Should You Buy a House Now or Wait it Out? (Money Q&A)

Transcript:

On this episode of the Personal Finance Podcast, should you buy a house now or wait it out?

What's up everybody, and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of Master money.co. And today on the Personal Finance Podcast, we're gonna be diving into your questions on this money q and a. If you guys have any questions, make sure you join the Master Money Newsletter by going to Master money.co.

Slash newsletter and follow us on Spotify, apple Podcast, YouTube, or whatever podcast player you love, listening to this podcast on it. If you want to help out the show, consider leaving a five star rating and review on Apple Podcast, Spotify, or your favorite. Podcast player. Now today we've got a bunch of your questions that have come in.

We're gonna be answering nine of your questions in this money q and a, and I'm really excited to go through each and every single one of these. So the first question, we're gonna be going through $10,000 net. Take home after taxes and 401k max. What budget breakdown should they have with that $10,000 net take home pay?

Question two. If someone makes way too much to invest directly into a Roth IRA, and we're gonna tell them what to do based on that situation. Question three, I have $35,000 in savings. What's the max I should use to pay for a car in cash? Question four, should you buy a house now or wait it out? And will these prices stay this high?

Question five is if you max out a Roth IRA and HSA, do you contribute to a 401k or taxable account with no employer match? Question six is, how do I phase out credit building credit cards as I get approved for better cards? Question seven is, what if your wants and needs take less than 50% of your income?

How should you manage the extra? Question eight is if the emergency fund is complete, how much should I keep in checking versus invested? And then question nine is, what's your take on Bitcoin as part of a portfolio with increasing. Institutional adoption. These are all great questions. We're gonna dive into each and every single one of these.

Let's get into it. I have a $10,000 net take home after taxes and a 401k max. What's your budget breakdown? So someone makes $10,000 net take home, and they wanna know what a budget breakdown should be for them. So here's a couple of thought exercises that I want you to do. As we have this thing where we talk about the 20 55, 25 rule, uh, and we have it in that specific order for a very specific reason.

Now, what does 20% stand for? That stands for future you. And so we at a minimum want you to be saving 20% of your income towards future. You. Now you can make adjustments to this, and I highly recommend people make adjustments when they're in their wealth accumulation phase early on in life. Uh, and we'll talk about that here in a second, but at least 20% of future you, which is your Roth, IRA, your HSA, your 401k, or your taxable investment.

So if you wanna max out your 401k, that would actually get you to that point in time if you are looking to do that. 'cause $2,000 every single month gets you to $24,000. But we wanna make sure that we're following the 1 3 6 Method also first. When it comes to our emergency fund, so I want you to have at least, uh, some of your three to six months expenses saved up and you just follow that trajectory.

Secondly is 55. So 55 stands for 55% goes towards your baseline expenses. Really this is a range, and so the range is going to be 50 to 60%, 55, just in the middle, but it's 50 to 60% towards those baseline expenses. This means housing, groceries, utilities. Transportation insurance and debt payments all fall under this baseline expenses.

So that'd be 5,000 to $6,000 would be what falls into those categories we've already spent on those two, and then 25% towards the things that you love. So it's really 20 to 30% towards the things that you love. And 25% or $2,500 goes to travel, restaurants, hobbies, family, fun. If baseline expenses are lower, you can increase this amount.

But what I highly recommend for a lot of people is to look at the things you love, budget there and say to yourself, well, is financial freedom something that I'd love? Because you can allocate more dollars towards your freedom if you take a portion of this and put it towards future. You now, if you want to enjoy life more.

Now, the reason why we have this. Flexibility within this budget is that you can look to enjoy life more now if you want to with that 25% number. But if you are looking to retire as fast as you possibly can, 'cause you hate your job or something else, you can actually take this entire 25% or a good portion of it, a good chunk of it, and you can put it towards future you and increase future you to like 40% if you wanted to, or you can increase it to 30% if you want to.

And this is where the flexibility of this, uh, actually comes into play. Now if your baseline expenses are lower, if you live in a low cost of living area and your baseline expenses are even lower, you can put some of those towards future you. Or you can also put some of those towards things that you love.

