162: How Anyone Can Invest in OpenAI & Anthropic w/ Ben Miller

21:03Ben Miller:It means that each position in the fund is worth a certain amount. As you said, let's just say we owned 20 % of the fund in SpaceX. Let's just say that was a fund. And that fund marked it at whatever SpaceX last-round valuation. So you typically mark a position based on the private pricing of a company. And that's usually where it raised money most recently. So like Stripe just did a tender offer. They raised at, I think,$148 billion valuation. Actually, we own some shares of Stripe. If you bought into VCX, the NAV would be at Stripe's last round valuation. So the net asset value is the value of all of the underlying assets priced, typically priced by the private market pricing of each company, each private company.

21:55Ben Miller:The thing that's going to be interesting and the thing that's like is that the public will price that fund, that portfolio of private companies, probably differently.

22:05Robert Croak:Yes, that's the important part to think about. Absolutely. Because they might say, oh, I'm willing to pay a premium to have access to this. Or there's a lot of volatility in the markets. I don't want this at all in my portfolio. And the difference between the underlying value of those positions and how it's priced by the market could vary. Yeah, and will vary.

22:27Ben Miller:And so it could trade at a discount because there's war in Iran and everybody's freaking out, everybody's selling, everybody's negative about the future. That's an example of why it might price it at a discount. It could price it at a premium because you say, oh, this company raised money. Last time they raised money, their revenue was a lot lower and the revenue is growing like crazy. And so I think the next time it raises money, it's going to have a huge markup. And so I'm going to buy this at a premium. I think AI is going to replace half of the white collar workers and I want to own part of that, whatever your theory is.

23:01Ben Miller:So there's a lot of reasons why people buy and sell things. And I think over time that the fund would likely trade at a discount and a premium, but it's definitely highly regulated. And so I can't say and I don't know how it will trade.

23:15Austin Hankwitz:Another thing that stood out to me about the innovation fund is the multi-stage investment approach. You're not just investing in early stage startups, you're investing across the life cycle of private companies from early stage all the way through late stage, even beyond IPO. So why is it important to take that broader approach when investing in private technology companies as opposed to traditional sources?

23:38Ben Miller:Like in the dream world, right, you'd want to invest in the best tech company at the beginning. No one knows what the best tech company is going to be. When a company ends up being the sort of the rocket ship, once it becomes clear that that company is a rocket ship, it's almost impossible to get access to the company. So let's say there's like, I mean, I'll take, I don't know if you know this about Anthropic, but Anthropic, when they tried to raise money on Sand Hill Road way back, I think 2019, every venture fund turned them down. They ended up raising money, I think, from Eric Schmidt's office, family office.

24:11Ben Miller:They were totally and absolutely out of favor, and they did not come into favor for a number of years. Now, everybody wants shares in Anthropic, and you can't get it. Literally, to get shares of Anthropic, you have to have a really close relationship with the executive team. And same thing with OpenAI, that the minimum check size to invest in these big companies, like I think opening eyes last round the one that was like six months ago the minimum check size was a quarter billion and so you you know to get into these companies you can't get into these companies yeah you you'd want to do what everybody want to do is they just want to wait till it's really clear and you'd come in at the end and it's impossible so you have like this like balancing act you want to come in early enough that you get access but not too early that you end up like you know picking the wrong horse.

25:08Ben Miller:And that's the name of the game. It's really hard to do. And we were fortunate enough to do it in the last three years with VCX. We invested in most of these companies in our portfolio back three years ago. No one knew at the time. I mean, we suspected that they were going to be world-class companies, but you didn't know three years ago. Three years ago, just to remind everybody, Silicon Valley Bank had just blown up. Everybody was freaking out about the tech like decline. Yep. San Francisco was in deep decline because of COVID too. And everybody was negative on tech. That's when we were sort of like most successful.

25:44Ben Miller:We did a lot of great investments during that period.

25:48Robert Croak:I think that's a testament though, to the market is a pendulum, right? It swings from excitement and overhype to depression and despair. And in 2022, it was certainly swinging the other way, especially in the private markets, right? SVP blew up, like you had mentioned, but, you know, the S &P and the NASDAQ fell by, I think, 30 or 35 % in 2022, right? From the top down to the end of October. And then ChatGPT came out at the end of November and that sort of reinvigorated things the other way. But it's really, it's a testament to your ability to go against the curve and find these opportunities and have deep conviction into your ideas, Ben.

26:29Robert Croak:And I think that bleeds over, I'm sure, from Fundrise and the same sort of strategy you have used over the last couple of years, several years now with commercial real estate being all over the place that it has been. You guys have done such a wonderful job identifying these deep opportunities. And you took that strategy and said, I'm going to go do that now for venture because this is the biggest no-brainer of all time. And you guys, I mean, OpenAI, SpaceX, Anthropic, Databricks, all these cool companies you've mentioned and getting into them, I was just doing some math. I want to say Anthropic is up 70 or 80x since its 2023 raise.

