Q&A: $4M Invested in a Single Stock, 529 Account Loopholes, & Dividing Expenses When Married

26:49And I think this is a good one. And it could go either way. I like the renting side and dumping as much money as possible into the markets and not trying to time the markets. But I also like owning property. I try to buy properties all the time. And so either way works. And they're both good strategies for the future. I think the most important thing to just realize here, Andrew, is that you've done a wonderful job, an absolute wonderful job financially by 28 years old. You're making$150 ,000,$200 ,000,$250 ,000 a year likely over the next couple of years here. You have zero debt. You've been living at home.

27:26You've been investing aggressively. You've done all the right things to give yourself the flexibility to make a choice that makes the most sense for you. I know you're trying to figure out the perfect choice, but sometimes the perfect choice doesn't exist. Sometimes you just have to jump into the water and start swimming. And maybe that could be with real estate. Maybe that means you're still living at home, your apartment. It doesn't matter. It doesn't matter the choice you make, like what Robert said, because you're the type of person that's going to make it work regardless. Remember everyone listening, and I love these episodes, personal finance is personal.

27:59Life gets in the way. You fall in love. Something happens with your family, you relocate, life gets in the way and all you can do is your best. So as long as you're learning and you're advancing and you're executing on the things we talk about and the things we educate on, you will be just fine because everybody's path to freedom is different. One of the best pieces of advice I ever got when I was super down about losing some money in the stock market or losing some money on a business venture or whatever, this person said, Austin, you have the rest of your life to make money, right? And so like I took that and I'd apply it to all parts of my life where if my dad, for example, who's turning 80 this year, if he wants to go on a two-week vacation with me, I'm gonna go hang out with my dad, right?

28:46Because I might not have that opportunity in the future. I can always make more money in the future to offset that two weeks of like vacation. It's just, I want people to really hammer home what you just said. Personal finance is personal. You can always make money for the rest of your life. do the things that matter most today with the people that you love. That's what money affords you, the flexibility and the opportunity to make these choices. I love, love, love that response. Wow. Now, before we jump into our next question from Lauren M., I do want to give a quick shout out to the Rundown Podcast by public.com Zaididmani.

29:23Last weekend did a wonderful breakdown of NVIDIA and what NVIDIA's potential future could be depending on what happens with Congress and a bunch of different things with the United States and China and export laws. And it's pretty interesting. So if you're someone who, one, wants to get the quick hit seven, eight minute long episodes every day about what moved the markets yesterday, headline news, biggest earnings, investor relations, all that fun stuff, listen to the Rundown podcast. There'll be a link to listen to that in the show notes below. But also don't forget, they have a video section of the podcast that comes out every single weekend that does like this great deep dive analysis on a really cool topic.

30:04Last week, again, I said it was about NVIDIA. The weekend before that, it was about Uber Eats versus DoorDash. I'm not sure what this weekend's gonna be about, but I'm sure it's gonna be great. So go learn something cool about investing by listening to the rundown by public.com. Yeah, I love it. Zaid crushes those episodes. And it really is why we love Public so much. They just do such a great job from customer service to their offerings, to what they charge for fees. It's just a great, great platform and we love what they do. So if you wanna listen to the rundown, click the link in the show notes below.

30:38All right, Robert, our next question comes from Lauren M. Lauren says, hey, Robert and Austin, I'm excited to see what you guys have to say about this one. I've been given a job opportunity by a friend of mine that would come with the benefit of living rent free as well as my utilities completely being paid for. I'd be getting paid$25 an hour, which comes out to$48 ,000 a year before taxes. However, again, it's rent and utility free. But here's the catch. This new job opportunity is located in Crenshaw. And I don't know the area except for all the negative drawbacks that I've heard everyone say about it.

31:13I'm a female and I'd be bringing my partner with me so I wouldn't be alone. But my housing would be gated for some kind of safety measure which makes me feel good. But you guys kind of can see the dilemma I'm having with the situation. It's a really great opportunity to save some money with my rent and utilities being completely free. And my good friend would also be the one training me on this new endeavor. But what would you do in my shoes? Do you take the job even though it's located in a not that great part of town and save money for future investing or don't take it and miss out on the opportunity?

