157: How We’re Preparing for Volatility in 2026

17:12Austin Hankwitz:It's free, easy to use, and honestly, one of the best investing apps we use.

17:16Robert Croak:You can just go search Blossom in the app store, click the link in the show notes, or go to blossomsocial.com on your computer. All right, Robert, let's jump back to our interview with Troy and Garrett. So my question here for you is, Can you explain the specific importance of your funds, your NEOs funds, compared to the normal benchmark index funds and ETFs that exist today, right? It's like, what's the core differences here, right? It's like you've got the NASDAQ 100 and you've got QQQI. You guys are tracking the NASDAQ 100, but what's that core difference between the two, right? What's the difference between QQQ and QQQI?

17:50Garrett Paolella:Think about the differences in QQQI. You're bringing in income and sourcing that off the volatility of the options market around the NASDAQ 100. So in the NASDAQ 100 ETF QQQ, you're long all 100 plus names in the NASDAQ 100, and you're in it for that growth of that index and those underlying names. In our product, QQQI, you're still long those same names and the same weighting. So you're still getting that growth. But we are, as we talked about before, selling those index calls out of the money to bring in premium. So we're sourcing that from the volatility of the options market. We're not paying out the distributions from the underlying names.

18:25Garrett Paolella:They're not paying these huge dividends that we get to pay out. So for us, really sourcing that income from the options market, whether it's QQQI or whether it's a Bitcoin like BTCI or our Ethereum, NEHI or any of the other products, we're really sourcing that income from the options market. And the higher the volatility, kind of go back to the beginning of the conversation, the higher the volatility, the more income you can source from that options market. So when you think about the NASDAQ 100 is inherently a little bit more volatile than, say, the S &P 500. So you're going to bring in a little bit more income on a monthly basis that we could distribute out through the monthly distribution process.

19:03Garrett Paolella:And you might have a little bit higher of a distribution there, say, than an SPYI because the volatility is a little lower in the S &P 500.

19:10Austin Hankwitz:And before I go into my next question. Can we touch back on that for a second and explain to our listeners, because I know we did this before on a prior episode, but should they or can they own QQQ and QQQI simultaneously? And what would be the advantage to that?

19:28Troy Cates:Yeah, absolutely, Robert. They definitely can. And I think we always support that, right? Regardless if it's a Neos product or products, right, you should never have all your eggs in one basket. So don't own just one, ETF or one fund for your whole portfolio or just one asset management firm as a whole. We love the ability for investors, again, back to their risk to returns, what are they trying to achieve for themselves and what are they ultimately comfortable with? The ability to use multiple products helps diversify that risk away. And that risk could be the downside risk, that could be cashflow risk, but it also could be upside risk.

20:03Troy Cates:And because our products inherently are focused on generating income. Whenever you generate income, regardless of our products and your overall portfolio, you're usually giving up growth and total return to generate income, right? Just think fixed income relative to equity is very different risk profile and total return profile, but you're getting cashflow and income from one and usually not from the other. The idea here is yes, you could look to own and should, you know, maybe a QQQ and a QQQI and match that to your individual risk return and goals, looking at how you need cash flow relative to total return and long-term kind of price appreciation.

20:40Austin Hankwitz:Yeah, that helps me a lot because I've been asked that question in the past and I never remembered to ask you guys directly. So I really appreciate that breakdown. And the next thing I want to talk about, I'm excited to talk about is your new distribution calendar. Instead of all the funds paying at the same time near the end of the month. Different segments of the NEOS lineups now distribute in different weeks throughout the month, which is a pretty big shift in how people can think about their cash flow. And if they play their cards right, investors can get paid every single week from their various NEOS funds.

21:12Austin Hankwitz:So can you explain the thinking behind this structure? Because some of our listeners are diehard ETF holders, and some are just now getting into investing. So maybe start out simply with what distribution means for these investors and how the new calendar works.

21:27Garrett Paolella:This was an exciting change for us because one, it helps us operationally. You know, as you said before, we were distributing all the ETFs on the same day towards the end of the month. But we were looking at our suites and decided how could we break up each week and have a different suite distribute during that week. And just to be clear, we're still distributing monthly income. We're not looking to do weekly per fund. So each fund is still distributing once a month, but we broke up each suite. So week one is the boosted ETFs. Week two is our fixed income suite. Week three is our high income suite.