27:03Robert Croak:I mean, the$380 billion valuation right now, it's unbelievable. OpenAI was, I don't know, 30x since the release of ChatGPT. And it's so cool that you guys were able to jump in that and identify them. Maybe take a moment to explain how you identified these companies. You said like, hey, we had this idea that they were going to be category defining. What was that deep in your soul that was like, I really believe in this stuff?

27:28Ben Miller:We have a financial advisor who used to be a senior executive at a big financial house. And he was saying to me, you need to explain your process because was it expertise or was it luck? And I look at our portfolio and we have nine of the top, I don't know, 10 or like 15 companies in the world. Our performance in the last 12 months is like, I think the fund's up 65 % approximately. Can you flip a coin nine times and call it every single time? I was just sort of like, luck? And clearly everything is luck, right? I'm not trying to say that there isn't a ton of luck in everything we did. We were lucky that you know, like we were active when the market was so negative.

28:16Ben Miller:And I definitely think it was part of luck. No question. But like, was it only luck? I was just like, come on here, give me a break. So anyways, like I kind of feel like the market will continue to disbelieve it because part of the problem with the market, all financial markets, is they want everything to look like a pigeonhole. Like when you walk in the room, you need to look like a financial manager wearing a suit. You need to have like a certain MBA. And I think all that is BS. Everybody believes that like somehow if you follow a process, you'll get great outcomes. And that's not my experience building Fundrise over the last 15 years and building businesses and investing over the last 25 years.

28:58Ben Miller:That's just like a story you tell to raise institutional money. So anyways, I'm a super, I'm very skeptical of all institutional BS. How did we do it? And then the question is, how can we keep doing it? But how we did it was that we, you know, Fundrise has 100 software engineers and technical people. I've built, you know, Fundrise over the last 15 years. Like we've built a lot of software. You know something about software. I've been in finance and investing for a long time. There were things, companies we chased. So we did it kind of opposite venture fund. A lot of venture funds, they are reactive.

29:31Ben Miller:They sort of like, they try to like, some people call it spray and pray. but you you try to have a class of wide net and we had sort of the opposite of approach which is we hunted down the companies we wanted and we said we want this company like how do we get it and the way we decided what we wanted usually was like we're using the software and the software if it was revolutionary to our business like we built a real estate ai product called real ai and real ai showed me that Anthropic was the best AI platform for enterprises. And so we hunted down Anthropic and invested in them. So it's a combination of technical capabilities.

30:13Ben Miller:Another thing I believe, and this is like, you could debate this, but mostly I believe that you're a price taker in markets and not a price maker. And that people believe that somehow like when you're investing in a company, the price is the magic. And I would sort of say like every investment you made in NVIDIA over the last probably five years seemed expensive. I'm much more of a believer in you get the right thematic, you get the right team, get the right product. And like when we invested in Anthropic, we invested in OpenAI, we invested in Andrel, like we invested in Databricks, like they seemed expensive.

30:52People thought it was expensive.

30:55Robert Croak:Oh, I remember. Every single time. Every time. Every single time. Well, it reminds me, you know, Robert and I had a conversation two years ago. Robert was invited to invest in XAI at a$5 billion valuation. And he's like, man, this seems really expensive. Like, it's just an idea and it's$5 billion. This doesn't make any sense. XAI is now a quarter trillion dollar company. And, you know, to your point, it's like, oh, yeah, OpenAI at$400 something billion seemed really expensive. But now they just did a raise at$880. It's like it seems really expensive at that time to your point, but then you make this decision because you have this deep conviction in the company or you're a customer or you see those things and you're like, wait a second.

31:32Robert Croak:Exactly to what you were saying, 100%.

31:33Ben Miller:Yeah, and just the nature of exponential investments is that you're much better off. I mean, this is our view and then people have different views. But on tech, you're much better off investing in the best company at an expensive price than a mediocre company at a great price. It's not like real estate. Real estate is a value investment. We really want to buy value. It's the opposite of tech. It's hard to do two things that are opposite. And especially with AI. I mean, this is like AI is the penultimate of exponentials. And I believe, and I've been saying this for a while, I think the market's starting to wake up to it.

32:10Ben Miller:I mean, it's going to do 20, 30, 40, 50 % of the white collar jobs. I mean, there's tens of millions of jobs in America, hundreds of millions of jobs in the world. we can't fathom that amount of change. I mean, people are scared of it. I keep saying the only way you can protect yourself, well, there are two ways you can protect yourself. You can be as active as possible in learning

32:33Robert Croak:and you can own a piece of it. I like that. And that's hopefully what everyone can do that's listening to the show right now can do with VCX.