So this is the way that we wanna look at this when we break this down, is we wanna make sure that we have it in these three categories, and then we decipher. What do we truly value? What are my true values when it comes to building wealth and money? And how do I wanna look at this and allocate these dollars?

But this is the guideline that I would start with. And then you can start to allocate and break it down even further based on your own personal expenses. Question two is, we fortunately or unfortunately, make too much money directly to invest in a Roth IRA. Can you please help, uh, in how do we do this? So.

The number one thing that I do in January of every single year is I do what is called a backdoor Roth, IRA, and I think we talked about this a little bit previously in the last money q and A as well, but in the backdoor Roth IRA, this is a way for you to still get dollars into your Roth IRA if you make too much money.

So at the beginning of every single year, what you wanna do is you wanna open a traditional IRA. And in that traditional IRA, you are gonna put your $7,000 max that you can put in every single year. And your spouse can also do the same. They can put $7,000 in their traditional IRA and then you're going to convert them to a Roth IRA.

And so this is going to be the way and the workaround to get your money into, uh, the Roth IRA. Now, the thing to remember is if you have an IRA already. And you've already paid and you've already had the tax deduction on that IRA, if you had a tax deductible contribution, then you are gonna have to pay taxes on those dollars when you transfer them over to the Roth IRA.

It's a very important note to make sure that you understand, uh, is that when you move that money over and you have not paid taxes on that money, then you will have to pay taxes later on. If you make a non-deductible contribution, then you will not have pay taxes on that money 'cause you just haven't paid tax yet.

So typically I make non-deductible contributions in January of every year. And then I start to move the money over to the Roth, IRA, uh, after that, and I do the conversion. Now, where do I do this? I like to do this in Vanguard because Vanguard knows that a lot of its customers do this. And so Vanguard makes this so incredibly easy.

There's less forms to fill out than other places that I've done it. I've had an account at like Merrill Lynch before, uh, and they made it very. Difficult to do the backdoor Roth IRA. And so this is my favorite way to do it and be able to actually ensure that the backdoor Roth IRA is actually done and it's seamless.

And I really, really like to reduce friction when it comes to finances. And so that's why I use Vanguard for my Roth IRA because it is frictionless when you do the backdoor conversion. Not sure how Fidelity is, I haven't done it there yet. Uh, but Fidelity, I'm sure is fairly easy as well, uh, for a lot of.

Folks. So if you are a higher earner, make sure you look into the backdoor Roth IRA. You can do it. Your spouse can also do it. Uh, and you can have two going at the same time. I have $35,000 in savings. What is the max I should use to pay cash for a car? So if you have 35,000 in savings, and the big question I have here, 'cause there's not enough information for me to kind of answer you directly, so I'll give you all the scenarios and kind of see where you wanna land on this.

But if that $35,000 was. Set aside for a car purchase, then you can use the $35,000 for the car purchase. But if that was set aside for like your emergency fund or something else, what I would recommend is looking into, um, you know, either saving some additional amount for a car purchase or following some of our methodology that we talk about when you purchase a car.

'cause if you're going to, paying cash for a car is by far the best way to buy a car because it is a depreciating asset. And so paying cash for it at least allows you to buy a depreciating asset. But if you realize, oh no, this was for my emergency fund, or this was for something else and this is the only cash savings that I have, uh, then most likely I wouldn't use all of that for an depreciating asset that would not be a good transfer of wealth.

And so what I would consider in that situation is I would not use my emergency fund, but I would consider, you know, going out and figuring, you know, how much car can you afford? And so we talk about this all the time, but I like for people to at least put at first 20% down. And the reason why you put 20% down is because if you drive a car off a lot, specifically a new car, it is going to depreciate 20 to 30% within the first year.

And when it depreciates that amount, if you get in some sort of accident, uh, within the first couple of years, you could be underwater on that car and paying out of pocket instead of the insurance company helping you get a new car. And so I wanna make sure that. Uh, most people listening at least put 20% down.

