Q&A: Spot Bitcoin ETFs, Shiny Ball Syndrome, and Revocable Trusts

0:01The world moves fast. Your workday? Even faster. pitching products, drafting reports, analyzing data, Microsoft 365 Copilot is your AI assistant for work built into Word, Excel, PowerPoint, and other Microsoft 365 apps you use, helping you quickly write, analyze, create, and summarize so you can cut through clutter and clear a path to your best work. Learn more at Microsoft.com slash M365 Copilot. Hey everyone, and welcome back to the rich habits podcast question and answer edition we continue to be super grateful and happy that public.com is the exclusive title sponsor for these question and answer episodes now as a reminder public.com is one of our favorite online brokerage platforms because they offer much more than just stocks they give investors the opportunity to own cryptocurrency t-bills bonds and even music royalties they even just launched their own high yield cash account that pays a higher yield than Robinhood, M1 Finance, Ally Financial, and literally everyone else at 5.1 % with no subscription fees required.

1:09Did I mention the funds are insured up to$5 million? They're also fully liquid, so you can withdraw your funds at any time. Be sure to move your existing savings over to Publix High Yield Cash Account by visiting public.com front slash rich habits. Yes, they even built us our own awesome landing page. Yeah, if you visit public.com forward slash rich habits, there's also a link in the description below. You're going to find all the information you need to make an educated decision with your money as it relates to not only their high yield cash account, but their bonds, their T-bills, their music royalties, all different ways that you can earn yield with your portfolio in 2024.

1:48So with that being said, we're actually going to switch things up a little bit on this episode of the podcast. We are going to still do the question and answers, but we're actually going to get all of our questions today from the public.com platform. As you all might know, public.com is kind of like a Twitter vibe, right? They've also got people that ask questions, give hot takes, kind of stuff like that. And we posted earlier in the week saying, hey, we're going to take some questions, shoot us with them. And we got 18 questions in like two days. So we're really excited about it with our first question being Omar asks, What do you think about managing the instinct of investing?

2:25I feel like I walk on a tightrope sometimes trying to balance my long-term investing with my short-term ideas. How do you keep things straight when new ideas and opportunities pop up all the time? This is a great question. I don't think we've ever been asked this question. And really, the shiny ball syndrome is problematic. It has a cute name, but it can kill people's investment strategies. And what does that mean? The shiny ball syndrome basically means when people bounce from idea to idea to idea and they just really never focus in on a plan and what their goals are financially. I've suffered from it.

3:02Millions of other people do as well. So it's a really, really great question. And my take on this is really simple. Figure out kind of your three-pronged approach of what you're trying to do with your money and your investment style and strategy. You might have one prong be your retirement. What are we doing with that money? That's the money that we put away for the long term. Hopefully it's through a Roth IRA. You're not touching that money. You're not getting in and out of that money. So then that second prong could be a traditional brokerage account. So that one's going to be your riskier investments.

3:33You're going to really go pedal to the metal with those and really push hard. Make sure your dollar costs averaging into a lot of your favorite investment vehicles. And then I would say your third prong might be diversified investments. It could be real estate, cryptocurrency, maybe fine art. Who knows? It could be whiskey and wine. But that's the one you want to have in those alternative investment strategies. And you want to try to stick to those core three prongs. And then if you wanted to add a four, which is your YOLO money, where you're just trying to get out there, find that next hot crypto, invest in some more risky items.

4:08that's okay as well, as long as you're really focusing on having your key three elements of your base, that those are dialed in and you don't sway from those strategies very much. I largely agree with this, Robert, because the first prong is that retirement. That's the money I don't want to touch. I want to make sure that's an incredibly safe long-term ideas like the S &P B500, the NASDAQ, QQQ, VOO, Moat, SPYI, the names that we know and love and have been talking about for several months now. That's my long term. The second one that you mentioned, that taxable brokerage account, I'm right there with you.

4:47I'm doing some long term stuff in there because I do want to build out a bridge account, but I do see the single stock names that get me excited. And when I see those names and I do want to have a little bit into that, I'm okay with allocating five or 10 % of my total invested capital to those more interesting opportunities, right? And the last thing you mentioned here, which I would argue is probably something not everyone might have the opportunity to do, but there definitely should be some diversification in people's portfolios beyond just these riskier ideas, right? The fine arts, the wines, the whiskeys, the cryptocurrencies, the real estate, stuff like that.