32:40Ben Miller:That's my hope. And like if somebody says, how do you keep doing it? My hope is that we can build the brand for being how you democratize investing into these great companies, you democratize ownership, and the companies recognize that's important, recognize that that's a win-win for them, and we make it possible in a low-fee wrapper. So that's the hope, is that if people, if the population says like, yes, then we can continue to build that bridge and the companies embrace that, because I don't think they want to go public. I think there's a really big challenge for them. Yeah. The public markets are a double-edged sword.

33:19Austin Hankwitz:Yeah, I agree with all of it. This is such a great conversation. And one of the things that really stood out to me reading through your CEO letter was the historical perspective you gave. You talked about how the American financial system was built around the idea of broad ownership and that everyday people should have the ability to own pieces of the companies building the future. But today, many of those companies are still being built entirely in the private markets. So you've talked about democratizing. How important is that to access private markets, not just financially, but from a broader economic perspective?

33:55Austin Hankwitz:Because I love every bit of what you guys are doing because you're leveling the playing field for the everyday person that doesn't get locked out of these investments until long after the IPO when most of the profits are eaten up already.

34:08Ben Miller:Yeah, let me do a counterfactual because it helps paint a picture of why this is so important. Can you imagine if Google, Amazon, NVIDIA, Tesla got on the list, the Mag7 had never gone public?

34:21Robert Croak:Oh my gosh, man.

34:22Ben Miller:No. Oh my gosh. What would our society be like today if all of that economic wealth, all that wealth accrued to basically the top 0.1 %?

34:35Robert Croak:It's$22 trillion of market value. $22 trillion.

34:39Ben Miller:And all the growth. Yeah. All the growth. If you didn't have growth in wealth over the last 20 years and it was all going to a small group of people, our society would crumble. And so the democratic ownership is one of the key pillars of a capitalist democracy. We have to maintain that. But I mean, for private companies, it's just way better to raise and stay private. I mean, it's just so much better. Being public is brutal. It's brutal. I mean, it undermines... Like, I want to ask... I need to talk to someone who's really a public market expert and say, like, tell me a company who's built in the public markets from basically like$400 million of market cap to scale in the last five years, I think zero.

35:29Ben Miller:I don't think you can build in the public markets anymore.

35:33Robert Croak:They're too messed up. No, I completely agree. Now, as we round off this conversation, Ben, and again, dude, this has been so fun. I love talking about this stuff because it's never been more important for everyday Americans because you rewind to think about the 70s, the 80s, the 90s, the early 2000s, and how easy it was to just buy the S &P, buy these mutual funds, get in the markets, because companies that were building the future were publicly traded. It's a different story now, specifically since the pandemic. And as we think about exactly to your sort of counter antidote there, which was like, imagine if the MAG-7 never entered the public markets.

36:10Robert Croak:I mean, that's 40 % value of the S &P just within these seven to 10 companies, depending on how you want to roll the dice there. It is so much wealth generation that absolutely wiped out. I remember listening to an interview with Jeff Bezos. He's got 10 % of Amazon, let's call it a$1.5 trillion company. And someone asked him like, hey, you're this multi-billionaire. We should be mad at you, all this stuff. And he goes, I don't think about it like that. I think I made a hundred billion while I made my investors 1.35 trillion, right? I made everyone else all that trillion while I took a billion, a hundred billion for myself.

36:43Robert Croak:And that to me is what you guys are solving here with VCX and why I'm so excited about it. If you can't hear it, my voice, but let's just quickly touch on and round off this interview about the risk associated with private tech investing. So everyone, as they think about, does this fit in my own portfolio? They're going into it, eyes wide open, and they've got the right expectations laid out for them.

37:05Ben Miller:Yeah. There's so many risks. It's hard to go through them all, but let me just, Let me just start with the first risk is our existing investors, and then I can talk about the future investors. So we have the Fundraised Innovation Fund, or VCX, when we list, we'll have about 100 ,000 investors. Including two right here on the show. Oh, sweet, sweet. Okay. And so when we were going through this process, we had a lot of challenges because everyone involved, all of the lawyers and exchanges. I had never seen a company or fund go public with 100 ,000, basically effectively private investors. They don't hold shares in their brokerage accounts.

37:45Ben Miller:You have to move them to your transfer agent. And so it's created a lot of logistical challenges. So for those 100 ,000 investors, the way I try to explain the risk to them, so the risk is that it doesn't trade well, it trades down. and I say to them, okay, we're up 65 % in the last 12 months, 64.8 % or something in the last 12 months, and we're up almost, I think, 85 % in the last two years, something like that. So, I sort of say, okay, well, if we have to pay a liquidity premium to go public and you have this world-class portfolio of companies, last year, the weighted average growth rate of QQQ was 25 % annual growth.

38:26Ben Miller:And last year, the weighted average annual growth of VCX portfolio companies was 193%. So these companies are growing way, way faster. And you hold this portfolio and soon after we list, you'll have liquidity. You can sell, you don't have to sell. I feel like we delivered for our 100 ,000 investors.