Now there's also gap insurance. That is very true. Um, and with gap insurance, this is something where you have to weigh out the cost, the pros and cons of having the gap insurance versus just putting the 20% down and getting the card, uh, paid down because you're gonna have to pay it down anyways. And so that's the first thing I want you to think through.

Uh, is the 20% down, the next number is going to be four. Now four is a big time number because a lot of people will try to stretch out their car payments for 5, 6, 7, 8, 9, 10, 20, 30 years. Whatever you guys do. And I'm just kidding. It's usually like around five to seven years is what a lot of people do with their car payments.

I've seen 'em stretch out even longer. Um, but when that happens, that means that you are perpetually gonna be having a car payment forever if you just keep stretching your loans out. Instead, I'd like you to have a shorter timeframe, three to four years where your car loan is only that three to four years.

Okay? And that is gonna be a really important number for a lot of different reasons, but one of which is that, um, you wanna make sure that you just don't have car payments forever. It is really important to not have those car payments forever. Um, when you're doing this, the next number is 12. 12 is the maximum amount of your actual income that you should be spending on a core.

Ever in terms of, um, this is going to be every single cost from your car payment all the way up to insurance, gas, and any other maintenance items. 12 is the max, so 7% around there is usually what we want spend on your car payment, 7% or less, and then the remaining 5% is going to be going towards maintenance, gas, insurance, those types of things.

And then the last number is 10. And I want you to drive this car for 10 years or longer if possible, and that is going to allow you to have six years with no car payment. And in addition, you can take those extra dollars, put them towards investments, and achieve financial freedom even faster. See, what most people do in the lower to middle class is most people in the lower middle class put a lot of their net worth into their car.

That is what I want most wealth builders not to do because it is a depreciating asset. It goes down in value over time. And so when you're looking at that vehicle, the last thing you wanna do is put. All of your dollars in something like a depreciating asset. If you look at people with a net worth under $10,000, and this is from Census Bureau information, but people who have a net worth under $10,000, typically the majority of their net worth is actually in their car, and that's the sad reality is the majority of their net worth is in a depreciating asset.

People who have a net worth of 10,000 to a hundred thousand dollars, a lot of their net worth, the majority is either in their house and their car. So it's vehicles and transportation. This is something I want you to realize as I'm talking through this, okay. People who have a net worth between a hundred thousand dollars and a million dollars, typically their net worth.

Is going to be in retirement accounts and their house, those two things. Okay? People with a million to 10 million, this is where the interesting part comes in. It's gonna be retirement accounts and it's going to be businesses. And above 10 million is typically, businesses are the majority of their net worth.

And so that's where I want you to think through, well, most people in the higher levels do not have the majority of their net worth in vehicles, and so you want to try to avoid that if at all possible. Now, when you are just starting out, obviously a vehicle is gonna be a huge purchase for you, but I would just want you to think through that as you go through this.

Now if you can buy a used reliable car and you can find one that you can pay for in cash, then I would definitely do that. Uh, and you can just use the rest of the money that comes in that you would use towards a payment and keep those dollars invested. That is the key when it comes to this. One of the most important things that you can do today is making sure that you have a financial protection plan.

The number one thing that. I do when I wanna protect my finances online is I use a service called Delete Me. And what Delete Me does is they are a service that goes and removes your personal information from Data Broker. So if you're not aware, if you Google your name or you Google your phone number and in quotations see what comes up, you're gonna see a bunch of your information on the internet.

What Delete me does is it goes to those data brokers and gets that. Information removed. This is risky to have your information out there because there are so many data breaches happening right now, and if some criminal gets a piece of your personal information, they can use that information and try to piece together the rest of your information and they can go out and open bank accounts in your name.

They can open loans in your name. They can try to figure out ways to hack into your financial system, and that is going to be something that you wanna avoid at all costs. It can be absolutely detrimental to your finances. If you do not have an online protection system, and so for everyone out there, if you do not use a service like Delete Me, I highly recommend it.

