Watch & Subscribe on YouTube

Are you blindly trusting your 401k to secure your financial future? You might be making a costly mistake.

In this eye-opening episode of Wealthy Wellthy podcast, we dive deep into her wealth of experience in personal finance and investing, and offers a fresh perspective on building long-term wealth beyond traditional corporate retirement accounts.

The main focus of this episode is debunking the myth that maxing out your 401k is the best path to a comfortable retirement. Krisstina explains why "matching, not maxing" your 401k contributions and diversifying your investments can lead to greater financial freedom. Krisstina emphasizes the importance of having control over your money and being an active, knowledgeable investor to maximize returns.

Throughout the conversation, we dive into topics such as the limitations of government-controlled retirement accounts, the benefits of real estate investing, and the crucial difference between financial security and financial freedom. They also touch on the value of financial literacy and the need to calculate your specific retirement needs.

Ready to take control of your financial future and explore investment strategies beyond your 401k? Listen to this episode of Wealthy Wellthy for actionable insights that could transform your approach to retirement planning and wealth building.

Key Takeaways

5:05 History of pensions and retirement plans

10:52 Limitations and drawbacks of 401k plans

16:46 Risks of relying solely on 401ks

22:17 Match don't max: 401k investment strategy

28:42 Options for investing outside 401ks

34:24 Comparing different investment vehicles

40:48 Strategies for building wealth long-term

Memorable Quotes

"Retirement plans are based on a history that's not applicable today. We want to live to 100, maybe more. But these plans are not set up to live to 100, which means if we just rely on traditional retirement plans, it's very likely that we'll run out of money."

"Match, don't max because you just want to take advantage of what the company is matching. But we don't want to max out everything that we can put into these types of programs."

"To really build wealth and to build it powerfully, you might say, 'Hey, there's my neighbor. The estate wants to dump this property really fast. I can get a great deal on this house.' But wait, I can't touch that retirement income to take advantage of this opportunity."

Resources Mentioned

 Vanguard (for index funds) - https://investor.vanguard.com/

Connect with Krisstina

Website - https://wealthywellthy.life/

Instagram - https://www.instagram.com/krisstinawise

YouTube - https://www.youtube.com/@krisstinawise

Krisstina's Book, Falling For Money - https://www.amazon.com/dp/0692560904/

🎙️🎙️🎙️

Podcast Production & Marketing by FullCast

And there's, there's an escape route just to the right or just to the left or a little modification. And the person says, no, I'm just going to keep doing this thing, smashing my face against the window until I die. Alarm clock in the morning. Are you just like, oh my gosh, snooze. Five minutes, 10 minutes, I can't take it. And then, even then, when you have to get up, are you like, dragging yourself out of bed? It's not supposed to be like that. That is a sign.

And the thing is diagnosis. When you actually look at what that word is, first of all, it has D in it. And the next word that's hidden in there is gnosis. So this inner knowing, that's how it happened. Wisdom. That change from one reality tunnel to another is rapid. We have ancient stories that are stored in our salt, and those stories are constantly reaffirmed.

Stories that are, I don't.