31:44The location is the only thing holding me back. And if I do take it, what game plan would you see for my investment future that I could save for? Thanks so much. Love the podcast. Ooh, what an interesting question from Lauren. So here's my thought, and I talk about this a lot, and that is quality of life at every age is so important and so many people don't consider it that much. And so what you're saying is to save$20 ,000,$25 ,000 a year, you're willing to live in Crenshaw in an area that could be, you know, very run down. It could be, it could lack opportunity. It could lack the opportunity for networking for the time you're there.

32:29So for me, I would rather you work on your skill set to be able to find a higher paying job in an area where you feel safe, where your quality of life is better, and you just have a better overall situation. Now, I haven't spent time in Crenshaw. All I can do is imagine from reading about it of the troubles and issues you may have living there from a safety perspective. But in my opinion, I think it would be better to go out, find a way to make more money and not take the opportunity because it'd be different if this opportunity was, hey, I'm going to get free room and board and utilities in a bad area, but they're going to pay me$100 ,000 a year.

33:15Right now, you're getting paid a menial wage, you know, a pretty standard wage that's out there for any kind of decent job, yet still living in kind of a worse area. So for me, it's a no. I wouldn't do it just because I want you to be safe. I would look for a better opportunity elsewhere or work on my skill set, keep my expenses low, and go find it somewhere else. I love that answer. I agree with you. Now let's pretend that she did want to go. Let's run some numbers. And again, I think that's the correct answer. Honing in your skill set, making more money in the future so you can afford to live in a better cost of living area, whatever, right?

33:58I think that's the right answer. But assuming you did go for this, we have to think about the opportunity cost of not going for it. So let's say you didn't go for it and you're working somewhere else making$48 ,000 a year. Assuming you can find some affordable rent for about$2 ,000 a month plus utilities, we're talking about$30 ,000 a year just in housing costs. You mentioned you'll be making$45 ,000 a year pre-tax. That's about$38 ,000 post-tax, which means 30 of your 38 grand that you would be taking home would be going to your living costs. That's obviously not sustainable. So the only way for you to not take this job is to go make twice as much money somewhere else.

34:48Like that's the only way you'll have enough margin in your budget to stay invested and to make saying no to this opportunity actually worth it. So if you can go make twice as much money somewhere else, go do it. If you did take the job, it could be a two or three year season of your life where you can probably live off of 60, maybe 70 % of your monthly take-home pay, stash away the other thousand to fifteen hundred dollars a month which would come out to between like twelve to eighteen thousand dollars a year and do that for three years and go build your base right that's how you come up with let's call it fifty thousand dollars in three years by doing this you know if you really wanted to do this and you're like you know what it's just i'm just going to do this for a couple years it'll be a season of my life to get my base built like i'm not going to blame you.

35:35Everyone has to do things that make them uncomfortable to get ahead sometimes. I've done that. Robert's done that. And maybe this is that thing for you. But we would much rather see you go make$100 ,000 and have a normal cost of living, live somewhere normal, feel really good, and still have the margin in your budget to invest that$500,$1 ,000, maybe$1 ,500 a month to really get that head start on your financial journey. Yeah, and I want to add a little bit more to this. We're not saying it's easy to control what you make. You know, maybe you're just getting started in your journey and you're working on this new skill set and you got to start at the bottom.

36:16All of that is fine. So we're not saying there's anything wrong with making 20, 25,$30 an hour. Most of America makes that kind of money or even less. What we're saying is we want to make sure that you're understanding the opportunity cost from what Austin broke down because it is harder to just all of a sudden make more money to live in a better area. But also you have to understand the flip side opportunity cost, whereas if you're living in this area that is less than desirable to take this opportunity, is the opportunity cost negatively affecting your quality of life in a way where you don't make new friends?

36:54you're not networking, and you're not advancing your career so you can make more money and get out of that situation. But at the end of the day, personal finance is personal. Like we said earlier, if you feel this opportunity is right for you and you feel your quality of life and safety will be fine, then go for it. Just look at it as a season. You're learning this new thing. You're trying to get ahead. So you're taking this opportunity because of the free living expense and just go for it, but just understand both sides. And we really appreciate the question. 100 % appreciate the question. And there might be a world too, Robert, where if Lauren did take this opportunity, she might be able to save more than call it 30 or 40 % of her income.