22:01Garrett Paolella:And week four is the hedge product. So thinking about it, as you were saying, Robert, if you own a hedge product and you own a boosted product and you own a high income product, you're getting paid on different weeks of the month. So for some investors, they really like that. For us, it does help operationally breaking it up like that. But it was an exciting change to go into 26 and really think about as we now, as we were talking about earlier, 19 ETFs. When we had three back when Austin started investing in SPYI, it was easy to have them all in the same day. But now with 19 and growing, it's nice to break them up a little.

22:32Robert Croak:Robert, speaking of distributions, I think what's so powerful about NEO's funds is these are tax efficient distributions, right? So maybe, Troy Garrett, take a moment here to explain Section 1256 contracts and index options and return of capital and what all these key terms that you type into investopedia.com actually mean for investors who are looking at not just that distribution yield, but the actual money they get to keep in their bank accounts after they pay taxes.

23:01Troy Cates:Yeah, I think one thing we really strive here, Austin at NEOS, is if you're investing in an income product, how do you make that as tax efficient as you can? You can't control everything, of course, but if there are ways that we could try to manage our investment process or buy certain underlying investments within the fund that have a better tax classification than others, we're going to look to try to leverage that for the better part of investors. So you had mentioned a 1256 option, and we talked about how we're an options manager, and Troy had mentioned index options. So majority of index options, and let's keep it simple, like the S &P 500 and the NASDAQ 100, right?

23:37Troy Cates:Those get what's called a 1256 tax classification. 1256 means a section of the IRS code. And it states that 60 % of your returns, your realized returns, are taxed at long-term capital gains rates. and 40 % get allocated as a short term, right? So ordinary income. And so when we can, we love to trade those index options because of that tax classification. It tends to help people out because I think a lot of folks default to like, oh, I'm gonna do a covered call. I buy Apple and I sell one Apple call or I buy SPY and I sell one SPY call. Those ETF and those equity options are actually tax dollars, ordinary income.

24:16Troy Cates:As more institutional managers, because of the size of them, index options carry a sizable amount of notional per one. So if you think about the S &P 500 at 6 ,900, right, one option contract is worth$690 ,000. Most people don't have that as just a one single position to write a cover call. So we have the ability to try and utilize options or investments that can get better tax classifications for investors. So I think that's first and foremost. The second thing we try to do is what's always helpful within just like estate planning is when you can, can you harvest losses in your portfolio? Let's just say you need a portfolio distribution.

24:53Troy Cates:You have something with a gain, something with a loss. If you could sell both of those, you can offset some of that tax liability. Essentially, our rules-based approach is seeking to do the same thing. When, let's say, in a covered call strategy, the market runs a lot and we would have the ability to, you know, rebalance. So roll, as Troy talked about, our options to take advantage of a potential loss on one side of the portfolio while the equities are appreciating. that has the ability to reclassify the same way you would in your broader portfolio, a return of capital. And so just very simplistically, a return of capital is just stating that you have a loss in your portfolio that nets out against a gain.

25:34Troy Cates:And so they view that as a non-taxable event in your portfolio. For us, what's a little different is as we're generating potential return of capital in a portfolio, we're essentially seeking to convert your total return and that short-term ordinary income that the fund would be generating, right? So on that short-term basis into return of capital. And what does that do? It actually defers your taxes to the future when you sell the fund because it's changing from a ordinary income in short-term to a long-term capital gain if you've held the fund over 365 days. But the way it's doing that is it's lowering your cost basis.

26:12Troy Cates:So let's just say you bought an investment at$50 and you earned a dollar worth of return of capital as a distribution. You're now at$49 a share in your cost basis. So after your 365 day, you sold the fund, that$1 is taxed at long-term capital gains because you lowered your cost basis. So it's a tricky concept to hear for the very first time. After you hear it usually once or twice to walk through it, it's a bit easier, but we're always striving to find ways in our investment approach to be tax efficient. The investments we ultimately choose within the fund, thinking about that income products need to be attempting to be as tax efficient as they can.

