enhanced income. And so folks that are looking to take longer duration in their portfolios within the fixed income space would still want a government allocation. TLTI is that fund, which has been really interesting as we start to see, is the Fed going to continue to, although slowly, still cut rates over a longer period of time and kind of lock in those multi-generational rates that we haven't seen in a while. And then I did briefly mention we got the S &P 500 hedged equity income products coming out to market, looking at some more things within the commodity space and Bitcoin.

29:40So hopefully those will be a little bit more to talk about as times come. Well, I do want to double click, though, on this IYRI fund because I made a TikTok video recently explaining to people a couple different places they can park their money during times of volatility, if it's a commodity or if it's gold, like whatever. But one of those things that I had talked about was the Vanguard Real Estate Index Fund ETF VNQ. And VNQ is up 7 % year to date compared to the NASDAQ being down 3 % and the S &P being down 1%. So let's call it a 10 % swing in real estate versus like technology stocks. So like you guys just introduced IYRI, which I'm assuming is very similar to VNQ.

30:23What are you seeing in the real estate markets right now that are positive? Why are we seeing such a positive return so far in the last just two and a half months of 2025 in real estate? Yes, certainly an ease of secondary interest rates. So thinking that the Fed hasn't cut another Fed funds rate, but just looking at what the 10-year has done just in the last even week or two weeks here, is that a significant reduction on secondary interest rates, mortgage rates, those types of things. And obviously, because of real estate, that easing of the debt lending and the leverage that real estate traditionally has on it is definitely a function of price appreciation for real estate investments that are very heavily debt overlaid with mortgages and different structures.

31:13So I think this comes back to the portfolio construction again that we've been speaking about is like another way to make sure you're diversified across your portfolio and not taking all your bets within tech, you know, and AI, if you're concerned about what that volatility could be. And so IYRI is allowing you to really get exposure to that US real estate market. But think about dampening the volatility even more and generating that kind of consistent monthly distributions that it's able to produce above and beyond just that income oriented allocation that you normally get just by owning, you know, US real estate or REITs, in the public market.

31:47I appreciate that breakdown, Garrett. I'm looking at it right now. Mortgage rates are down to 6.19%, which is the lowest they've been since October of last year. So to your point, as the 10-year continues to tick lower, mortgage rates will likely go down as well, which increases valuations for real estate. And I know when you guys launched IYRI, we talked about it on the show as something to look into, and you guys are outperforming both the S &P and the NASDAQ with this fund. So definitely something that I will keep on my watch list and add to over time. So I appreciate that breakdown. And just for a reminder for everyone too, because I know a lot of people may have been, you know, just started investing in October, November, December, January of this year for the very first time.

32:31And they're like, whoa, wait a second. Why are my stocks down? You know, why is my portfolio in the red? What's going on? Volatility is the price we pay to invest. That's how I want you guys to think about it. You will not be able to get the, I mean, for the last two years, 20-25 % returns without also weathering the storm of a contraction, call it 5-10-15 % in the markets. I think it's the statistic, Robert, from Goldman Sachs that says 68 % of all bull market years dating back to the inception of the S &P 500 contained at least one 10 % or more contraction. Now, we're talking about contractions.

33:12We're not talking about recessions or a great financial crisis. We're just talking about the ebbs and flows of the market. And I really hope this episode can kind of oo-saw a lot of people into realizing that, you know, the market is a pendulum. It swings way to the upside and way to the downside, but over time, it continues to tick higher. And I want to encourage everyone to just take a deep breath. We're trying to give you as many ideas here as we possibly can to have some hedges in your portfolio or have a little bit of income to perhaps offset the price of volatility that you're experiencing, because like everyone else, we're navigating these markets in real time as well with the experience that Robert and I and Garrett, of course, have, which in this case is decades.