I trust Heidi and Thaddeus, but I don't. Your modern workplace is designed to keep you busy. Have you eating foods that make you feel tired, lethargic, and give you just enough energy to feed it to the Monster Corporation. We're kept moderately sheltered and addictively entertained and of course, passively obedient enough to keep doing it. Do you long for something more but don't know where to start? These corporate escape artists have broken free from the ordinary. They walk unfrequented paths. They break pattern, and they've broken free. Fix your finances, hack your health and unlearn the lies keeping you stuck in the matrix. Welcome to the Corporate Escape Artists podcast. Welcome to another day in the corporate matrix, everybody. We're joined here today with my beautiful co host, Heidi and Christina Wise for episode number two with Christina, who runs her own YouTube channel @ChristinaWise and has the Wealthy Wealthy podcast. And today I really wanted Christina to talk about what's on all corporate people's minds these days. Our 401ks. And that's because being a corporate worker myself, most of us, including me, have lost our pensions in some way or another. Now, when I first went to work for the corporation that I currently work for, 17 years ago, I had a pension. It was a defined benefit plan, which means the longer I work, the company contributes this money to this insurance plan that would pay me a certain amount of money when I retired, guaranteed within three years of me working for this company, they got rid of the pension plan and they just said, hey, here's how much we think your pension would have been worth. Here's your $4,000 or $5,000 that we think it's worth today. Take the money, do whatever you want with it. And now you have to contribute to a 401k. That's the only way you're going to have retirement money. So most of us in the corporation are forced, I mean asked or granted the privilege of adding to our 401k plans for retirement. We have to fund our own retirement plans if we expect to have money in retirement. And the way that we are forced told to do so is the 401k when you work for a corporation. Most of us then are convinced that that's our ticket to retirement. That as long as we max out our 401ks and we're putting money in every single year that when we retire at whatever age that be 59 and a half or 65 years old, we'll have all the money we need for retirement and we're golden. I don't think that that's accurate and I think we've been lied to about assuming that contributing to the 401k is all we need to do to be totally self sufficient in retirement. And that's why we brought Christina on today to talk a little bit more about 401ks and what the myths are. Heidi, did I miss anything?

I don't think so. Let's have some 401k fun.

All right. So Christina, do you want to just tell everyone like what the 401k program is, who it's for, who it's not for? Because I don't think you can do a 401k in the version that it is. If you're an entrepreneur, there might be a SEP401K or something you could do. And Heidi doesn't even know what that acronym means. She's looking at me like I'm crazy. So no, can you, can you break down the 401k world to start out with before we get into what we should do with our 401k?

Sure. Where I'd like to start is the word retirement. And the word retirement, where it started with pensions was in the industrial age when an employee would work for a company for 40 years and it was a carrot that the companies used to keep people with the company and say, hey, stay with us for 40 years, you're going to have this pension, it'll be worth 6, 60% of what your current wages are and then you'll be able to retire. And back then when these pensions were created, people retired at like 62 and they lived to 68 to 72. So that's, that's that model. And people did do that, meaning that was the culture you worked. Usually the husband would go to work for 40 years, go get the job, the wife in many cases would be staying at home and then they would sit on their rocking chairs, they would have their house paid off because they had a 30 year mortgage. So their house would be paid off, they'd get this retirement income via pension and then they would die. So today we're still thinking of retirement from back then and you're in anti aging and that's a lot of what you teach on your side hustle. And I think many of us, we don't want to die at 68 or 72. We want to live to 100, maybe more. But the problem is that these type of retirement plans, they're not set up to live to 100, which means that if we just rely on these traditional retirement plans, it's very likely that we'll run out of money. And who wants to run out of money when they're 78 and they still have 20 years to live? So it's first just understanding that these plans are based on a history that's not applicable today. So that's the first point. The second point is retirement. The question I like to ask when I'm coaching or consulting is do you want to wait till you're 68 to retire? Wouldn't you rather focus on something that's more financial independence and financial freedom versus retirement? So that's a question to explore that do I want to work for whoever I work for up until a certain age, let's say 65 or so, and do I want to be fully dependent on whatever monies are available at that time and whatever economy we might be in at that time? And if the answer is no, then that might seek further exploration of okay, what other options are there? And going back to the word retirement is to understand that retirement, when we're talking about retirement plans like a 401k for example, is that they're government programs. So how it works in most cases is that you as the employee can put a certain max amount into this 401k and that your company will match it. So that's a great thing in the sense it's like free money. You get to double the amount of money or double how fast you might grow that amount of money. So that's a great thing. Now something I say is match, don't max because you just want to take advantage of what the company is matching. But we don't want to max out everything that we can put into these types of programs. And the question is why? Why is because when it's attached this word called a retirement program, even if it is a SEP IRA or a Roth IRA or a 401k or different types of, you know, teachers unions have different types of retirement plans. So there's a name to the type of retirement plan it may be, but in this case a 401 is that since it's a government program that's attached to some type of tax consequences, meaning you don't pay taxes now or you don't pay taxes later, you don't have control over that money. So you're putting it in somewhere. There's probably. It's attached to a lot of fees because there's management companies that are managing this. And fees eat up a great portion of your overall compounding of that investment. And you can't pull it out early without consequence. You can't reinvest the money. It's locked forever, basically. And the government tells you what you can and can't do with that money. So you can't really grow wealth because wealth requires control and it requires that you are able to take out money to be able to take advantage, maybe advantage of a good investment that comes across your desk or a new opportunity, or want to start a business or these different things. So that's why I say take advantage of the match because it's free money. But to start thinking outside of just retirement is start thinking of investing for some type of control of more of a financial freedom mindset versus a retirement mindset. Because to really build wealth and to build it powerfully, you might say, hey, there's my neighbor. Let's just make up a scenario. My neighbor just died and the estate wants to dump this property really fast. And I can get a really great deal on this house and I can maybe cash flow it or, you know, buy it and update it and flip it. And here's a really good opportunity to build some extra wealth. But wait, I can't touch that retirement income, which is where that stash of money is, to take advantage of this opportunity. So we want to be able to, yes, take advantage of this retirement opportunity that our employers give us. But to think that I want to be in control of my financial future. Future. I want to know, can I use my money and have control over a good portion of that money allocated towards investing so that I can invest for more freedom than retirement?