26:51Robert Croak:Absolutely. No, I appreciate that. And as someone who's got six figures in NEO's funds, appreciate it. I don't like taxes. Thank you. You know, this whole episode is about volatility in the markets. In 2026, you know, we heard that Trump's got Kevin Warsh. We've seen some layoffs with AI headlines from Amazon and some other names. We've seen some volatility, right? The NASDAQ and the S &P have been all over the place. A lot of the high-flying names that worked in 2025 are just getting beaten down in 2026 here. And if you're part of the Rich Habits Network, you know that my thesis for 2026 here through the show, something that Robert and are very much aligned on is energy and infrastructure.

27:33Robert Croak:It's materials. It's international. It's some of these durable, boring, quite honestly, sectors of the market. And that to us is exciting here in 2026. You guys have the MLPI ETF, the NEOS Energy Infrastructure High Income ETF. A lot of investors are looking for income in ways that are less correlated to your traditional S &P and NASDAQ and things like that, especially after the last few weeks we've had. Where does MLPI fit inside of a diversified income portfolio? And what kind of role do you see it playing alongside these equity-based strategies?

28:11Garrett Paolella:It's a great question. And I think, you know, we launched that product about a week before Christmas. And it was one that we had seen a number of advisors reach out, a number of investors reach out asking for a product like this. And we spent a lot of time working on what the underlying index would look like, working on what the option portfolio would look like. And it really slots into your alternatives income section, you know, where we think about our alternatives, whether it's Bitcoin, Ethereum, gold, real estate, this MLP and energy infrastructure sector has always been a place where people go to get that diversification and potentially earn some nice dividends off of those underlying names.

28:48Garrett Paolella:But to add to that, we wanted to bring in our rules-based strategy and option portfolio on top of that, where we could give you additional income on top of whatever dividends you were receiving from the underlying names. So this has been a product, I think, Garrett, if I'm wrong, it's one of our fastest growing ETFs since inception. Here we are six, seven weeks into the product's inception and the flows have been coming in. We've been really happy with the performance and how the fund is working out. So it's been an exciting adventure getting into this sector. But again, going back to thinking about your whole asset allocation pie and starting out with those three ETFs of equities, fixed income, cash alternatives, and just continuing to slice the pie up.

29:28Garrett Paolella:And this is just another solution we wanted to have out there for investors to be able to invest in and earn some income off in a tax efficient manner. And over time, continue to diversify and have that durable portfolio.

29:42Robert Croak:You guys are way too modest. Performance in the last month, I'll say it because you can't. 10.5 % since the middle of January is what I'm seeing in my portfolio from MLPI. So like, yes, you guys definitely created an awesome product at the right time. And you're so good at that. You guys are always introducing these products that just happen to be the new perfect thing to have in a portfolio, despite whatever's going on in the macro or the markets or whatever. And no, I love it. I appreciate it. I appreciate that breakdown, Troy.

30:08Austin Hankwitz:I'm definitely going to back you up on that, Austin. Troy and Garrett, this has been incredibly helpful. If you're listening to this and you're feeling uncertain, this conversation really highlights that there are ways to stay invested, manage risk, and still generate income no matter what stage of the bull market or bear market we're in. And I love it because I feel like our audience gets a front seat, you know, passenger right along on the ride while you guys are creating all these incredible products for everyone out there, including all of the Rich Habits people and followers, people in the network.

30:42Austin Hankwitz:And so are there any parting words or anything you guys want to share about the market or what's around the corner for NEOs funds that you guys want to share with our audience right now?

30:51Troy Cates:I'd love to share one thing that I think we always talk about, and I maybe expressed it a couple of times in here, but I think do your research, right? There is. There's a ton of product available out there. As you think about, like, your overall investing career, your passive income, right, your rich habits. As you think about that, we always say look at what your estate planning goals are. look at where your risk tolerance is and pick what fits you, not what your friend says at a cocktail party. That is the next hot thing. That's going to be up 10, 20, 30 % of your portfolio, because it could be down 10, 20, 30%, you know, percent at that same timeframe.