33:56Yeah. So Austin, I think that's a great point, right? And what we've talked about a lot in this episode is something you guys started with, dollar cost average, right? You see those 5 % to 10 % corrections, look at that back to history and probably looking at that Goldman Sachs example, great buying opportunity. So focus on continuing the dollar cost average, try to make sure that you're thinking about the risks that you build in that portfolio construction or your long-term plans and stick with those, you know, and make sure that whatever you are investing in, you're willing to weather a down five, a down 10%, because those are healthy, right?

34:27Those are healthy ways to make sure that the market can continue to trend higher and companies can continue to grow their earnings that carries everything. If you just had a straight up market, it would defy all laws of financial balance sheet statements. And so naturally, at some points, you got to have some type of fluctuation. But think about those things as advantages, because I don't think anyone has ever been upset buying a dip in the market when they look back at their portfolio after at least 12 months, if not, you know, certainly any longer period than that. Yeah. So for me, the biggest takeaways from today are portfolio construction, patience, stick to the plan, and diversity.

35:06I think those are the key takeaways everyone should be thinking about as they exit this broadcast and really take notes on because it's really all about just understanding what is happening in the markets. How do you navigate the murky waters when there's a lot of volatility and come out the other side, even a bigger winner. So I love it. I think this was a great episode. Very, very fun to have you on Garrett, as always, very enlightening. And we appreciate you spending the time with us. Yeah. Thanks guys for having me. Just honored to be here and appreciate the opportunity. Thanks so much, Garrett.

35:40Robert, we've been talking about volatility now since, what was it, the 13th of January. It was one of our major themes for the year. I think it's going to continue. Earnings growth is decelerating a little bit from Wall Street's perspective. It's called the Great Unwind, as I'm seeing in some headlines. There's a lot of fear and anxiety and movement in people's portfolios that they weren't expecting. We love to share ideas with you, and we love to bring you all the best of the best, but sometimes those aren't always good news. And volatility is something that has not been good news, but we're happy to have called it per se.

36:16And we're trying to give you guys the best possible ways to offset some of that volatility if it's with income or if it's different ETFs or asset classes or whatever you can do. Because at the end of the day, the most important thing is to stay invested and continue to grow your wealth over a long period of time and to think about years and decades, not days and weeks. That is right. Create the plan, execute the plan, stick with the plan, all of the above, because people just want to have so much emotion and have these knee-jerk reactions. And we're not going to allow it here at the Rich Habits Podcast because we're here to help you make money no matter what the market conditions are.

36:56And that is what I love to do every single day for each and every one of you. So now, Robert, let's jump into the Q &A section of this episode. So our first question, or just maybe a comment in general here, comes from Teresa via Instagram DMs. Teresa says, I still hold fast that cryptocurrency is fake money. I can't pay my rent with cryptocurrency, I can't buy my groceries or feed my kids with crypto, and I can't pay my electric bill with crypto either. I've listened to your podcast from day one, and I really wish you guys would stop hyping up cryptocurrency. until we can use it to actually live please just stop talking about it and teresa's reply here was actually to our instagram story which was a screenshot of donald trump talking about their strategic crypto reserve or something like that on truth social and so we had thought it was a good idea to share it with you all robert let me take a first stab at this because i know you've got your own thoughts on all this stuff and i might be coming from a much more conservative perspective when it comes to investing in cryptocurrencies very far out there for a lot of people and including myself.

37:59So Teresa and everyone else, let me just like state two things. The first thing is I love the idea of being diversified as well as being invested into asset classes that are not correlated to the stock market. I think that's a very important diversification measure that a lot of investors try and uphold when they're building a portfolio. Of course, you want exposure to profitable publicly traded companies, but maybe you also want exposure to real estate or maybe commodities like gold or maybe like fine wines and whiskeys or artwork, right? Building a investment portfolio can mean a lot of different things.