37:37Maybe she can save 50, 60 % of her income and it really moved the needle for her. So just if you're going to do it, here's my advice, right? If you're going to do it, go all in, be as frugal as possible, save as much of this money as you possibly can. If you're gonna be living in this situation that you hate, make sure that you are taking advantage of it every single day, week, and month. I want you to be just super, super all in on this idea of learning as much as you can to what Robert said so that you can take this experience and go move up elsewhere in your career from this experience. And then also be saving as much as you possibly can on the back end when it comes to your monthly expenses because you now don't have to worry about monthly rent and utilities and things of that nature.

38:21Maybe there's a world where you don't have 50K, you have 100K at the end of this three years. That would be life-changing money, Lauren. So if you're going to do it, go all in and make sure you're retaining as much information about this experience as possible. So in three years' time, when you want to eventually move, you can take what you learned and then hopefully make 60, 70, 80 ,000 living somewhere better and just rocking and rolling, growing your career and building your base even further. I love these questions and they're definitely getting more in depth. And just, I just really love digging into the intricacies of what people go through on a day to day basis in their lives.

38:58And I just feel so blessed that we get to have all of these incredible questions brought to us every single day and every single week. It's amazing. So our next question comes from Amit S. Amit says, hi, Robert and Austin. First up, I must congratulate you guys on an awesome job. You folks have been the single biggest impact on my finances and the future of my family will enjoy everything because of this podcast. What an awesome message from Amit. Thank you so much for saying that. Amit says, my name's Amit. I'm 52 years old, married, and I have two teenage kids. And I moved residence to the United States two years ago from another country.

39:34And I discovered you guys about six months ago. I have a portfolio of$4 million invested in the stock market and we make about$400 ,000 per year. My challenge is that 90 % of my 4 million is invested into a single stock, which has done very well over the last eight to 10 years. And I've just never touched it. Almost 60 % of that $4 million is due to capital gain appreciation. After listening to you guys, I'm now ready to diversify, build my base and use all the good tips I've learned from you. So my question is this, I want to diversify 2 million of this 4 million away from this single stock. So should I bite the bullet and do all 2 million at once?

40:16Or do I sell 500 ,000 a year for the next four years or maybe something different? I wanna make sure I'm taking taxes into account when I figure out the strategy. What do you recommend? Robert, you wanna kick this one off? Yeah, this is a tough one because part of me says there's no time better than now to start investing and moving some of this money around. But first, I want to back up a little bit and talk about how important it is to diversify. Because when 90 % of your net worth is in one stock, you're one day, one bad report, one scandal away from losing most of your portfolio worth. And that's scary to me.

40:58In my opinion, you should have diversified a long time ago out of it. I know it's been making money, so it's great. but let's get this handled as soon as possible. So what would I do? I would probably bite the bullet. I'd probably pull the 2 million, take the tax hit now of whatever you have to do and get that money moved and diversified elsewhere. I like the idea of dollar cost averaging and doing 500 ,000 at a time, but the other issue is then you're still opening yourself up to the fact that that one scandal or one issue with that company could wipe you out, and then you wouldn't even have the$4 million to work with.

41:38So I would look at it that, yes, you're going to pay some taxes, but having that diversity is going to let you sleep at night a lot better and also put you in a position where you can really set yourself up for your children. You mentioned two teenage children. That's very important because right now I don't hear anything about 529 plans. I don't hear anything about you having custodial Roth IRAs for the kids. You're not diversified enough to where I would feel safe at night. And that's why I would do it right away. I completely agree, Robert. So now let's put some numbers around it. So if you are taking home$600 ,051 or more married as a married couple, then you will owe 20 % on this long-term capital gain that you have alluded to.

42:30So let's like break that down. You're taking home 400 ,000 right now, which means for you to take advantage of a 15 % capital gain because you wanted to keep taxes in consideration of selling this, you would have to only cash out$200 ,000 of this or less, which will be another 10-year period of time before you can completely diversify away. If you wanted to do some of that, I'm not mad at it, but I completely agree with Robert. It is so important to diversify your money out of a single stock. You have$3.6 million in a single stock, which to your point probably has done pretty well over the last eight to 10 years.