31:22Troy Cates:And so I think it's overall diversification and just making sure you do your research and you're comfortable with what you're buying and you know what those expected outcomes, you know, of returns are when the fund performs well, when it's in the mid range or when it's not in favor for whether that asset class or that strategy is. So it's always helpful to make sure you think about that as you're building kind of long term wealth or you're in your deaccumulation phase and living off of it so that you don't wake up, you know, saying, oh, not going on vacation. I just lost, you know, 20 percent of my portfolio value, you know, all being in AI trades.

31:53Robert Croak:Definitely don't want that to happen. Now, before we ask Garrett and Troy our final question, got to give a shout out to public.com, the investing platform for those who take it seriously. On public, you can build a multi asset portfolio of stocks, bonds, crypto options, and now generated assets, which allow you to turn any idea into an investable index using artificial intelligence.

32:15Austin Hankwitz:And it all starts with your prompt from renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20 % year over year. You can literally type any prompt and put the AI to work. It screens thousands of stocks and builds a one of a kind index and even lets you back test against the S &P 500, all with just a few clicks.

32:36Robert Croak:Generated assets are like ETFs with infinite possibilities. They're completely customizable and based on your thesis and not someone else's. So go to public.com slash rich habits and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com forward slash rich habits. Paid for by public investing, full disclosure in the podcast description. All right, Robert, let's now jump back to our interview and ask Garrett and Troy our final question. Actually, before you guys leave, I'd love to get just a 30 second, 60 second breakdown of where you think we are here in the markets. Seen some volatility, seeing some of these high beta names roll over.

33:13Robert Croak:We've seen the indices trade sideways for three months. What are you guys looking at right now? What's interesting to you? What are you keeping your eyes on as it relates to maybe economic data or earnings or like what as$20 billion fund managers that you guys are? What is interesting? What are you guys looking at right now?

33:31Garrett Paolella:I think the most interesting thing we're watching, and I'll let Garrett go after, is really what the volatility market's doing. Thinking about that added volatility we've been seeing that we're talking about. We talked about it last year and thinking about how volatile the markets were last year, specifically around the tariff announcements or any announcements that came out of the administration. So I would imagine this year is very similar. We're also looking at what's going to happen with the Fed. Are they going to continue to cut rates? We have a new Fed share coming in the next couple of months.

34:00Garrett Paolella:Are we going to see more rate cuts? And what does that look like to people that keep money in cash or T-bills or the likes? And what does that mean for their income needs and where they could source additional income? So we're keeping an eye on the Fed and obviously the volatility markets.

34:16Troy Cates:Yeah. And I would add, right, like even a consolidation phase for a couple of months is not a bad thing. Consolidation is a good thing in the overall market. it. But I think Troy hit it on the Fed and on volatility and like what's going to come in the next couple of months. The economic data has come out pretty strong. I mean, obviously, as we got some data about GDP, you know, in fourth quarter of last year was more positive than people expected. The jobs market, although you see announced, you know, layoffs, you know, more broadly, seems as if the jobs numbers, though, each week still come in pretty decent, I would say.

34:48Troy Cates:And so I think there's a lot of stuff that the media loves to hype on both sides. That's what media does. It gets viewers, it gets clicks, it gets watches, you know, especially that kind of more mainstream financial, you know, media. And so I think you got to, again, stick to what it is that you're comfortable with and what you can weather within your portfolio. But overall, it's definitely going to be kind of all eyes on the Fed and economic data, you know, coming out, knowing that there's going to be spits and spats of, you know, tweets that go out on a short-term impact, you know, of the market.

35:16Troy Cates:So just prepare yourself, I think, you know, for that is what we're hearing, you know, broadly from a lot of more institutional investors.

35:22Robert Croak:Thank you guys so much for sharing your perspective. And I know you guys boots on the ground. I mean, you've got a ton of institutions, I'm sure that you're talking to us appreciate you guys sharing their perspectives and just everything here in this episode. I always learn something whenever you guys are on the show. So I very much appreciate y 'all taking the time and everyone listening, please go to neosfunds.com check out their products. I've got six figures in these ETFs. Personally, I really believe in what they're building. They are you put them up against x yld jeppy, you put them up against any of these other like cool covered call ETFs that you see online that are popular, they're outperforming them year over year and they're more tax efficient and they're just, they're building these products for durability.