38:44Robert Croak:I feel like you absolutely did. You said, hey, listen, it's 2022. We've got conviction. Join us for the ride. I joined you for the ride. Robert joined you for the ride. I look at my insane gains in my own Fundrise Innovation Fund account. I'm like, oh my gosh, these guys crushed it. And now you guys are saying, cool, 100 ,000 of you joined us for the ride. If you want liquidity, here's how you can get it. And if you've not yet joined us for the ride, and maybe this is the next part of the answer, which is the risk for people that are not, you know, part of that 100 ,000, but, you know, want to now get involved that it's public.

39:15Robert Croak:So people that are not, you know, joining us for the ride or have been, you guys can jump on board now too.

39:20Ben Miller:Yeah, yeah. So there's a risk for our existing investors that we give them liquidity and there's a cost to that. Yep. And that's a risk. I think that's like clear. Then there's a version, if we traded a premium, the next investor has sort of two different risks, right? One is the underlying portfolio. And two is basically how it trades. And so the underlying portfolio, some of these companies would already be some of the biggest companies in the world. But I mean, anything can happen. The way I think about private markets is you get faster growth and way more growth. They're younger companies and they're potentially riskier.

40:00Ben Miller:And you can get more mature, slower growing companies that are older in the public markets. So you're just creating access to a part of the world that's faster growth, younger, more risky. And so that's the risk of the underlying portfolio. And then how it trades, like, ask me of the weather today.

40:19Robert Croak:Yeah.

40:20Ben Miller:Like, it's just the weather's going to change. How it's going to trade is going to change. The war, I just, you know, I'm old. I'm old. I've seen like, I've just seen over 20 years, like who cares how it trades any one day? Like it's about this like seismic shift. It's about AI. I think people no longer arguing AI is a bubble. I think they're not worried about that. Literally, like, I mean, last year was like AI is a bubble. And now people are like, uh-oh, AI is like, it's something else, whatever it is. So it's, but it could still, you know, who knows? Maybe it's a bubble. So that's a risk. So I don't know.

40:55Ben Miller:There's a lot of risks in the world. you can't avoid them. I think of this, I'm hoping that people start thinking of it as like a part of their portfolio. VCX is like QQQ. It's like spiders, like SPY. You have it as part of your portfolio. You own chunkier portfolio in private markets. The long-term hold, sometimes private markets are hot. Sometimes they're cold. Over 20 years, I think it's a growing, important part of portfolio management and how it trades. I think that should be irrelevant in the short term.

41:29Robert Croak:No, I love how you put that. It should be a complement to a well-diversified portfolio that already exists, just as you would have a little bit of cryptocurrency or a little bit of real estate or a little bit of commodities. Maybe you want to have a little bit of venture in your portfolio that complements everything else inside of it. Ben, thank you so much for joining us on this episode of the Rich Habits podcast. Knocked it out of the park again and so excited to hopefully have you back again in the future. Yeah. Thanks, guys. Robert, I mean, do we even need to have a takeaway from that? I just I genuinely hope that everyone understands and hears how sincere Ben is about solving this problem.

42:07Robert Croak:And it's a problem that has made me so angry. And it's a problem we're trying to solve in the Rich Habits Network by offering investments to you all all the time over there. It's just like, I've made millions of dollars investing into privately held companies over the last six to seven years now that would have never been able to be afforded to anybody on the stock market because they're still privately held companies still. And the only reason I was able to get involved is because Ben alluded to it. Oh, you have to know the executives at this company. I've known executives at a couple of companies.

42:38Robert Croak:I got lucky, right? VCX is solving that problem for so many people. I love how they are democratizing this access. And it's never been more important with this K-shaped economy. You can't just silo all this wealth to the top 0.1 % of venture investors. You've got to let the everyday American have a piece of the pie, wet their beak.

42:59Austin Hankwitz:Yeah. And with AI, I think there's two things to it. You need to be actively learning to stay ahead of it. And you need to be actively investing and owning pieces of it. And VCX allows that. I think this episode should be a game changer for tens of thousands of listeners out there. If they really dig deep, take some notes and really understand the importance of VCX moving forward. So what an incredible opportunity for us and all of the Rich Habits podcast listeners and followers to be able to have the deep dive from the man himself at Fundrise and really explain the importance of this moving forward.

43:36Robert Croak:With that being said, Robert, let's jump to our Q &A section of this episode. Before we jump to that first question, Robert, let's remind everyone of the special announcement we made a couple weeks ago. We built the Rich Habits money map for both personal and business finances. Shout out to those side hustlers who are listening because this is for you as well. It's a plug and play setup that reflects exactly how we think about money, which is save first, invest consistently, and let the systems do the work for you. The name of our podcast is Rich Habits for a reason, because we know what to do with your money is only half the battle.