If you go to join delete me.com/pfp 20, that will get you 20% off Delete me plans. What Delete me does is they go to these data brokers, they get your information removed. The first time they did it for me, I got my information removed from thousands of different websites. I am not exaggerating is absolutely crazy.

The amount of websites that had my personal information on there. And so it is really, really valuable work that Delete Me does. I cannot recommend it enough. So if you go to join delete me.com/pfp 20, that'll get you 20% off Delete Me plans. And they're really affordable for the amount of work they do.

They also continuously monitor to make sure your information is continuously getting removed. Uh, and again. So go to join delete me.com/pfp two. Should I buy a house now or should I wait it out? Now? Will these prices stay this high? And this for reference is someone in Charlotte, North Carolina. So there are a lot of factors that come into play when you buy a house.

And if you're trying to time the market, if you're trying to figure out, oh, when will the market go up? When will the market come back down? Can I time this thing? In most cases. That is a fool's errand. It is very difficult to time the market and time what is going to happen. But what you can do is control the variables that you specifically can control.

And so what you wanna do first, anytime before you buy a house, is you want to run the numbers. And so to run the numbers, you need to understand total cost of ownership. Now, what is total cost of ownership? This is going to factor in. All the associated costs of home ownership, so this is going to be closing costs.

When you buy that house, it's thousands of dollars you have to pay in closing costs. This is going to factor in homeowners insurance, which you have to pay every single year, and this is thousands of dollars in homeowners insurance. Typically, maybe you have flood insurance as well. For example, I live in Florida.

Most people in Florida have to have flood insurance. We have had hurricanes and flooding all over the place here, and so there's additional home insurance that you also have to have, or maybe you live in the Midwest. And you have to have, you know, wind mitigation or different insurances based on tornadoes or different things that could happen there.

But in addition, it also is going to factor in things like capital expenditures. And so when you run the numbers on a house, you wanna make sure you understand well, how often do I have to replace the AC and heater? How often do I have to replace the roof? How often do I have to paint the exterior? How often do I have to do all these big maintenance items that are going to cost a lot?

If you've never seen how much it costs to paint the exterior of a house, even if you do it yourself, it is not. Cheap. What if your plumbing goes out? What if you have an issue with your electrical system? What do you have? You have to upgrade your panel. All of these different things are gonna be really, really costly.

Next, that is just the capital expenditure maintenance. Then there is the regular maintenance. Things like if a toilet breaks or if you have some sort of issue with the faucet, or if you have to fix something within your house, which things break every single month. If you're a homeowner, most homeowners know your water heater goes out or some of these other things, then you are gonna have to pay out of pocket for those as well.

The difference here is that your landlord will pay this if you rent, but if you buy a house, you're gonna have to pay all of these outta pocket. So it's very important to make sure that you first run total cost of ownership. Now we have a free total cost of ownership calculator. Uh, that will give you the difference and tell you, you know, is it better to buy a house or is it better to rent a house?

And so if you go to master money.co/resources, you will see that total cost of ownership calculator for your home. Secondly, though, is once you run total cost of ownership, if you're saying to yourself, well. Am I gonna be able to stay here? Will the market go up? Will the market go down? That is something that most people cannot answer.

And if they try to predict what the market is going to do, I would write them off. 'cause nobody has a crystal ball. And most people who make market predictions are typically wrong. They are wrong dozens of times until they're right and they will brag about when they were right. And that's the one thing I want you to make sure that you understand is a lot of those predictors out there typically do have no idea what is going to happen.

Now, if I was a betting person, it'd be something where over the course of the next couple of decades, house prices are gonna be higher than they are today. That's just what I would bet if I was someone who was in the prediction game, is that over the course of the next couple of decades, house prices will be higher than they are today.

But again, I. Homes appreciate, you know, 3% in value every single year. On average. You can make more in a high yield savings account right now than you could on what, uh, a home price would gain because you factor in total cost of ownership. Now, you may be saying to yourself, well, I bought a house in 2020 and it's gone up hundreds of thousands of dollars, and that may be the case, but at the same time, you still have to factor in all the total cost of ownership, which is a big, big difference in terms of the total return.