38:35And in my experience, since I think it was the summer of 2017, I added Bitcoin and have been actively adding Bitcoin to my own diversified investment portfolio. Now we can have all the arguments in the world about its utility or other crazy meme coins and alt coins and all the scams that are out there. I'm not disagreeing with that. But what I am doing is I really, really believe now, especially that it is a multi-trillion dollar asset class and that we have ETFs around it. And even the president of the United States is flirting with the idea of having a strategic reserve of it, that having one, three, maybe 5 % of your net worth tied to this asset class via Bitcoin is a good idea.

39:23And then something else I just want to quickly touch on is like a lot of people, again, about a half a dozen were like, oh my gosh, you're talking about Trump. I'm unfollowing you. I'm not listening to your podcast anymore. I don't want to be a part of this. That is totally your right to do. And we wish you all the best. all we're trying to do is navigate a market environment no matter who is president just like we did under president joe biden we will also do under president trump and whoever turns out to be the next president we are always trying to figure out what the markets are doing how whoever is sitting in power is impacting them if it's a chips act like under biden or if it's with tariffs under trump or a strategic crypto reserve like we don't know we're just trying to actively keep you guys updated with what's going on and help you navigate the market's volatility under whoever administration in real time.

40:14I love that answer. And I love this question because it drives me crazy. I think the people that have these type of responses that they're unfollowing us because we mentioned Trump or shared something from Trump, please understand this. And Austin, you nailed it. We don't care who's president. We don't care who's governor. We don't care what's happening with any of it. We are here to educate and guide people on how to make money, no matter what the economic or political conditions are. End of story, full stop. That is it. We are here to help. We don't care. We are not political. We're not religious.

40:52We are here to help guide you. So you make the most money and live the best life. That is it. So when it comes to Teresa's question about cryptocurrency. It drives me nuts. I can right now take my debit card. I can enter it in. I can connect it to a crypto account. I can put a thousand dollars in that crypto account. I can buy Bitcoin for a thousand dollars. Bitcoin, let's say goes up to$4 ,000. I can then cash out the $4 ,000 right back into my bank account and buy groceries, pay for my kids, pay for rent, pay for my car payment. I can do whatever I want with cryptocurrency, just like I can with the stock market it easy to use cryptocurrency like a dollar bill or a debit card not yet but it's getting there but at the end of the day when it comes to being a good investment structure in a good sector i think it's phenomenal we've seen higher gains with bitcoin over the last five years over any other asset class on earth so i've personally cashed out millions of dollars from bitcoin alone in the last seven, eight years.

41:54So if that's not real and you consider that fake, I'm sorry. I think what you should do is more research and have a better understanding of what you are investing in because at the end of the day, we're not gonna ever stop talking about cryptocurrency. We're not hyping it up. We are educating our job and our goal in life with this podcast and our community is to help educate people on all things, business mindset and finance to help them grow and retire with dignity. I love all that. And the only addition I'll make is I am religious, but I don't talk about it on the podcast. I don't think anyone cares that I believe in God.

42:33So politics, religion, whatever, like it doesn't matter. We're not trying to push that onto anybody, but we are trying to help you all navigate the day-to-day headlines and encourage you to have exposure to asset classes that have historically speaking now for the last decade been uncorrelated and have outperformed the S &P 500. Just like if like, Robert, there was a crazy champagne that was just the best champagne in the world. You could be sober and hate drinking and not believe in it at all. But I would still encourage you to somehow own a bottle of the champagne because it tends to go up over time, right?

43:09Like that's the same thing. It's like, you might not have to believe in this stuff. But at the end of the day, having one, three, 5 % of your net worth invested or even exposed even to this asset class is a good idea. And that's what we're just trying to share with people. So Teresa and the other dozen of you that had a negative comment to share, it's all good. We respect that. We love this country. It's a free country. We encourage you to do whatever is best for your mental health, your financial well-being, everything in between. We're rooting for you regardless if it's our podcast or someone else.