44:09Robert Croak:The real key to building wealth is making sure those money habits actually happen consistently without having to rely on willpower. That's why we partnered with GetSequence.io. GetSequence.io is how you turn your money habits into automatic systems so your money saves, invests, and works for you all in the background in real time. With GetSequence.io, you create simple rules for your money And when something happens, like getting paid from your employer or maybe even revenue hitting your business bank account, those rules execute automatically. Saving, investing, taxes, debt, all of it's handled automatically without you even having to think about it.

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45:52Robert Croak:All right, Robert, let's now jump to our first question. As you guys know, every episode of the Rich Habits Podcast, we try and answer your questions. We've got our Thursday episodes, which are completely dedicated to answering questions that you guys ask us on Instagram at richhabitspodcast on Instagram in those DMs, which is where all of these questions today are coming from. Or you can ask us questions via email at richhabitspodcast at gmail.com. Now, this question is coming from Adam on Instagram. Adam says, hey guys, I love the podcast. I'd love to get some advice as I'm a recent college graduate about eight months into my first full-time job.

46:28Robert Croak:I'm 24 years old and I started contributing to my Roth IRA about seven or eight months ago doing$580 a month into VOO. I've only contributed$2 ,900 all of 2025 and now my contributions are counting toward 2026. But here's my question. Should I contribute the remaining$4 ,100 that I am allowed to for 2025? I currently have$23 ,000 in a checking account and$4 ,000 more in a high-yield savings, and I'm adding$500 a month to that lump sum of cash. I'm still living with my parents, so saving up is pretty easy for me, especially as I think about moving into my own apartment, as well as perhaps even getting a new car in 26 or 27.

47:13Robert Croak:I also have$25 ,000 of student loan debt. My monthly payment is$291. Would love to hear y 'all's perspective. Robert, what advice can you give our friend Adam?

47:23Austin Hankwitz:Well, I would first say Adam is crushing it. I love seeing people that are young and hungry and out there doing the thing, getting the things set up, seeing the Roth IRA set up and all that. But to break it down tactically, I think Adam is sitting on way too much money in a checking account. At 24 years old, there's no reason to be sitting on that much cash when you already have the high yield savings account. So I would love to see him go back and max out the Roth IRA for 2025 and get as much as he can to max out in 2026 and trim that back a little bit. I really like that idea. And then when it comes to the student loan debt, he's paying on them right now, probably paying the minimum at$291 a month.

48:05Austin Hankwitz:Depending on the interest rate there, I'm assuming if they're five and a half or less percent on those student loans, I would keep rocking and rolling and paying on those and seeing if the government extends any new programs in the future to maybe lower the interest and help make those easier to pay off. But I like where he's at. I would just like to see some of that money go towards getting those Roth IRAs maxed out. And maybe what I would do, too, with VOO is additionally add QQQ in the mix as well in the Roth IRA. So that would be what I would do tactically if I were Adam at 24 years old.

48:41Robert Croak:There we go. Adam, you've got$27 ,000 between your checking account and your high yield savings, and you're adding$500 a month to that lump sum of$27 ,000. I think it makes a ton of sense to take$4 ,100 of that$27 ,000 and use that to kind of contribute to that Roth IRA back toward 2025, assuming you've not yet filed your taxes for 2025. Go max out that Roth IRA for 2025 and continue contributing here in 2026. that's going to leave you$22 ,900 of cash. If I were in your shoes, because, you know, I'm assuming you've got so much cash because one, you're trying to save for an apartment, which is first and last month's rent.

49:22Robert Croak:And two, you mentioned you're trying to buy a new car in 26 or 27 or something like that. If I were you, I would love to see you spend and maybe allocate here more money toward investing, be a little bit more comfortable living at home. Maybe, you know, you're 24, maybe you live at home for the next 18 to 24 months, allowing you to really turbocharge your investing beyond just the Roth IRA, right? Think about, I mean, you've got eight months into a job. Are you investing up to the match? I hope you're doing that, right? Match beats Roth beats taxable. But then like, even let's say you don't have a 401k beyond that, like, let's open up a taxable brokerage account public and just start putting another$500 or$700 a month into that and investing that to the S &P 500.

50:10Robert Croak:We always like to see people have the equivalent or more of their student loans invested before they start making extra payments on it. I'm only seeing you've got, you know, a couple thousand dollars here. You said 2 ,900 contributed last year for the Roth and you're maxing it out here. We're on pace two in 2026. So if you had four grand, five grand in this Roth IRA, You're saving a lot every single month. You've got all this cash. I'd love to see you take maybe even more of this cash, invest it, get it working for you while you're young, and then say, okay, how much money do I need to get that first and last month's rent?