36:03Robert Croak:And I commend you guys for that. Seriously.

36:05Troy Cates:Well, thanks guys. We appreciate it. Appreciate the opportunity to come on. It's always a pleasure to be here in front of the audience and just also wrap with you guys. Likewise, we always learn all sorts of new things from you all and what you're doing and congratulations on the continued growth of the podcast and all that you're doing. Thanks, man. Actually, I take it back. I got one more question for you.

36:23Robert Croak:Can you guys explain, and I'm not going to name names because I'm not the type of person to do that, but can you guys please explain the importance of paying out distributions from income that has been generated versus paying 120 % yield on an ETF or something? Because I think a lot of people right now are looking around at these different ETFs that are paying yields that are over 100%. They're like, wow, this is really cool. I'd love to get a 120 % or what, 80 % yield. Can you guys just spend 30, 45 seconds explaining why it's important to pay a distribution on income that you actually generate inside the portfolio versus 100 % yield?

37:05Garrett Paolella:It's important. It goes back to what Garrett was saying earlier, doing your homework, doing that educational piece and understanding. And the great thing about an ETF is you can pull up our holdings or any holdings of an ETF and understand what's in the portfolio. You could see what the actual mechanics are. And when you look at it and think about our products and what we're trying to build here, yes, maybe if you're sourcing by yield or distribution online and you're going from top down, you see these, as you said, 120, 80 percent, 90 percent, whatever distributions. The important part for us is building products that over time, the total return can support the distributions going out.

37:39Garrett Paolella:And when we're selling these calls, for example, in SPYI or QQQI and bringing in that premium on a monthly basis and distributing that out, that's what we're distributing. So we're not looking to have a flashy distribution number because we think it should be out that way. We're putting out what is built into the fund and what the fund can produce over time. And the goal is to make sure that total return can support that over time. Otherwise, you get into a phase where you can't support that and you start seeing your NAV erosion, which I'm sure you've seen people talk about and stuff like that.

38:13Garrett Paolella:So it's really important to understand not only what the total return of the fund can do, because that's a good way to equalize when you see these larger yields. Look at the total return. Look at what those distributions are compared to what the overall price return and total return can do in the fund.

38:28Austin Hankwitz:Thank you guys so much for stopping by. It's always just an incredible conversations. I know our listeners love it. Can't wait to have you guys back soon.

38:36Troy Cates:Looking forward to the next opportunity. Thanks for having us on.

38:38Robert Croak:Thank you, Robert. I am so grateful that we have people like Troy and Garrett in our network. These two individuals that between their 19 ETFs have over$20 billion of assets under management. I mean, they have built durable, covered call, high income, options based ETFs for longevity. right? I mean, I've said it a couple of times now. I've got six figures in their ETFs. I believe in what they've done. I've been an investor since 2022, 2023. We first had them on the show. I know like in 2023, I mean, we've spotted them early as incredible ETF providers. They've been nominated for two awards now by ETF.com.

39:21Robert Croak:They won one award. You get to see about this next one, but it's like They've done a wonderful job of building a product suite that allows our investors that during times of heightened volatility, aka right now, when these high beta names that some people might have in their portfolios are moving around, the NASDAQ had a double, you know, two and a half percent down day the other week. Like you're seeing volatility in the markets. If you want to have a hedged product, if you want to be diversified into energy and infrastructure, international, gold, Bitcoin, Ethereum, which I guess is down two.

39:53Robert Croak:But regardless, like they offer you the opportunity to diversify your portfolio, not only into those asset classes and sectors of the market, but to generate income through those investments to offset more volatility. So if you are someone who is spooked about volatility at all in your portfolio right now, go to NeosFunds.com, find and learn more about SPYI, QQQI, MLPI. Again, it's a big position in my portfolio right now. I'm buying thousands of dollars of it every single day. I think it's going to be a great winner in 26. Like, get yourself some NeosFunds and just take a deep breath. You can be all right.