43:39But just know that we're not coming at you from some crazy political agenda. We're just try and help y 'all make money. I love it. All right. Now let's jump into a real question coming from Michael. Michael says, Hey guys, I'm an avid listener of your podcast and I love the straightforward approach you guys share. I have a question as to what to do with my annual bonus of about$12 ,000 before taxes. It's going to get paid out at the end of March. I'm 32 years old. I make 125 ,000 a year in between my Roth IRA and Roth 401k, which is invested into the S &P 500 in the NASDAQ and my bridge account, I have$155 ,000 invested to build my base.

44:19I also have a$20 ,000 emergency fund and an$1 ,800 a month mortgage at a 3 % interest rate. I don't have a car payment or any other debt. So here's my predicament. Do I just do the responsible thing and put all$12 ,000 of my bonus into my investments? Do I splurge on something a little bit? How much of this should I use for fun money? Would love to get your perspectives. Robert, you want to answer this one? Yeah, I love it. And this kind of goes back to one of your themes, Austin, and that is you're 32 years old, you're crushing it, you're doing great, you've got your base built, you're really, really doing well.

44:54I think you should look at splurging on something. What better time than now to reward yourself for all your hard work, all of your educational stuff that you've learned and really set yourself up from a literacy perspective with respect to your finances. So yeah, my opinion is it might be time to go ahead and splurge, spend all of it, spend part of it, but reward yourself. You've done an incredible job. You're so far ahead of the curve. And I love hearing stories like this. So thanks for sending this question. Michael, you have done a wonderful job. You're 32 years old. You've built your base.

45:27You've got$155 ,000 invested. You have a fully funded emergency fund. You have a low rate mortgage. You have no car payment. You're crushing it right now. The world is your financial oyster, essentially. If I were you, I would feel as if you've been working hard or doing these things right and have likely been for several years, maybe at the expense of a vacation, maybe at the expense of a car you really wish you could drive, maybe at the expense of something in your home that you just think is a crazy idea, like a$4 ,000 espresso machine, right? I don't know what makes you tick. But I do know that you can get burnt out doing this sort of frugality stuff really easily if you don't reward yourself along the way.

46:12And I would imagine considering how well you've done financially here at such a young age, you might be approaching what could feel like a burnout situation. So to Robert's point, I'm in total agreement. Take half of it. Call it$6 ,000, $5 ,000,$4 ,000 and take that dream vacation. Go on that really cool experience or maybe go buy that thing that just like never makes sense for you. But you know what? Maybe you're super into coffee. You want to get this espresso machine or maybe it's like a hot tub. Like, I don't know what you're into, but there's something I'm sure you've kept in your notes app for a couple of years now that's like, if I ever had the money, I would buy this because it really make me happy.

46:49That I think is what you should spend half this money on. And yeah, maybe the other half of it. Yeah. Throw it your bridge account, use it to max out your Roth IRA, whatever you want to do. You already know the protocol. You're very smart when it comes to money. But I do think splurging on something's a good idea, especially if it's going to keep you motivated for the next 12, 18, 24, 36 months to stay with it financially. Yeah. I want to unpack this a little further because I love this question about splurging because I feel, and I'm going to use a reference of one of my dear friends. He is unmarried, no kids, has millions of dollars.

47:25And when I went to his house the last time I was around in Ohio, this was probably four years ago, he had really old furniture. He had a terrible 15 year old TV. He had a beat up truck, all of these things. And I looked at him and I said, what are you doing? You have millions of dollars. You have nothing to do with it. Why don't you splurge? You've been talking about buying a nice boat, get rid of your crappy boat, get a real boat, upgrade your TV lease. It'll cost you three, $400. So when you're watching TV at night, at least you can enjoy it. So you have to remember, we're never going to be educating to just save, save, save, invest, invest, invest, and not enjoy life.

48:06You have to have balance there. Otherwise, what is the point? So I love this. I love this question and just always try to find a balance. So you're not just building your wealth for the future and not enjoying the present. And my last point here is when you do think through what that item or experience, specifically item, I guess, that you want to splurge on is, think about the cost per use, right? Cost per use. So for example, I spent like$2 ,000-ish buying a state-of-the-art, beautiful LG 4K QLED TV that's like 60 inches. I'm in love with it. I love it. I love it for movies. It's amazing. And I'm cool with that because I'm going to have it for like the next five or six years.