43:10Congrats. Time to go cash in. like you rode the wave for the last eight to 10 years that is something a lot of people can't do now you should reward yourself and say okay great i'm going to cash in on this i'll pay my 20 percent capital gains and i'll make sure now to invest this and diversify it perhaps into some real estate maybe some gold and silver as a safe haven with precious metals maybe a little bit of cryptocurrency maybe a little bit of you know whatever else you can come up with from a diversification perspective beyond the US stock market and the NASDAQ and the Dow Jones and things like that.

43:42I think it's a wonderful place to be. The biggest thing to consider here though is that tax hit. You will pay a 20 % capital gains tax on the profits. So work with a professional CPA that can sit down with you and help you figure out exactly what that comes out to. You do not want to be in a situation where you have to get a surprise from Uncle Sam and it's like a whole thing. Maybe there's a world where you can max out some other retirement accounts to offset some of that. Just working with a professional will really help you offset some of this tax liability, but being sure to know that you will have a tax liability on this is the most important thing.

44:19And then, yeah, Robert, let's say that this person is able to diversify their money away. They still have, I think they said, let's call it one and a half-ish million dollars in this single stock. Does that scare you? How does that make you feel? Yeah, it's still a lot. The general rule of thumb is you should never have more than 5, 6, 7 % of your net investable capital into one stock. So even at this, let's call it$1.6 million, that's still 40, 45 % of the net worth after taxes, assuming the 20 % tax rate. But you also have to look at the flip side. A very important part of this is that when you're paying this tax bill and nobody wants to pay a tax bill, is that a lot of it is gains.

45:01So you have to be able to look at it from that perspective is you are giving yourself peace of mind and diversity through your gains. So that makes it a lot easier to pay this tax bill and feel good about it moving forward. So I don't like having that much in one stock. It scares me. And I think that Amit needs to really keep considering that. So maybe start with the$2 million and then migrate more over time. But I would definitely get some of that money out right away because you don't want to be a one-trick pony and be in a bad situation if something were to go awry with that company. You mentioning that reminds me, right?

45:40Amit said they're 52 years old. This is the time where you said, hey, listen, I made a big bet over the last decade and it paid off for me. From 42 to 52, I made millions of dollars by betting on this stock. Now it's like, congrats, you're 52. Your kids are going to be going to college soon. I'm sure you might be thinking about what retirement can look like in the next decade or so. It's time to take some of that crazy risk off the table, begin to diversify in the markets and different types of asset classes, and set yourself up for a wonderful retirement. I couldn't agree more. And before we go into our next question, listen up, folks.

46:17Time could be running out to lock in a 6 % or higher yield at public.com. You can lock in a 6 % or higher yield with a bond account, but remember, your yield isn't locked in until time of purchase, so you might want to act fast. Lock in a 6 % or higher yield with a diversified portfolio of high-yield and investment-grade corporate bonds only at public.com forward slash rich habits. As of recording this, Robert, on March 3rd, 2025, it is a 6.6 % yield. That's pretty good. So if you want to diversify your portfolio, perhaps a meet, this could be a wonderful way for you to do that as well. And for anyone else listening, a bond account on public is a wonderful way to just add a little bit of stability, right, to your portfolio on a monthly, quarterly, and annualized basis.

47:06So our next question comes from Kristen B via Instagram. Again, this is the Rich Habits Podcast Instagram account. Kristen says, what is a fair way for a married couple to divide their expenses when one partner makes significantly more than the other? In our case, my partner makes 125 % more than I do on an annualized basis. Thanks so much. Robert, you want to kick this one off? Yeah. So Kristen B., I think this is a great question. And more and more people, this is definitely something that didn't happen a lot 10, 20 years ago, but it's certainly happening now. And I really love it because if you can break this down proportionally and take each share and say, okay, your partner makes 125 % more than you.

47:53So you break down the math of what your percentage should be then of the totality of the monthly bills. And that makes it much more reasonable and fair for both parties. I think it's a great conversation to have. I think it's really smart to do. And this is can be for just regular money making earning couples. It doesn't have to be just in affluent couples. This can be for any random couple out there that's doing well, that's building their wealth and they're really enjoying life. So keep that in mind, break it down proportionally, just like you've alluded to. I just think it's a great strategy to have the financial conversations early.