50:48Robert Croak:Do I really need a new car right now? Is this really more important to me than getting an extra$10 ,000 invested at 24? because Robert, I think the stat is every dollar invested in your 20s turns into 70 in retirement. So think about that for a second, Adam. Every dollar you invest right now in your 20s will be$70 in retirement. You're telling me you want to go buy a new car? You're telling me you want to go not live with your parents for an extra 12 months because your friends are making fun of you? Dude, screw your friends. Go get that extra money in your retirement. That's what I'm thinking.

51:19Austin Hankwitz:I love that takeaway. And I love that stat because so many people do it backwards. They spend their 20s and 30s out screwing around, buying things, depreciating assets, buying clothes they don't need, getting a new iPhone every single time, not realizing the power of compound interest if they just set aside money early when they're in their 20s and early 30s and let it ride forever and everyone can retire a multimillionaire if they did that.

51:47Robert Croak:So our next question on Instagram comes from RJ. RJ says, Hey, y 'all, I love your podcast, and I can't get enough. I'm 62, and I'm currently renting from a family member. Here's my question. Should I buy a$425 ,000 condo in cash or mortgage it with a 20 % down payment? This is a 55 and older community with a golf course and many other incredible amenities. So the HOA is around$1 ,200 a month. I have$600 ,000 in stocks and savings. I plan on working until I'm 70 so I can save in my Roth. Robert, what's your perspective here? What advice can you give RJ for someone who, in their 60s, should probably be looking toward retiring without a mortgage, but with only$600 ,000, maybe there's a different way to think about this.

52:35Austin Hankwitz:Yeah, RJ, I think it's a horrible idea. You have$600 ,000 right now, making you money, building towards retirement. You're 62 years old as it is. I think it would be a really bad idea to go plunk down$425 ,000, which is over 80 % of what you have saved for retirement, to buy this condo and then still have the$1 ,200 per month for the HOA fees. I would rather see you continue to rent, but if you're trying to improve your lifestyle, maybe see if you can find one of those same condos, but just for rent at a reasonable price so you can keep letting your money grow towards retirement without depleting all of what you've built.

53:17Austin Hankwitz:because already, even if you're going to work for an additional eight years, you're still on that fence where you don't have enough for retirement as it is. And buying a condo, which aren't traditionally great investments, yes, the amenities are great. Yes, that's fun and cool and helps your lifestyle, which I appreciate. But they're not great investments in most instances. So I would rather see you keep rocking and rolling, try to rent, not put all that money down or pay cash for the condo for certain. keep the money building towards your future and figure it out and try to continue renting.

53:52Robert Croak:Yeah, I think there's, you know, sort of a fork in the road here. Maybe there's three alternatives. RJ just talked about the first one, which we can agree is probably not the way to go here, RJ. You would be wiping out your retirement savings. You would be only having, call it$150 ,000, $175 ,000 left to your name at 62 years old as your nest egg, but like a paid off place to live. and that paid off place is not really paid off because they're gonna come at you with 1200 bucks a month just to live there. Like that to me right now is the road that we're not going down. Now let's think about the absolute opposite of that.

54:26Robert Croak:The opposite is you have$600 ,000 in stocks and savings. You are renting right now from a family member, which probably comes with some favorable rents. I would imagine your family member wants to see you live comfortably so they're not raising rents on you. It's not crazy. so the other side the complete opposite is you continue to rent from 62 to 70 because you said i plan on working until i'm 70 so rock and roll you're gonna work let's let's get really really smart about this then the next eight years let's say you're now renting from this family member for the next eight years you're 600 000 in stocks in savings the rule of 72 tells us the stock market doubles every seven years your 600 000 is probably not aggressively invested at your age You're more on the capital preservation side, so it's probably not going to double in the next seven or eight years, but it could increase by 50, 60, 70%.

55:16Robert Croak:So now we have$1 ,900 ,000,$1.1 ,000 is what this$600 ,000 of stocks and savings turns into at 70. Now you're 70 years old. You've got$1 million in your stocks and savings. And now maybe you can say, cool, I want to go spend$300 ,000,$400 ,000 something thousand of that. because again, we don't want people to go into retirement with a monthly mortgage payment. But again, you got this HOA, so it's kind of a trade-off. But that is coming from a position of strength, right? Hey, I've got a million bucks. I can go put$400 ,000 toward a condo or$350 ,000 toward a condo that makes a lot of sense for me.

55:52Robert Croak:I've got my Social Security that's probably paying me$2 ,000 a month. And after everything's said and done, another$700 ,000-ish, maybe$600 ,000 nest egg, which at the 4 % rule, we're talking about another maybe$2 ,000,$3 ,000 a month on top of the 2000 social security. So now you got a paid off mortgage with$5 ,000 a month of income. Yeah, you could probably retire with something like that. But you absolutely can't retire by taking 600 ,000 here, putting 425 into cash, and then still having this$1 ,200 payment, it's just going to eat you alive. If you plan to work until you're 70 RJ, I would think about that as a very strategic plan.