5:22We definitely want people to have as much capital as possible invested into these long-term index funds. But as things might get turbulent, it is a good idea to have different types of outperforming asset classes like fine art, whiskey, wine, real estate, all the fun things that we talk about on the podcast as well. So if it were me, I think the biggest thing that's going to help me stay on track is automating the process, right? I know a lot of the brokerage platforms that we use and that our listeners use have this sort of auto-invest feature. So if you can go into your brokerage account, into your IRA or your 401k or whatever the thing is and automate the process of putting it into these S &P 500 NASDAQ long-term index funds and automate the process of having a nest egg by the time you're 59 and a half, 60, 65 years old.

6:08And then you still have a little bit of money left over to have some fun with and do the shiny ball syndrome stuff. I'm not mad at it, right? I want you to have some fun. That's what investing is all about, but do it after you already have your future figured out? For me, it's all about once you get your base built, we're talking about getting the retirement account up and running, have that Roth maxed out, have that traditional account as well, where you've got some of these stocks you like. Once you get that base at say$100 ,000 and that's working for you, then I think it's okay to venture out into a couple of these.

6:40Maybe you want to buy a small business. You want to invest in that restaurant or buying that laundromat. I think that's okay, but you have to have your base first because you want your money automated as much as possible and you want it working for you. But then when you get to a point where you're comfortable, the money's coming in, you've got your base built, then I think it's okay to start venturing out. Just don't get lost in the shiny ball syndrome that so many people do where they're bouncing from each new item every six months and they really end up never seeing anything through because then you'll find yourself continuously chasing money and not building wealth.

7:15Really good question, Omar. And shout out to you for asking us this question on public.com. Our next question comes from Jonathan. Jonathan says, hey, Robert and Austin. I love the podcast and I've learned a ton from you two over the past year. Here's my question. T-bills often have a higher yield than a high yield savings account. And they also have tax advantages while still being liquid. Is there any reason to maintain a high yield savings account at that point? Couldn't I just dump all of my emergency fund into T-bills instead? Robert, you want to kick this one off? I would love to. That is a great question, Jonathan, and you're absolutely correct.

7:50Note state and local taxes as far as for your gains in a T-bill. Super easy to buy through public.com, and they pay better in most instances than a high-yield savings account. So there is no real advantage. So many people feel that a high-yield savings account is the way to go because they believe it's liquid and maybe a T-bill is not. but T-bills are fully 100 % liquid with no penalties. So for me, you're 100 % correct. I don't see a reason not to because so many people get caught up in the liquidity issue of even owning stocks or other types of investments. And in most cases, you can get your money out within a few hours.

8:30So I love that you understand this with T-bills and I agree totally. Yeah, I'm right there with you, man. You know, Jonathan, I have a high yield savings account and I did it. I created this account maybe two years ago because the platform I used was paying a great yield and I love it. It's also the platform I use to invest. It's all in one place. But I've now realized after earning over$3 ,000 in 2023 on my high yield savings account, it's like, wait a second, couldn't I have earned more and maybe not have to pay any state or local taxes if I just did this with T-bills? So this is something I'm also trying to optimize for here in 2024.

9:04That's kind of what's frustrating though is it's the get over the hurdle type vibe of like people see, okay, I'm here, I'm comfy, I'm fine, I'm earning this. But wait, they do the math and they realize they can earn four, six,$800 more with their money over an annualized basis by moving it into T-bills versus SoFi's 4.25 % APY. That's not bad, but I'd rather have 5.25 % APY in T-bills, right? Think about it. Every$10 ,000, that's an extra$100 on top of what you're already earning in free money just by moving it over. And if you have a$30 ,000 emergency fund, I mean, I'm not sneezing at 300 bucks a year.

9:41That's a lot of money. So I totally agree with you here, Jonathan. Liquidity is the most important part to realize. And a lot of people don't realize that. But public.coms, T-bills, and I guess anywhere else you have T-bills, CSHI is a T-bill ETF you can get inside of your online broker if you want to do it that way. But T-bills in general, they're very liquid and it's super easy for people to earn more yield with them while also optimizing from a tax perspective. And I love this point, Austin, and I'm so glad that you enjoy touching on it. I think one of the biggest things that people get wrong in their wealth building journeys, especially early on, let's say they have$3 ,000,$5 ,000,$10 ,000 is they look at the return and they're like, oh, well, I only earned$300.