48:31We talked about this in an episode a long time ago. Get these conversations out of the way even before you're married if you can. What does our future look like? What is each person bringing to the table, good and bad? And I think you'll be in great shape. This is a great question, Kristen B. And Robert, I appreciate that answer. I'm going to take the other side of that. I'm going to say that it shouldn't matter. You guys are married. You guys have a joint checking account. You guys are paying for expenses anyway out of this joint checking account. It's like, hey, how much does our household make?

49:04Kristen, let's say, for example, you're making 100. Your spouse is making, let's say, 225 ,000, right? That 125 % more. So together, you're making $325 ,000. It shouldn't be, oh, my spouse makes more than me, therefore they should pay more of the mortgage or they should pay more of the groceries or more. It's like, no, you guys have $325 ,000 a year. Let's call it post-tax. We're talking about$260 ,000 a year or about$20 ,000 a month. Let's say you have$20 ,000 a month that gets deposited to a joint checking account. Out of that joint checking account, we pay our mortgage, we buy our groceries, we pay our utilities, we pay for our insurances, we pay for all the other different things that go with running a household.

49:50We set money aside for our retirements. We are saving for our vacation, right? It's an our thing. It's not like my expenses and their expenses because they make more than me. I will be in this situation with my fiance, soon to be fiance, and who will turn into my wife. I make 10 to 15 times more than she does on an annualized basis. I'm an entrepreneur. I'm a business owner, right? I just make more money. But at the end of the day, we're going going to have joint checking accounts. We're going to have all of our money go into one spot. We'll do that after we get married, obviously. And then we'll make decisions with our money because we are married and it's our money.

50:27It's not my money. It's not her money. It's our money. And I just think, again, that's something really important that people need to understand when they're married. And I'll caveat that. A lot of people are like, oh, what if it's an abusive relationship? What if it's these other serious things? Yeah, if addiction or abuse or whatever is going on here, Of course, there are caveats to this. Do not combine finances with someone who is not a good person, right? Like I totally am empathetic to that. I hear you. But I would argue that 80 to 85 % of the time that is not the case, maybe even up to 90 % of the time that's not the case.

51:00And that combining finances, being on the same picture financially, knowing that this is our money that is then financing our monthly expenses of our household and our retirement is the best mentality going forward for long-term wealth building? So I'm going to stay on the other side of the fence here. When I was married and in every relationship I've been in, I've paid all the bills. It's just the way it's been. It's always been that way for me. I think that's how it should be. If the man is the breadwinner, that's okay with me and that sits right with me. But I think in modern society, and we have to be cognizant that we do have a divorce rate of 50 % or higher right now as we film this episode, you have to look at both sides of it because, you know, with a more proportional earning situation between the two entities in the marriage, I think it's important to understand that what do you do in the situation?

51:58You know, nobody wants to think they could end up in divorce. I never thought I'd end up divorced. I'll be honest there. I thought I was in a great, great place. But what do you do if you want to protect yourself financially. If you just pool all the money and you don't have kind of your own side and their own side, then I think it's okay to pool it all. And I agree with you on that. But also I think we live in a different era. Otherwise we wouldn't have divorce rates being so high to where I just feel people should at least be cognizant of protecting themselves, whether they're the breadwinner or not.

52:35So they have some sort of separation to be able to have their own nest egg just in case. You hear it all the time where people get divorced, and I deal with it all the time with clients where they get divorced, and let's say it's a traditional husband and wife marriage, and the wife then fights for her portion of whatever is there, or worse, the husband was misleading her for years and they didn't have the money that she thought, and then she's gotta go out and start over, or maybe it's flip side and he's got to go start over. It's just a little scary to me. So I like where your head's at. And I just disagree with it a little bit because I feel that not necessarily that it should be proportional on the bills, but that there should be some separation.

53:22So each person has their own accounts when it comes to their retirement. Oh yeah. I mean, everyone has their own Roth IRA. They've got their own 401k, all that fun stuff. I mean, that's just smart. I think what I'm trying to get at is like the money comes into a bucket and then we say, cool, Austin, you need to max out your Roth IRA this year. So we're going to put in our budget, our honest budget,$583 a month for Austin's Roth IRA,$583 a month for Austin's spouse's Roth IRA. And then we're off to the races, right? So it's like, I guess what I'm saying is I'm also assuming that we're on the same page.