Next. You also need to understand that for most people, you need to think that you would stay in that house at least seven years. But really my real rule is 10 years. Because if for some reason you go out and buy a house and the market goes down, you need to have enough time available to be able to recover from that downturn.

And so 10 years or more. Is what I really want you to do if you are going to buy a house. So you need to plan to stay in that location for 10 years. A are you gonna stay there or is there an option? Like, are you gonna stay there for maybe a couple years or you're not, you're unsure, then maybe you wanna rent.

But if you know you're gonna plant roots there and you are gonna stay there than it is much better to consider buying a house. Uh. Based on, you know, you wanting to plant roots there. And if you have a stable job, that's great. If you have an emergency fund, that's great. You need to also have a fully funded emergency fund six months before you go out and buy a house, because house things with houses will happen over and over and over again.

In fact, I don't even utilize my emergency fund for a lot of housing issues. Now, I've actually created a separate housing category within my, uh, bucket method, my high yield savings count, and I actually have a. Separate savings for house expenses because they happen so frequently and I have a brand new house.

I built a brand new house in 2020 and I still have things come up within that house. So it's something you definitely need to make sure that you are budgeting and saving for because housing costs keep continuously. Rising, but if you are running total cost of ownership and it looks good to you, if you're planning on staying in that location for 10 years or longer, and if you have a fully funded emergency fund and you have enough for the down payment to be able to get out there and get started, then more power to you.

There's nothing wrong with it. But also you need to just make sure that when you buy that house. Your mortgage payment needs to be less than 30%, uh, of your income is spent on your mortgage and housing costs. And so all of that needs to be factored in. The total cost of ownership calculator will help you with that, but that's how I would look at that situation when I am looking at buying a house.

The next question, question five, is if I max out my Roth IRA and HSA, do I next contribute to a 401k or a taxable account? I get no employer match. So for me specifically, I would still contribute to a 401k next. So it would be. You know the Roth IRA, the HSA, and then I would go to the 401k would be the next place I go.

Reason for that is you still get some great tax benefits with the 401k specifically in the year that you are contributing to that 401k, your money's gonna grow. And then when you pull the money out, you'll pay taxes on those dollars later on. Now the thought process is most likely when you are retired, you'll be making less money.

And so the tax. Burden could be much lower than it would be today when you were making, uh, better money than you would be in retirement. So that is one thought there. Now they do, obviously the 401k has other factors like required minimum distributions when you turn 73, meaning you're gonna have to withdraw money at the age of 73.

But I really do like the 401k and that's the next thing I would do. I contribute to my 401k. Uh, absolutely love it. And it's something that I really, really like. Now if you plan on retiring early, a second consideration could be the taxable account because it gives you more flexibility. But you just have to understand that you will be paying taxes on those dollars on the gains when you pull that money out.

So say for example, that you make $250,000 per year. And you are a great earner. You're making really good money. Uh, well, if you make $250,000 per year and you're making really good money, then you will likely pay 15% on the gains on that money. So when you sell a stock, that is when you'll pay on the gains of that money.

So if you're selling stock to withdraw money to live on. Then you will pay that 15% tax on those gains. So just making sure that you understand the tax implications of a taxable brokerage account is a really important thing, but it does allow flexibility if you wanna retire early or if you're someone who wants to just have more flexibility within your financial situation.

It is a great, great account to have. Uh, but my order, my specific order for most is to look at the Roth IRA and HSA 401k, and then the taxable comes in after that because of those great tax benefits that you get with the 401k. Alright, the next question is on question six. How do I phase out building credit cards as I get approved for better cards?

So this is a fantastic question. You know, start our credit cards or cards that you get from the beginning or cards that I would possibly keep around, depending on what's going on here. So let's say for example, you have your very first credit card and this is the, uh, longest credit history that you have under your belt.

Well, probably in most situations I would take that credit card and I would either, you know, just put one bill on there, maybe my Netflix or something like that on that card, just to maintain that credit history. Long term credit history is a big portion of your credit score, and so if you are new to building up your credit, then keeping that credit history is very, very important.