48:50I use my TV probably three to five times a week. I'll sit down like just last night while I was watching Love is Blind with my girlfriend. So it's like think about cost per use. I'm okay with spending that much knowing I'll only spend it every four to five, six years, but I'll use it all the time. So don't like go buy something silly that you're never going to use. Another example of this is I just, you know, bought a$4 ,000 couch. I've never had a nice couch. My last two couches were Facebook marketplace couches. So now I'm investing into what I want to be like an elevated new experience for my daily life is like I sit on a couch all day long.

49:22I need to have something good. So think about it like that perspective cost per use. I think that's a very responsible way to think about splurging. I love it. Love it. Love it. One of my big expenses is mattresses. I do not skimp on my mattress. I want to make sure that when I fall asleep, that I feel like I'm at the best resort on earth. So you'll never see me skimp on a mattress. So our next question comes from Meta inside of our Instagram DMs. She says, I'm 32 years old. I'm married with a baby on the way, and I've paid off all my student loan debt of$180 ,000. And my husband has about$25 ,000 left of student loan debt himself.

49:59Now we have roughly 185 ,000 sitting in a high yield savings account, earning about 4 % because we thought that we'd be buying a house soon. However, New York City is becoming too expensive and we're considering moving to a different state in the next five years, give or take depending on our child care situation since all of our family does live in New York City. Now my husband has$17 ,000 in a 401k, I've got$50 ,000 in a Roth IRA as well as$30 ,000 in my bridge account and$45 ,000 invested in a city pension plan from work. We're currently renting a one-bedroom apartment in New York City for$2 ,300 and with maternity leave coming up we anticipate a huge pay cut this year since I make double my husband's salary.

50:40What should we do with the cash sitting in this high yield savings account? I'm afraid to invest it short term and have the markets go crazy and lose some as well as consider my taxes and all that fun stuff that comes with investing. So I'm trying to figure out what to do. Do we set ourselves up for retirement more by investing this in a long-term account? What do we do here? So Robert, I want to take a first stab at this one. I love where you guys are at and I think it's fantastic at your age how you're looking at money and what you're doing. But I do think you're on the right track. Having that much money in a high-yield savings account, whether the markets are turbulent or not, I think is just too much.

51:17I would rather see maybe 50 in the high-yield savings account, get the other$135 ,000 working in the markets, especially at your young age, because then it is working towards your retirement, getting it into some of the index funds that we talk about, getting good balance, getting more diversity, for the long term, because are we going to see volatility for the rest of 2025? Probably. Maybe we'll see some downturn through this year and into 2026, maybe. But over time, you need this money making more than 4 % and you need it active in the market. So I think you're on the right track. I'd get a bunch of that money out and get it activated and then go from there.

51:58I think that would be the best plan long term for you, especially because you have a 30-year investment time horizon ahead of you and plenty of time to weather any storms in the market. So it seems like Meta here has about, between her and her husband,$100 ,000-ish invested toward their retirement accounts and their bridge account. And then they've got this $185 ,000 that I'm sure they've been saving aggressively for as a down payment on$800, $1 million,$1.5 million piece of property in New York City, which makes a lot of sense. If I were you, I would probably want to, one, not make any money moves until after your baby has arrived.

52:44I pray for a happy, healthy baby, but who knows what could happen. So making sure that you have some of that financial flexibility in case a medical bill that is unexpected comes for something crazy, right? Let's hope it doesn't happen, but no one can predict the future. So I would want to make sure that like you're neck high in cash when it comes to making sure that this baby is delivered properly and all is well. The medical bills come, you pay them, you're off to the races now. And then I'd say with what you have left over, you mentioned you'd be making a lot less because of the maternity leave.