10:23I only earned$100. I only earned $400. They look at the return in the dollar amount rather than the ROI. What is the rate of return? And I think people struggle with that because they don't realize the power of compounding. Once you keep letting that money roll over and you're rolling those profits over and letting them compound, they look at the actual dollar amount and be like, oh, so what? I earned an extra$400 switching this to a 5.1 account with public versus a 4.3 % with SoFi. And what they're not understanding is I talk about it all the time, positive arbitrage with your money. You want to squeeze out every percentage you can in your favor and not someone else's.

11:01And that's why actively managing your money and going where the best return is and the best gain is with the best tax structures is so important. So whether you're early on in your journey and you feel like that money's not making a difference, trust me, it is because when you get your account to 100 ,000, 200 ,000, a million dollars, then all of a sudden that 0.75 % of that 2 % is wildly different in your your returns. Trust me, I've been there. I'm there now. And it's amazing when you optimize your money that way. Really, really good question, Jonathan. We appreciate it. Our next question comes from Luke.

11:35Luke says, Hey guys, love the podcast. I know the Bitcoin ETF approval was recent news. Can you all break that down for us? Robert, you've been following this one very closely. Perhaps you could even start by just introducing what a spot Bitcoin ETF is and how that's different from what has been on the market now kind of for a while, which are these futures ETFs. Yeah. So the reason the spot Bitcoin ETFs are so groundbreaking and so different is it's allowing all of the institutional firms now for people to actually own Bitcoin itself rather than a derivative or just owning the rights to the Bitcoin.

12:16It's owning it themselves. And why the approval of the spot Bitcoin ETFs is so monumental is now the average family office, the average investor that didn't want to invest through, you know, a crypto platform can now go right to that big broker that they trust, whether it's BlackRock or Fidelity or ARK or whoever. And with tens of billions of dollars pouring into the market, it's going to finally give crypto, specifically Bitcoin right now, that credibility that all of the big institutional investors always wanted and giving them a legal mechanism. Because before they spot Bitcoin ETFs, you couldn't just go to your broker and say, hey, I want to put 100K in Bitcoin.

12:57There wasn't a correct mechanism to be able to do that, a proper mechanism. And now there is. So it is monumental that this occurred last week. Now let's talk about what happened. A lot of people are really nervous and I'm getting a ton of DMs is why did Bitcoin not skyrocket upon the approval and why is the market now in crypto been down about 7 % in the past four or five days? And let me explain that. I believe that the reason that is the case is it's buy the rumor, sell the news. I believe that the price of Bitcoin has risen so much because everyone was buying the rumor that the ETFs were going to get approved and that a lot of people were taking profits upon the approval.

13:37On top of that, just because the ETFs got approved did not mean that all of them we're trading at full volume day one. Deploying that much capital takes time and energy to get it out there. It's obviously moving very swiftly. So in my opinion, we might see a couple more weeks of sideways action in Bitcoin and in other cryptocurrencies that follow. And we could even see Bitcoin, if it really languishes under that$41 ,500 amount, we could see it go down to even as low as maybe 32 to 35 ,000. But if it holds above 41.5 in the coming days, then I believe Bitcoin will then tear up to around 55 ,000 in the next few weeks.

14:22That's my opinion based on my research, my team and everything that I follow. That's where I think it'll be. So very, very, very good question and very important and topical right now because the spot Bitcoin ETFs are changing the game for the cryptocurrency space. Because remember, that's just the start. We're going to see XRP ETFs. We're going to see Ethereum ETFs in the coming months. All of that is really going to help us get across the finish line and really probably go into the best bull run crypto has ever seen. And just to add some additional color as to why Robert thinks the price is going to continue to go up over the coming months and quarters is with the derivatives, these futures Bitcoin ETFs that have been around for several years, there's no actual Bitcoin that's changing hands, right?

15:11They're just betting on the price. And if the price goes up, then the derivative product goes up, which means ETF goes up. It's kind of confusing, but there's no real Bitcoin that's being invested into. With spot Bitcoin ETFs, what happened last week, there are now, and I just got the data here, I pulled it up,$4.6 billion worth of assets were invested into these ETFs last week. That caused all of these ETFs to go to their custodian, which I believe is Coinbase, and they had to go purchase over 11 ,000 Bitcoin like that. That purchasing volume of 11 ,000 Bitcoin to maintain that spot asset under management sort of threshold there for these ETFs is why Robert and I think the purchasing power is going to continue to bid up the price of Bitcoin over the coming months and quarters, right?