53:57Like you were talking about like divorce rates and stuff like that. Isn't money like the number one reason why people get divorced anyway? way. I think I read the stat where if you're on the same page with money, politics, and religion, the divorce rate drops to like 8%. And so there's a 92 % chance that you guys are going to be just fine, assuming you're aligned with those three things, which I would argue everyone should be aligned with before they get married, right? So maybe it's just like the optimist in me thinking about like the best way to grow wealth is to be on the same page with money as a couple and sending Venmo requests back and forth.

54:29That's just, that's not the relationship I want. I don't want to have to buy this or, oh, you buy this or all about it's like, no, like we are a unit. We're going to be buying things together. We're going to be investing in things together and we're going to be growing our wealth together. Then I think the way to resolve this as I think through this, because I've been on both sides of it is to maybe everyone out there listening. No one ever thinks that their significant other is going to change, leave them, have an affair. You never, ever think that you want to assume when you get married that it's going to last forever and it's going to be beautiful, but that's just not the math.

55:02It just isn't that way. And so I would say then a way to cap this off would be maybe you have a life meeting once every 90 days where the two of you sit down, you look at the books, you look at where you're at, you look at the spending habits and you say, okay, what are we doing here? Is everything on track? Are we getting off track? Is one person spending way too much? And you figure it out. And I think that would be the best strategy moving forward to keep the romance going because you're right. I knew a couple that would Venmo each other back and forth for stuff. I thought it was very, very terribly unromantic.

55:38I would never, ever be in a relationship like that. You know, I'm old school. I believe the man should pay all the bills. That's just the way it is. But then does it get tricky if there's more an equal balance in the financial set of things? For me, it has never been that way. But for others, maybe it does. So I think that's where a financial life meeting could come into play and really kind of unpack it for both parties to make sure that there's no money constraints that someone is holding back and not sharing with their significant other. I think it comes back to our favorite phrase of broke people react, wealthy people forecast, right?

56:16Every 90 days, every 30 days, every 60 days, it doesn't matter how often, more often than not though, you and your significant other, right? Your spouse, the person you're married to, y 'all should sit down, pen and paper and forecast what the next month's budget's going to look like. Hey, we're going to make 20K this month. My name's Kristen. My spouse's name is whatever. What are we going to do with this 20K? It goes into the joint checking account. We got to pay the mortgage. We got to do this. Oh, Kristen, we got to max out your Roth IRA. Spouse, we got to, you know, I know you've got a car note, right?

56:46So it's like all these things are all getting figured out in real time. Being on the same page and being transparent with money is how you have a healthy relationship with it and a healthy relationship with your spouse. This comes from someone who's not married. I've not yet seen the downfalls of a marriage yet. So I'm talking from an optimistic perspective here, but like that's how I plan to approach marriage myself. Yeah, I love it. And this is a very, very slippery slope of a conversation because you've not been on the bad side of all this. And I'm not trying to be a negative Nancy. I'm just trying to make sure everyone has their perspective in order.

57:20You know, I did a call with a very, very wonderful woman. It was a one-on-one call a couple months ago. And she was telling me this story that she thought that her and her husband were wildly successful. She never touched the bills. She never knew anything about the money. She just did what she wanted. And it never mattered until the day the sheriffs came to the house and said that there were three mortgages and the house was getting taken by the sheriffs. And all of a sudden her life got upended. I'm not trying to get emotional, but it was brutal. And this happens all the time. So don't take this as negative.

57:56This is just me giving you the best experience and information I can give each and every one of you to make sure to keep the romance, but also have these meetings, have the hard conversations so you always know where things stand. So our final question comes from Art V. Art says, I'll start by saying that the Rich Habits podcast is my favorite podcast. Thank you. Now, with regard to the emergency fund that you guys are always talking about, you suggest to have money set aside in a high-yield savings account. What do you think about me putting that money instead into dividend stocks? My logic is that I could sell stocks at any time.

58:34My monthly expenses are about$8 ,000 a month. I've got a couple rental properties. So if I have$50 ,000 in an account that's only earning three, maybe 4%, it feels like a missed opportunity. What do you guys think about this strategy? Robert, this is something I think I get the most flack on, which is like an emergency fund is not an investment account. You're not supposed to be earning 9, 10, 12, 15 % on it. It's an insurance against your existing investments, right? It's the insurance that when it rains, it pours, like it always does in life. And you're going to have that$6 ,000 set aside to go do that thing or the 12 ,000 that you'll need in case of this big thing happening or whatever with your three rental properties.