53:16I would also probably consider using this money to supplement your lifestyle while you're home with your baby. I don't know if that's going to be three months or four months or five months or six months, but you should not go into like debt or credit card debt or anything like that to supplement your lifestyle while you're on maternity leave. Like use this money. That's what it's for. And then once you're back working and your husband's working and, you know, maybe the family's helping with the baby, right? It's like, it's not really, you know, things are back to normal, quote unquote. Now it's time to make the decision of like, one, do we really want to stay in New York for the next five years?

53:53And if that's the case, like$2 ,300 a month sounds pretty reasonable for an apartment in New York, depending on how your situation is there. So maybe you stick it out for a couple years and continue to save some money for a big down payment or a decent-sized down payment if you end up moving somewhere else in the country with lower taxes and a lower cost of living. but in my opinion if you do plan to stay in new york for at least five years and you don't plan to buy for the next five years putting this money to work in the markets by investing into the s &p 500 and like you know vti voo things like that that are just going to be long standing up into the right for a long period of time is a really really great way to make sure your money's growing for you, assuming you're not going to spend it for the next five years.

54:39And you also have this long-term vision of what owning real estate could look like in your late 30s and maybe early 40s, and really flourishing as a family somewhere else in the country that might give you more than a small backyard and whatever comes with buying in New York. I don't like New York City, Robert. It's cold and it's expensive. Yeah, I don't like New York either. I like to visit. The commerce part of it is great. We've had some really fun times there. But yeah, I just don't think I would ever want to live in a market where parking is tough and you don't get a yard and there's just not a lot of room and really, really high cost of living.

55:16Because a lot of times the increase in wages doesn't meet what the increase in living costs. So it's kind of difficult, but love the question. You guys are doing great. And Austin, I think your takeaway was perfect. Metta, Michael, and Teresa, thank you so much for asking a question or just providing your feedback, Teresa, via Instagram DMs. Feedback is always welcomed. Questions are always welcomed. I mean, Rich Habits Podcast on Instagram is where you can ask us these things, as well as emailing us at richhabitspodcast at gmail.com, and then also inside the Rich Habits Network. Now, Robert, what's really fun right now is anyone, I don't want to emphasize this, anyone can go and start a seven-day free trial inside of the Rich Habits Network completely for free, right?

56:04So we've already had, I don't know, 30, 40, 50 people do this trial in the last three weeks. So it's been really, really cool to see that so many people are actually utilizing this. But seven-day free trial, put in your credit card info, but you can cancel it. It won't charge you like set a reminder on your phone if you hate it. No hard feelings. But that'll give you the time to join a live stream at least once, watch some of the video content, ask some questions, get acclimated, and see if being a part of this community is right for you. So there's a link in the show notes below to give the Rich Habits Network a free trial.

56:38Like what do you have to lose? Seriously, go join one of these free Zoom call live streams. It'll be so much fun. Watch a replay. Like there's nothing to lose if you just set a reminder on your phone and cancel if you hate it that much. So join us in the Rich Habits Network completely for free, seven-day free trial. Like we'll see you there. The Rich Habits Network is definitely one of the coolest things I've ever built and been involved with with you, Austin and Christian. So really, really incredible. And for anyone that's looking to step up their game in finance or business or mindset, I think it is the best money they could spend.

57:12So I definitely love the free trial. As always, thank you all so much for tuning into this week's episode of the Rich Habits Podcast, and we hope you have...

57:43Liberty, Liberty, Liberty, Liberty. Savings vary. Underwritten by Liberty Mutual Insurance Company and affiliates. Excludes Massachusetts. Rinse takes your laundry and hand delivers it to your door. Expertly cleaned and folded. So you could take the time once spent folding and sorting and waiting to finally pursue a whole new version of you. Like tea time you. Mmm. Or this tea time you. Or even this tea time you. So did you hear about Dave? Or even tea time, tea time, tea time you. Mmm. So update on Dave. It's up to you. We'll take the laundry. Rinse. It's time to be great. Have a great rest of your week.