56:28Robert Croak:Stay the course here rent from the family member, have this 600 ,000 in stocks and savings grow for you over the next eight years into 800, 900, a million, 1.1, depending on how it's invested. I would also ensure you're perhaps working with a financial advisor that's going to put you in these different types of, you know, you got your growth and a little bit of fixed income, stuff like that, given your age. But that's how I would approach it. And then the final piece of advice I can give you, RJ, is think about, okay, you're 70, right? Are you really just going to sit around at the pool all day?

57:00Robert Croak:Is that truly, are you just going to golf every day? Is that how you want to spend your, I mean, the average person, I would argue in eight years, modern medicine is going to be even better. You're probably going to live another 15, perhaps 20 years beyond this 70 age. Are you going to sit at the pool for 15 years? Probably not. Maybe you want to give back. Maybe you want to have a little part-time job, work at the pet store. Maybe you're really into dogs or hamsters and you want to, I don't know what you're into RJ, but regardless, you got a part-time job that could also supplement some of this, right?

57:28Robert Croak:So a lot of ways to think about this, but at that 70 years old, what could that encore career turn into as well? Now, before we answer the final question for today's episode, got to give a shout out to public.com, the investing platform for those who take it seriously, because on public, you can build a multi-asset portfolio of stocks, bonds, options, crypto, and now generated assets, which allow you to turn any idea into an investable index using AI.

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58:30Austin Hankwitz:Paid for by public investing, full disclosure in the podcast description.

58:34Robert Croak:All right, Robert, let's now answer this final question. So our last question comes from Raymond on Instagram. Raymond says, Hey, Austin and Robert, I'm 48 and my wife is 53. We make$250 ,000 a year in W2 income and about 150 of that comes from my import slash distribution produce business. We have maxed out both of our Roth IRAs for the last three years because we've listened to your show, and I have about$150 ,000 in my 401k. We have two investment properties. One is completely paid for, which is worth about$600 ,000 and generates$28 ,000 per year after associations and taxes. And the other is a duplex that we still owe about$150 ,000 on.

59:15Robert Croak:It's worth$400 ,000 and it generates$20 ,000 per year net. Additionally, we both have brokerage accounts with about$350 ,000 combined inside of them. We don't have any debt other than a$70 ,000 SBA loan at 3 % and two car loans at about 4 % to 5 % totaling$60 ,000. We still owe about$300 ,000 in our current home in Fort Lauderdale and it's worth about$1.5 million. Here's our question. I just received$200 ,000 from an inheritance. What would be the best use of this money given my age and financial situation because I truly feel behind for retirement? Thank you so much, Raymond C. Robert, you want to kick off this question from Raymond?

59:56Austin Hankwitz:Sure. Raymond's doing a great job and I like everything I see. You know, it's a little weird having the$70 ,000 SBA loan, but only 3%. I probably wouldn't chunk the money in there and pay that off because, you know, it is low interest debt. We like to see that. What I don't see in this question, in this breakdown is anything to do with investing in kind of these private companies and, you know, venture capital and that kind of investment strategy, like we do in the Rich Habits Network, finding those private companies that are looking to raise capital. So I would say that an additional real estate is probably where I would go.

1:00:35Austin Hankwitz:But also I would like to see, and maybe they already have it and didn't allude to it. But I would like to see a portion of this going into some of these commodities that we like, because I still believe that there's a lot of room to grow in silver, gold, potash, copper, some of that. So I would probably get a little bit more diversified outside of the traditional scope of things doing this strategy with some of the 200K, and then go from there to give a little bit more upside potential and growth aside from the traditional investments they already have.

1:01:08Robert Croak:So Raymond, you've got about$550 ,000 in the markets right now. You mentioned three years of Roth IRA for you and your wife. That's 14-ish thousand a year, plus a little bit of growth. You mentioned 350 ,000 in brokerage accounts, 150 ,000 in your 401k. So you're about 550 right now. You mentioned that I feel I am behind for retirement. First off, no, you're not. You are not behind for retirement. Rule of 72 tells us anything invest in the stock market that's growing at this 10 % per year is going to double every seven years. Your$550 combined in seven years will be worth a million. Seven years after that,$2 million.

1:01:44Robert Croak:And seven years after that,$4 million. So if you genuinely feel behind and you're like, guys, I don't know what to do. I feel like really behind about all this stuff. Like maybe that's coming from a place of payments. Maybe you see money come in like this$20 ,000 per year you're making with the duplex So the$28 ,000 per year you're making with your paid off investment property and you're like, oh, I'm making this money, but it's going out the door to payments for this car, payments for this car, payments for this loan. Maybe that's where that feeling comes from. And I would argue as millionaires, you have enough money and liquidity in your brain to say, yeah, if I emotionally want to take$130 ,000 of this$200 ,000 and use it to wipe out this debt because I emotionally feel like I'm behind for retirement, you can do that.