You don't have to keep all of them, but the ones that you utilize the most, that have the biggest impact. Can't be the ones that I would kind of hold onto, uh, for the long run. Now, if these are cards that are maybe more premium cards, so if you have a card like the Chase Sapphire for example, and you're like, man, I don't use that card anymore.

I just want to, uh, because of travel hacking or whatever else, I moved on to a venture or I moved onto a city card, or I moved onto a Discover or MasterCard, something else. Uh, what you can do for a lot of folks instead of closing those credit cards is you can downgrade those cards to the free version.

If your cards have no annual fee, there's no reason to really close them, uh, you could just kind of maintain them and try to keep them open so you can have that credit history. And so for a Chase Sapphire or something like that, something that you have a lot of credit history on, you can go ahead and downgrade that card to the lower level free version of the card and be able to still maintain that credit history.

And then you can gradually stop using some of the lower tier cards, but keep a few active to protect your credit score. So that's kind of the way that I would look at it is if you have like 10 lower tier cards that you just have been hanging onto for a long time, you can gradually stop using some of those, uh, and just keep some of the longest history ones or some of the, the highest usage ones, um, are what I would consider as you start to phase some of those cards out.

But really. It's either downgrade is my first option. If I can't downgrade the card, uh, then I would just hang on to the longest credit history ones and just start to phase out a couple of the really, really old ones. Question seven, and this is a really, really fun question. So question seven is, what if your wants and needs are less than 50%?

How do you manage the extra. Money. So congratulations. You have more dollars that can go towards wealth acceleration, which is absolutely amazing. Uh, and here's the order I would think about this. One is I would put it towards my financial freedom. So I'd be going towards my retirement accounts first, or my taxable brokerage account, or towards my investments.

Like if you wanna invest in real estate or maybe you wanna buy businesses, all of those extra dollars, that would be my first consideration because for me, always my first thought is, can I put this towards my financial freedom? Because that is a very high priority and a very high value. To me, and so that is how I would think about that.

First is looking at those retirement accounts. Secondarily, though, I would look at maybe saving for big goals. So you can look at things like maybe the next house or you're saving for a car or maybe a wedding or something like that. Then you can save some of those dollars for some of your bigger goals.

But the third thing you can do is build a bigger cushion. So if you have less than 50% of your income going towards some of those, uh, baseline expenses, then you can take those dollars and put them towards a bigger cushion in your emergency fund. Maybe extend that out to a year or maybe extend it out even longer to give yourself some additional peace of mind.

But then lastly is I would also consider, uh, putting it towards things that I love and putting it towards, um, things that I really, really value and enjoy. So let's say for example, you're covering all your retirement accounts and you're maxing those out. You're putting money in a brokerage account, you're saving for real estate, you're doing all the things that you wanna be doing, and you still have money left over because you've kept your baseline expenses low.

Well, if you've done something like that, then you can put it towards more things that you love. If there are things that you wanna go do, maybe you wanna spend more time traveling and going on vacations. Maybe you wanna spend more time doing things that you know your hobbies. Maybe you wanna spend more of those dollars going to like special workout classes, or going to special events, or learning different skills.

Those are the really, really cool places that you can start investing some of those dollars. Uh, because you are living on less than you make. It is such a powerful place to be when you are living on significantly less than you can make. And so congratulations on that because you can put more dollars towards your priorities, but that's the order I would think about.

It would probably be financial freedom first, big savings goal. Second, building a bigger cushion third. If you already don't have that cushion, then that cushion would probably move to the top. Um, and then in addition, it would be investing in yourself and things that you actually enjoy. So congratulations there.

Question eight, if the emergency fund is complete, how much should be on deck in checking verse invested. So your checking account is all it is. Although your checking account is, is a pass through account, and so you would have one to two months of expenses max in that account. Two months is literally the max because your checking account does not earn you any interest whatsoever.

You could keep that in the high yield savings account, and so one to two months expenses max. I actually keep my checking account really lean, and I do that because I'm on kind of on top of what I'm doing, but I keep it lean because I'd rather deploy dollars outta that checking account. All I see a checking account is, is a place that money touches and I wanna push it somewhere else.