59:14You might need a roof, you might need something else and something else, 30K out the door like that. If it's in the dividend stocks, and let's say that these dividend stocks are experiencing a 10, 15, 20, 25 % correction like they did in 2022, well, congrats, your 50 ,000 is now worth 32 ,000 and you don't have the money you used to have if it was sitting in a high yield savings account, just sitting in cash, earning some interest, and insuring against your investments that are in your retirement accounts, right? So now you drain your dividend stocks. They're down anyway. Now you got to drain the 401k or take a loan out or something stupid.

59:50We don't want to do any of that stuff. We want to have our 30, 40, 50k sitting in our high yield savings account earning three or 4%, allowing us to stay invested with our 401ks, our Roth IRAs, and our bridge account so that those investments don't need to be touched, don't need to be borrowed against or cashed out or anything at an inopportune time. I couldn't agree more. And I always tell the story about what one year looks like for most people. And it kind of goes like this. We're going into springtime right now. Guess what's happening? Wedding season. So you're going to get invited to all these weddings.

1:00:24You're going to put it on the credit card. You're going to take money out. You might even sell some crypto or stocks to go do that wedding. And what most people do is they say yes, even when they can't afford it or haven't budgeted for it, because maybe this year is the year that more of your friends get married. And then you find yourself in a situation putting the money on credit cards. So wedding season's over, we're getting into the fall, you're paying down the credit cards, you're getting back on track. Holidays are here, Christmas happens, boom, boom, boom. You're ready to rock and roll.

1:00:54It's an endless cycle. And like Austin alluded to, the emergency fund isn't because you can't get your money out of stocks. I can right now ask for a wire of$100 ,000 or$1 million and have it in my account in a couple hours. But the problem with that is if that money is invested and it's pulled out, it's a taxable event. And you're robbing from your future for something you want to do today. That's why the emergency fund is great because it's liquid. It's not a taxable event when you use it. And it puts you in a situation where you don't use the credit cards when something pops up. So keep that in mind.

1:01:33I love it. Always understand the emergency fund is not an investing account. It is for emergencies. And emergencies can be tires. It can be something at the house where you have a bad hot water tank. It doesn't matter what it is. It's to keep you from using the credit cards or pulling money out of your retirement accounts. Yeah, a good example of an emergency is Christian, as you guys might know. He's our partner here in the podcast. He had a burst with his pipes underground in the new house he bought and whatever. It's like 15 grand he had to come up with in two weeks to go pay these people to fix it because his water wasn't running and it just didn't work, right?

1:02:13So it's like these emergencies can be, especially you mentioned three rental properties, they can be thousands if not tens of thousands of dollars that you might not be able to see coming. And if you have money invested into dividend stocks that for whatever reason we might be experiencing a contraction or a pullback in the markets, now you got to sell at a loss to go cover an emergency. Or if you don't want to sell at a loss, you got to borrow on some credit cards. It's a mess, dude. Don't dabble with it. Have your high-yield savings account. Use it for emergencies only. I love it. And that is what makes our 30-year age gap so special is because, you know, we have two spectrums.

1:02:54We have all the stuff and all the crap I've gone through over 30 years and 35 years of investing in building my portfolio and my wealth. And then we have you, this brainiac nerdy guy that's just really, really good at what does. And combining all of that experience and stories and knowledge really helps us break down difficult subjects in two different ways. And that's what I love the most about these Q &A episodes is us being able to really unpack it from two perspectives to help people make that educated decision because personal finance is personal. I couldn't have said it better myself, Robert.

1:03:31Everyone, thank you so much for joining us on this week's episode of the Rich Habits podcast question and answer edition. We have gotten so much positive feedback on this show year to date. We've got 70, 80, 90 ,000 people coming back now every single week to listen to our show. So if you've learned something on any of these episodes, please share it with a friend, send it to them via text message or a DM or maybe someone you know at work, maybe it's a family member. And if you do like what you hear, please consider leaving us a five-star review on Spotify. Thank you so much for tuning in, and we look forward to seeing you on Monday.

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