15:58As more and more people go to their brokers and say, hey, I want to put 10 grand, 20 grand, 50 grand, 100 grand into Bitcoin through Fidelity, through whomever else, then those companies go purchase them in these spot Bitcoin ETFs. Every week, the spot Bitcoin ETF says, okay, we got another billion dollars worth. We got to go back to Coinbase and now purchase a billion dollars more worth of Bitcoin. And that purchasing over time is what's going to bid the price of Bitcoin higher and higher, which is why this is massive, in my opinion, for Bitcoin as well. Now, to give you a perspective into what Wall Street analysts think about these Bitcoin ETFs.

16:33One analyst from Standard Charter projects that these ETFs could draw between 50 and 100 billion dollars of assets under management in 2024, while Alliance Bernstein expects about 10 to 15 billion. So we're kind of drawn on two different sides. But long story short, tens of billions of dollars seems to be projected to flow into these ETFs. And that's now tens of billions of dollars worth of Bitcoin that have to be purchased at market prices and will likely push the price of Bitcoin higher over time? Really, really good question. And I'm so glad we got to talk about it. And the other thing that we didn't even touch on is the Bitcoin halving is coming up soon, which will be around April 18th of 2024.

17:14So that is going to put more pressure on the volume of Bitcoin that is available and upward pressure in the pricing because of supply and demand issues. So keep that in mind as well as your dollar cost averaging or considering getting into Bitcoin. And as always want to just reiterate, we think everyone should have five to 15 % of their total net worth invested into these sort of blue chip cryptocurrencies. If it's Bitcoin and Ethereum or Chainlink or XRP, whatever you kind of want to do there. Personally, I'm a Bitcoin, Ethereum, Chainlink guy, and that's the way I like to do it, but to each their own, of course.

17:49Our next question from public.com comes from someone with the username that I can't really say. It's like C-T-S-S-H-A-H, but it's a good question nonetheless. What are some alternatives to traditional four-year colleges that can help prepare someone for a life of entrepreneurship? C-T, great question. I would say you have so many amazing tools out there right now that you can pretty much learn anything you want to learn through listening to podcasts like The Rich Habits. YouTube channels are great as well. Reddit can be really good. Books, there's just so many ways and so many tools now to learn just about anything you need to know to run your business, be an entrepreneur and grow yourself that I think you just really have to dive in and figure out what works for you.

18:38I learn a lot through TikTok and YouTube and books and news channels and investment channels. There's just so many platforms out there that I think college, unless you're gonna get a specified degree in maybe being an engineer or a doctor isn't necessary in this day and age. So for me, it's all about just picking platforms that work for you, that you feel you learn the most from, and then really going all in on those to learn as much as you can about your field and to improve your skillsets. As someone who's on the younger side and recently graduated college, and if I was trying to be an entrepreneur and I did not want to go to college, but I did want to try and learn some stuff that college might have been able to teach me.

19:20I would say the biggest thing that I reflect upon now that is really crucial for entrepreneurs to understand is accounting and finance. You need to know your numbers. You need to know exactly how much your revenue is, your expenses. You need to know how to run payroll, what that looks like. You need to understand your taxes. You need to understand depreciation and amortization. You need to understand all these other different accounting terms. You need to know the balance sheet, an income statement, and a cashflow statement like the back of your hand. And you can go learn all that stuff. That's on YouTube.

19:50That's on Twitter. That's on Investopedia, right? There are a ton of different places for you to learn about those financial statements. But once you understand accounting and finance as an entrepreneur, things begin to get easier because then you can say, okay, I can make a widget for$5 and sell it for 20. And my marketing cost is only$5 per widget as well. And my average cost per unit is only$10. So now I'm profiting$10 on my$20 in revenue. and I can now take that$10 to go reinvest back. Understanding those things and knowing one, what those things are and two, how to calculate them is gonna set you up for so much success.

20:26And a really cool creator that I think everyone who's an entrepreneur out there should go check out right now, his name is Vinader, V-A-N-A-D-E-R, Vinader Growth, I think might be some things that he's known as on a couple of platforms, but he's got a great YouTube channel, great TikTok, great Instagram as well. It does really, really good breakdowns as to what he does as an entrepreneur. He has these little things called torch markers, and it's for people that do arts and crafts. And bro makes a killing. He sells like hundreds of thousands of dollars worth on like Etsy and Pinterest and stuff.