So a lot of times money will hit my checking account and boom, automatically it's gonna start moving over to my high yield savings accounts, into my savings buckets. It's gonna start moving over into my IRA or my 401k, and it's gonna automatically start moving towards, uh, also, you know, paying bills or whatever else.

All it is, is it a pass through account for my money automation system? It is just the central hub where money flows and then it moves out of there. Literally like water going under a bridge. And that is what I think of as my checking account is just a place to allow money to either reroute it or allow it to flow in the direction that I want it to flow.

So our money on autopilot automation system will kind of show you how to utilize your checking account. But that is how I think about it. It is just telling my money where to go and where to flow, uh, and that rhymes. And I'm a poet and I didn't even know it. So that is how I think about checking now savings.

When you're thinking about the savings, if you already have your fully funded emergency fund, um, then that's six months obviously for us. And so fully funded is six months, and then we go to investments. So the rest of it, everything else should be going towards investments. If you have nothing, no other financial goals that you wanna put it towards.

And so, uh, investments should be the majority of it, and that should be just funneling as much as you possibly can into investment. So you can achieve financial freedom faster. It's just shoveling more into the fire so the fire grows bigger and bigger. Bigger. And so once you have that fire large enough, you don't have to work anymore.

You can have that fu money, not have to worry about that money anymore. And you can do whatever you want in life. Financial freedom is so amazing. Uh, and so when you are doing some of this stuff, uh, I definitely want you to think through that. That is amazing that you are having a fully funded emergency fund.

Congratulations. That is, that is so cool. And love, love, love to see it. Question nine, and this could probably be an entire episode and maybe we'll do another one coming up. We've done one in the past on crypto, uh, but it was a long time ago. We'll probably update you on this at some point in time, but what is your take on Bitcoin as part of your portfolio with company nation and institutional adoption?

So in the past I've had an episode on crypto, and what I talked about in that episode pretty much has not changed a ton. And really specifically during that timeframe, we were talking about Ethereum and Bitcoin. And that was the main two that I bought. Uh, nowadays I don't dollar cost average into Ethereum anymore.

It's really only Bitcoin, uh, if I'm going to buy it. Now, I am not a big crypto guy at all. I am not. I'm not the person who was an early adopter of crypto. It took me a while to even believe in crypto whatsoever. And truthfully, I think that crypto is more, I see crypto more as like a gold standard type thing than I see it as some sort of investment.

And the reason for that is crypto has a zero intrinsic value. Meaning that it has no p and l backing it, it is only worth what someone else is willing to pay for it. And so because of that, it is not a huge portion of my portfolio and I am okay with missing out on some of these massive swings and these massive gains because for me, crypto still is very difficult for most people to understand.

Most people, if you ask them who own Bitcoin? What is Bitcoin and what is the purpose of Bitcoin? And they're gonna start to say a bunch of stuff that doesn't make sense. Now, there are some very, very smart people who will say things about Bitcoin that do make sense, and their arguments are the reason why I even own Bitcoin.

Bitcoin whatsoever, but there are a lot of people out there who own Bitcoin and don't really know the reason why they own Bitcoin. So lemme tell you a little bit about this. Okay. When it started to even come more on my radar, when we went to, um, so BlackRock, the big, the largest head fund and financial companies in the world, uh, invited us up to the New York Stock Exchange to ring the opening bell.

And they were doing it for their target date ETFs that they were announcing. Uh, it was really cool, uh, bucket list moment for me. I wanted to always go to the New York Stock Exchange, ring, the opening bell, we got to do it, got to stand there at the podium and, and do some really cool stuff there with BlackRock.

So I was really appreciative of that. And I started to kind of listen to some of the folks in the New York Stock Exchange, started talking about Bitcoin, and I heard that BlackRock was coming out with a Bitcoin, ETF. Okay, so these are the institutional investors now starting to adopt for the longest time, Jamie Diamond, the CEO of JP Morgan Chase, the largest bank in the world.