40:28Austin Hankwitz:I love episodes like this. I feel like I could run through a brick wall right now because I think about, like you mentioned, we were so early to connect with Neos Funds with Troy and Garrett. And they just have all these incredible products right there. So I almost feel like it's our little cheat code, even though they've grown to be so huge already. But just such great products for the everyday investor. investor. And I just love that we get to bring them on the podcast and really get kind of, you know, inside and really understand everything they're working on and how it benefits our audience.

41:00Austin Hankwitz:It's such an amazing journey. And like you said, we do learn a lot on each of these episodes and I hope everyone else is learning as well.

41:08Robert Croak:All right, Robert, so let's now jump to the Q &A section of this episode. If you have a question to ask us, please shoot us a DM on Instagram at richhabitspodcast or email us your question at richhabitspodcast at gmail.com. These three questions were all Instagram DMs. So the first one comes from Peter C. Peter says, Hey guys, I love your podcast. I've learned a lot listening to you over the past couple of months. I'm trying out your honest budget tool, but I had a question around tracking my spending on credit cards. For example, I used a zero interest credit card to purchase a dishwasher for$600.

41:45Robert Croak:I then paid$200 toward the credit card bill during that same month. What exactly do I track? The fact that I spent$800 total,$600 or$200? Really great question here. Let me kind of back up and hopefully set the table here for you, Peter. When it comes to budgeting, I like to budget the 600, right? That's the thing I spent money on. That's the money that I spent, right? I spent$600 on a dishwasher. I spent$400 on a microwave or$300 at a dinner. Even if it's on a credit card, that's the money that I have spent. Now, I'm the type of person to pay off my credit cards every single month before the due date so I don't accrue any interest, which means that I spend it by swiping my credit card, but then that amount of cash also leaves my bank account during the same month.

42:40Robert Croak:So the cash outlay is equal to the amount that I've spent. But in this instance, your cash outlay, assuming you do not pay it off, is only$200 versus the$600 you spent, which means you still owe$400 on this credit card. Now you mentioned it's at 0 % interest, which is cool, I guess. But at the end of the day, we don't want to be carrying credit card debt. It's just a bad habit in general. But if I were you, I would look at the$600 versus$200 or$800 or whatever, because the$600 is what you spent money on. And that's how much cash should come out of your bank account to pay off your credit card on a monthly basis.

43:16Austin Hankwitz:I think that's a great breakdown, and it's a little confusing how this question is posed, but I'm going to take a stab at it to add a little bit of value here. And I look at it this way. You state that you spent the$600 for the dishwasher on a credit card, but did you budget for that? Were you prepared to do that, or was it a last-minute expense? Because if it was a last-minute expense and you did not have your emergency account set up for that emergency because the dishwasher went out, then it really wasn't budgeted. And that kind of defeats the purpose of the honest budget, in my opinion. Yes, you should do what Austin said, put in the$600 because you did spend it, and then put in the$200, giving you that net of$400 for that month.

43:57Austin Hankwitz:But I want to be clear, in my opinion, we want to try and be ahead of these types of purchases. That's why we have the emergency fund. So we're not putting these types of last-minute decisions on a credit card in the first place.

44:10Robert Croak:Great take. Yes, please have an emergency fund. That's always a great idea. So our next question comes from Manny O on Instagram. Manny says, Hi Austin and Robert. I'm 61 years old and I have a question. I have$300 ,000 invested through my Roth IRA and my 401k. However, I owe$40 ,000 in high interest debt. I want to pay off this high interest debt immediately. It's at 19 % interest. Would you recommend I get a loan at a lower interest rate of 7 % or 8%. Should I borrow this money from my 401k? What do I do? Manny, I got a quick solution here for you. So yes, pay off high interest debt, 19%, bad news bears.

44:53Robert Croak:First, first and foremost, get yourself an honest budget, figure out why you went into$40 ,000 of credit card debt. Was it because you were living beyond your means? Was it because you had a medical emergency? Was it because there was a funeral in the family, you had to pay for it, you didn't have figure out why it happened. And one, if it's something you can control, please control your spending. And if it's something that was unforeseen, like bad luck happens, I totally get it. Life is always in the way of us and it's okay. But the good news is, in my opinion, there's a way to go about this where you should be just fine.