1:02:33Robert Croak:That's going to help you sleep better at night, maybe, right? It's like personal finance is personal. Make the decision that makes best sense for you and your situation and what you are sensitive to. And if you are sensitive to debt, if it's an SBA loan against your business or these car loans, like whatever, sure, you can use it for that. But I don't think that that is the best use of this$200 ,000. I would rather genuinely just see you take all$200 ,000, add it to the$350 ,000 you have in these brokerage accounts. And if you want to diversify that into some index funds, maybe some international, maybe some Dow Jones, S &P, NASDAQ, maybe some commodities.

1:03:11Robert Croak:If you want to have a little bit of exposure to some fixed income, I don't know what you're into, but to take that 200 ,000 and invest it, knowing that it will double into four and then eight, then 1.6 over the next couple of decades. So you really are not behind on retirement. You can absolutely do that. It comes down to having that conversation with yourself and hopefully we can encourage you to have that conversation if you've not had it yet, because obviously you do seem a little risk averse when it comes to debt. You do have an investment property worth$600 ,000 completely paid off, right?

1:03:43Robert Croak:You did do that. So maybe this means, listen, guys, I've got this SBA loan and these two car loans, and I just got this inheritance and it's no sweat off my back to take$130 ,000 of the$200 ,000 and use it to pay off some of this debt because I can't sleep at night thinking that I'm behind on retirement. If that's you, Raymond, do it. Do it. It's your money. You are allowed to do anything you want with it. And we're just here to kind of help you understand the pros and cons of any decision you end up making. Now, if that is your case, do it, rock and roll, make it the right decision. Take the 70 ,000, add it to the 350, the 70 ,000 delta, right?

1:04:17Robert Croak:Add it to the 350, invest it, you're off to the races, or take all 200, invest it to that 350 taxable brokerage account. And congrats, you're going to have like four to eight million to your name in your 60s and 70s.

1:04:29Austin Hankwitz:That's a great breakdown. And I really like it. I'm with you. I would invest all 200, get some more diversification, take on a little more risk, and just let those lower interest loans rock and roll. But some people do have that mindset that any debt is bad debt. And I just don't agree with it. The wealthiest people I know have debt and carry debt as long as it's favorable to them from an interest rate perspective. So great breakdown, Austin.

1:04:53Robert Croak:Well, let's talk about it a little bit further because he's done a wonderful job of taking, because there's like two types of debt, right? There's good debt and there's bad debt. The bad debt is the car debt, right? Let's go into debt to buy depreciating assets. Well, that doesn't make any sense. Not only are you paying interest to the bank, but you're also losing value on what the money went toward, what you go purchase, where there's good debt. And good debt in your situation, Raymond, is a$70 ,000 SBA loan that I'm sure has allowed you now to generate that$150 ,000 of profits from your import and distribution produce business.

1:05:26Robert Croak:So maybe without that loan, you wouldn't have been able to generate these profits. So Raymond knows how to use debt properly to generate more upside on his life. Same thing here with the investment property. You've got$20 ,000 per year net on this duplex and you owe$150 ,000 of it against that$400 ,000 total value of the duplex. You're using debt correctly in this situation, Raymond. It's not just the, you know, to Robert's point, some people feel so visceral against it, but I think they feel so visceral because they don't understand that by carrying the debt, depending on, again, what kind of debt it is, good debt or bad debt, that it turns into something worth more, right?

1:06:08Robert Croak:It's a way to amplify upside. Just like, again, the$70 ,000 has turned into$150 ,000 per year in business profits. Yeah.

1:06:17Austin Hankwitz:And one thing, one last thing on this, the median net worth of a 48-year-old male that's married in the United States right now is$247 ,000. That's the median. So you're way, way ahead of that by four or five fold. So keep that in mind. You're not behind. You're just making really smart moves. And we're here to help you figure out that last piece, which is this recent$200 ,000 inheritance. inheritance.

1:06:45Robert Croak:Everybody, thanks so much for tuning into this week's episode of the Rich Habits podcast. We've really enjoyed the conversation with Ben Miller, the CEO and co-founder of Fundrise. Go check out VCX, the public ticker for private tech. Go type it in on your brokerage account on public or whatever you use. VCX is awesome. I've been an investor in VCX since they started the innovation fund back in July of 2022. I'm up like 70%, which is crazy. I wish I put more money in back then, but I'm definitely interested into it now more that it is publicly traded and available for everybody. It's so exciting.

1:07:19Robert Croak:So again, major shout out to Fundrise, Ben, Russell, the whole team for orchestrating this conversation.

1:07:24Austin Hankwitz:Thanks, everyone. And we'll see you on Thursday.

1:07:41Thank you.