Jamie Diamond was saying Crypto is absolutely ridiculous. It's not something I'm going to invest in. It's not something I'm interested in whatsoever. Then all of a sudden. Jamie Diamond flipped the script and all of a sudden he's talking more about Bitcoin and how he's gonna allocate dollars towards crypto and how crypto's gonna be part of their future.

And all of a sudden you hear rumors that BlackRock's gonna come with a crypto ETF, and all of a sudden these institutional investors. These late adopters are now getting involved in crypto. Why? Because they can make a lot of money when it comes to crypto. So this institutional adoption is very important.

And so for a lot of people out there, if it's only the investors, the individual investors like you and I who are adopting something, it is a little bit harder to believe in something. But when the institutions start to adopt something, well now it is a little easier to start to believe in something because institutions are gonna continuously push this item so that they can make more money.

Now we have. National governments that are adopting Bitcoin. So first you saw that early on with some of the countries that have a smaller GDP started to adopt Bitcoin and you would see some South American countries, some African countries starting to buy Bitcoin and making, and you know, having it as a reserve currency and all these different things.

Now the US is also. Doing some things with, uh, crypto and backing up Bitcoin and all these different things. So when that comes into play, then you start to consider it even more. So all of that babbling to say. For most people in your portfolio, if you wanna own crypto. Now, I'm not saying this is a requirement at all.

If you wanna own crypto though, I would keep it personally. This is what I do. I keep it less than 10% of my portfolio, and mine is probably less than 5% of my portfolio and I. If you wanna have a huge portion of your portfolio in Bitcoin, you can. And do I think Bitcoin will go to a million? If I was someone who was gonna place a bet on that, just for fun.

If I was gonna bet with my friends, my, if my buddy said, Hey, I'll bet you $20 that Bitcoin will not go to a million dollars. I would take that bet 10 times out of 10. But could I be wrong? Absolutely. And so this is something where if I was making a small wager bet with buddies, again, I would make the bet, but I don't know.

I would bet that Bitcoin would go to a million dollars, but again, I am not someone who has a crystal ball and I would not take my prediction as something that you should utilize to move forward and make an investment decision. 'cause you should not. So what I do is I dollar cost average into Bitcoin every single month.

The way I do everything else is I take a set amount of money and I buy a set amount of Bitcoin every single. Month. Well, it's a fraction of Bitcoin. I'm not gonna buy a Bitcoin every single month. That'd be $75,000 a month at the time I'm recording this. So that is what I see at Bitcoin right now. Small portion of your portfolio, if you're gonna buy it, dollar cost average in all the other coins are just lot of tickets right now.

In my opinion, that's just my personal opinion. Every other coin is a lot of ticket like XRP or uh, Ethereum or all these other things. You're just hoping something's going to happen for those to be even more relevant than they are. Um, now they could be very relevant at some point in time, but the rest, in my opinion, are just a lot of tickets.

And if you are buying things, like if you're buying meme coins, those are just. Extreme lotto tickets. Those are Powerball tickets. So all in all to say that, in my opinion, this is just my opinion, you don't have to listen to me, but in my opinion, I am not going to put a huge portion of my net worth into crypto.

Now if it turns into a huge portion of my net worth because I bought Bitcoin and it goes to $10 million per coin or whatever else, uh, fine. But I'm not gonna put a huge portion of my net worth into Bitcoin. I'm just gonna dollar cost average. I'm not gonna try to time the market. I'm not gonna try to figure out when it's going to go up or down.

I'm just gonna continuously buy it every single month like I do everything else. I do things pretty boring around here. We are boring investors. We are long-term investors. We play the long game. And if I was betting, I would say bitcoin's gonna be worth a lot more than it is today in the next couple of decades.

And so that is why I am gonna just continuously keep buying it and just keep, as Nick Majuli would say, just keep buying. And so that is how I think about that, uh, moving forward. So listen, thank you so much for that question as well. And thank you guys so much for sending in your questions. If you have any questions, again, join the Master Money Newsletter by going to master money.co/.

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