45:28Robert Croak:So one of the interesting characteristics of a Roth IRA is you are able to withdraw your principal tax and penalty free. So for example, if you are someone, you said you have$300 ,000 in your Roth IRA and your 401k combined. So let's say you have 150 ,000 in your Roth and 150 ,000 in your 401k. Let's say of the$150 ,000 in your Roth IRA, 50 ,000 of that is compound growth and 100 of that is contributions. You contributed$100 ,000 to your Roth IRA. It's now worth 150 ,000 and that 50 ,000 difference is your profit. Without penalties or taxes or any sort of bad news, weird vibes, you can withdraw your contributions to your Roth IRA like free and clear.

46:19Robert Croak:So if I were in your shoes, Manny, because I'm a big believer and you cannot out-invest high interest debt. I would not borrow against my 401k. I would not go get a loan. I wouldn't do any of that. I would literally take$40 ,000 of my contributions in my Roth IRA, not profits, not talking about it, just the contributions. I take 40 ,000 of those contributions out of my Roth IRA and use that money to pay off your high interest debt and never go back into high interest debt again.

46:46Austin Hankwitz:I think that's a great point in a strategy that everyone should listen to because we always say don't borrow from your future for current debts that you've occurred. And this is a tough one because$40 ,000 in high interest debt is really, really bad. So I love that breakdown, Austin. And I think that's exactly the playbook of what to do here because you don't want to go get another loan against your IRA and your 401k and do all that stuff. Do what Austin said. It's the best way to get rid of this debt quickly and get rid of that high interest right away so you can get back on track and just don't allow it to happen again because you need to be saving for your retirement at 61 years old instead of going backwards, paying off high interest debt.

47:29Robert Croak:And I mean, you are 61, right? So you're over 59 and a half. You can tap into these things without penalties and fees and stuff like that, just taxes like, duh. But it's still important to know that you cannot out invest high interest debt. And that's what you're trying to do right now in these retirement accounts. Robert said it great. We always tell people do not borrow against future you by cashing out your retirement accounts. But that means do not do it while incurring a 40 % tax and penalty and local fee, right? That is silly. But you are not going to incur those things because you're already 61 years old.

48:04Robert Croak:Just use some of this Roth IRA money, use it to pay off the high interest credit card debt, and then never go back into high interest credit card debt or any high interest debt for that matter. So our final question comes from Stephen B. Stephen says, I'm a huge fan of the show. I was actually big on hydrogen stocks back in 2022 and 2023, and I bought Bloom Energy when it was$10 a share. I was wondering if it would be smart to hold on to this stock and see this bull cycle out or if I should sell it. I sold about half of my profits already when it was around$95 a share. I really love the show. Thank you all for everything you do.

48:41Robert Croak:The quality is the best out there. Thank you so much, Stephen. Robert, I'll let you start this one.

48:45Austin Hankwitz:Yeah, Stephen, great job. I'm really happy that you took profits. I think that's one of the number one things that people seem to forget or don't understand in this world of investing. You have to take profits along the way. We talk about this every single day in the Rich Habits Network, in the newsletter, everywhere we can, we talk about taking profits. you've already done that. So what to do next? You've taken 50 % off the table already. What do you want to do next? There are other places you could redistribute these funds and do really well, but we do like Bloom Energy still. So maybe take another 25 % of profits and let the rest ride because I do believe Bloom has a very long-term upside.

49:27Austin Hankwitz:But that's what I would look at. But I am just so happy and proud to hear you say you take profits. So many people buy a stock right, ride it up 200%, never take profits along the way. Then it goes back down 30%, 40%, 50 % because of this volatility we're talking about. And then they're mad at the world because they didn't take profits along the way. So that's my take.

49:48Robert Croak:What is your strategy for taking profits?

49:51Austin Hankwitz:So my strategy is simple. When I get up 50 % on a position, I take 25%. When I get up 50 % more, I take another 25%, 50%, 25%. I do that until I'm fully out with my own money and playing on house's money. But sometimes I don't go all the way like in this instance. So if I use an example of mine, NVIDIA. Right now, I have taken profit four or five times over the last few years. And now I'm just riding the rest of it. But some of it is still my money that is in the stock. But I've taken out so much in profits that I have left more in than usual because my conviction remains really strong on NVIDIA for the future.