20:54And so he's like an entrepreneur and he's not a crazy entrepreneur that's like doing content creator, YouTube, hack, drop ship, whatever. He's a guy in his garage making some stuff and selling it on the internet and making cool money, right? And I think when I think entrepreneur, I think that's what a lot of people tend to go to, right? The solopreneur, the small business owner, not so much the crazy Lambo drop shipper going to tell you how to make a billion dollars. Right. That's a great point. And I would just like to add a little bit more to that. And it really comes down to your right understanding your numbers.

21:24You'd be shocked at how many business owners and entrepreneurs I meet with or have a call with a month that really don't understand their numbers. And so many people, even from the beginning, it behooves anyone considering launching that widget, launching that clothing brand, opening that beauty salon to really run the numbers in advance and understand, is the opportunity sound enough for you to make money? Most people just get an idea. I'm guilty of it back in the day. They say, yeah, this is amazing. I'm going to make the best spam sandwiches in the world and I'm going to get rich. The problem is once you start analyzing the numbers, how big is the market?

22:04If it's a localized store, how many people go to the other stores like it? What's your competitive advantage? You need to understand all that before you spend a dime because many times once you run the numbers and you go through the customer acquisition cost and try to figure it all out, you'll find out that you're going to be working for less than minimum wage because you didn't flush out the numbers in advance to understand the total market share you might get. It's just like Austin and I as content creators. We might have a million followers, but if we put something up for sale, we have to understand if we want to sell that rich habits journal or that money mindset hoodie, how many people from that million are going to see it?

22:46Then how many people are going to click on it? Then how many people are actually going to buy it? You know, the age old adage that you need seven touch points just to sell something. All of these things are the things entrepreneurs need to understand before they go all in on a project, because many times you'll just be spinning your wheels and you may not ever make money. And everyone needs to understand that from the beginning. We could do a whole episode about entrepreneurship, Robert. I've learned so much over the last four and a half years now being an entrepreneur. If you have any specific questions regarding entrepreneurship or small business ownership or solopreneurship, something Robert and I are very keen to, definitely ask them.

23:25Send us an email at richhabitspodcast at gmail.com, specifically our email address. We'll check it. We'll look for those entrepreneurship questions and answer them in next week's episode. We could do a four-day, 10-hour-a-day mastermind on the, and this just happened recently with my acquisition of the pizza store, is so many people are like, I would love to be a fly on the wall to see every little micro decision and every little value engineering thing you do versus the beginning entrepreneur. Because like when I went in, I immediately looked at all the processes in the kitchen. They weren't weighing their cheese when they make a pizza.

24:04They were just eyeballing it. They weren't measuring their sauce on each pizza. They were just eyeballing it. And it's just shocking. We talked about that. Elizabeth and I did yesterday that it's really crazy that Chipotle is a multi-billion dollar organization, yet their chicken, when you order your chicken bowl, it's free-handed. And half the time you get one person that puts a ton of chicken on and somebody else gives you like three little dribbles. That should be automated with a ladle that fits exactly what they want. So you know where it's at. So anything you can do to automate your spending and automate your processes is going to equate to much more profits.

24:43And yes, we could talk about this. It's one of my favorite things to talk about is value engineering and understanding how to extract the most profit and the best customer experience out of that business that you own or you're scaling. Really good question, CT. We appreciate it. Our next question comes from Luke. Luke says, I'm 27 years old and I'm now taking control of my finances. My portfolio is 92 % domestic stock allocation with the other 8 % international and foreign. Am I being too aggressive? Luke, really good question. 92 % invested into domestic is not too aggressive, in my opinion, right?

25:23I think everyone should be fully invested into the markets, whatever the markets are to you. And then a lot of people, I'm super cool with them being 100 % invested into the S &P, the NASDAQ, these sort of index funds that track the largest and most profitable companies in the United States, right? The S &P 500 doesn't have Nintendo in it or Toyota in it because those are foreign entities in foreign countries. And the S &P is all about the United States, 500 largest and most profitable companies. So I don't think you're being too aggressive, dude, you're 27 years old, you got 30 good years ahead of you of investing, just keep at it, right?