50:33Robert Croak:No, I love this breakdown. And let's just do some hypothetical math here for fun. Let's say our friend Stephen has 500 shares, right? They took$5 ,000 at$10 a share, 500 shares of Bloom Energy stock here, and they wrote it up to 95. So it was worth about$47 ,500. Took that$5 ,000. Now it's worth$47 ,500. And you said that you sold half of it. You took your profit. So you sold out of about$24 ,000. Amazing, right? You are more than out of your position. You've got house money at this point. In my opinion, Bloom Energy is one of those names. I own Bloom Energy, by the way, but it's part of my long-term portfolio holdings.

51:12Robert Croak:I just buy a little bit more of it every single day or every single week, whenever I dollar cost average. If you want to let this one ride, I'm not mad at it. You've already taken your profits. You want to see the bull cycle out or whatever. But here's the thing. We talk about this all the time inside the Rich Habits network, whatever decision you make, make sure you're going into that decision eyes wide open. Bloom Energy experiences volatility all the time. Robinhood has experienced a lot of volatility. Bitcoin has experienced a lot of volatility. Precious metals have experienced a lot of volatility.

51:39Robert Croak:And so no matter what strategy you pick, oh, I'm going to, you know, dollar cost average into this name because I believe in it long term. Robinhood's a great example for me. I think Robinhood's going to be a great company over the next 5, 10, 15 years. I see the wealth transfer happening. I see people using Robinhood. I mean, I think they're going to be Vanguard 2.0. I want to own that in a decade from now. Yeah, the stock's down a ton and it's in a downtrend for sure, but I'm okay with that because I know that I just want to own equity in this business for years to come. But I understand that owning equity in this business for years to come also means 40, 50, 60, 80 % downdrafts in price along the way.

52:15Robert Croak:That's just how it goes when you're investing into single stocks. Very different from the index funds and ETFs that we talked about here with NIOs funds. I mean, you think about the S &P 500, you're thinking about maybe a 15, 20 % pullback, call it maybe 30 % or NASDAQ, same thing, 25, 30, 35 % pullbacks. You're not seeing a 60, 70, 80 % pullback in the indices. You only see that in thematic ETFs and more specifically, single stocks. So Bloom Energy, if I were in your shoes, Stephen, I would hold on to the other 250 hypothetical shares, I'd ride the wave and I'd close my eyes until 2030 and see what happens.

52:52Austin Hankwitz:I love that breakdown. It's all about understanding your buy box, your risk tolerance, and what makes sense for you. But the number one underlying message for everyone, take profits along the way. Don't be greedy. That's the number one thing for me that everyone needs to really get into their heads, build that muscle and do because that's what we're here for. We're here to build wealth, make profits on our decisions, and really understand what we're buying and why.

53:21Robert Croak:Everybody, thank you so much for tuning in to this week's episode of the Rich Habits Podcast. We are super grateful that Troy and Garrett decided to join us from eosfunds.com. Major shout out again to them for joining us on this episode. If you've got a question for future episodes, send us a DM on Instagram at richhabitspodcast or email us at richhabitspodcast at gmail.com. And finally, if this volatility in the stock market is scaring you or your portfolio is like, what the heck is going on? What did I pick the wrong things? I don't understand. Consider joining the Rich Habits Network. My portfolio is in there.

53:54Robert Croak:Robert talks about his portfolio all the time. We host weekly two hour long Zoom calls every Tuesday night where we talk about our decisions and our ideas and what we think about the markets. And like, we just try and make sure you guys aren't surprised. and I think we've done a very good job. We have nearly a thousand people now inside the Rich Habits Network and we're just so, so grateful to have the support of several hundred people and of course the support of the tens of thousands of you all that come back and listen to the show every single week. So thank you so much. Please consider leaving us a five-star review.

54:25Robert Croak:If you learned something, please consider sharing this episode with a friend and we'll see you on Thursday.

54:40Thank you.