Yeah. So I've Got a couple things to go back to Christina, and then move forward into. Like how should we think about the money that's not going into the 401k. But you mentioned 401k IRA and then like a teacher plan, which I think is a 403B. So basically these are what you said. They're government programs that are buckets to hold on to certain amounts of your money and they're run by the government. So there are governmental laws, rules and regulations of what we can do with the money or not do with the money. So number one, you're saying when we put our money into these programs, first of all, most companies, not every company, but I would say the vast majority of companies have done away with pensions, including like 3M was one of the big holdouts. And, and they had amazing pensions. You could retire at like 50 years old. Same with some of the teachers pensions. My dad retired at 50 years old from the New York teaching state, so he was a state teacher. They had great pensions. They doubled the amount of money he would get in certain years by remaining a teacher. And he retired early. And you know, he's like 74, 70. So he's getting his pension. A lot of people that are our age and a little younger, even if they have a pension, not sure if they're ever going to actually receive the full benefit. But regardless, most companies have done away with this benefit of like a defined guaranteed contribution to your living while you are retired. And so we have to fund it ourselves. But the way that we're sort of coached or corralled into funding it is one option. If you're a teacher or a state employee, it's like a 403B. And if you're a corporate employee, it's like a 401K. And that's just a name of a bucket that puts a little fence around your money and tells you what you can and can't do and it even tells you how much you're allowed to put in. So like for example, if you made a bunch of money one year and you wanted to put $30,000 into your retirement account, you cannot do that. There's a maximum limit defined by the irs, which is oddly not part of the government, but they get to make that rule of how much you can put in and they limit it.

IRS decides that.

The IRS decides how much you can put into your, your 401k.

Weird.

So it's weird. So a, Christina, you're saying all These weird numbers, 403B, 401K IRA, which is individual Retirement Account. These are just names of different codes or standards that define what a retirement account is and what we can do with it. Because each of those numbers, 403B, has certain rules associated with it. And what you're saying, number one, you can only contribute a certain amount. You are limited. And I know this personally. I have seven, let's say, seven investments that I'm allowed to put my money into. So if I put my money in my 401k, the company tells me what investments I'm allowed to make if I want to invest in silver, because I think it's a, like, at $7 an ounce, silver was a screaming deal. And Today it's almost $30 an ounce. I would have made all this money. I'm not allowed to invest in silver in my retirement account. I cannot invest in a real estate, residential property, commercial property. I can do none of that. I have. Some people have three investments, some people might have 50, some, most of us have like five to 10 investments. And that's all we can invest in. And they might all be not what we want to put our money into, but that's all we can do. We literally have no choice. So I think our choice is limited. The what we can do with the money and when we can take out is limited. If we decide to take it out, we're penalized, we have to pay taxes on it and we incur a penalty to take it out and reinvest it. So I just wanted to go back and cover some of those things for people. I'm not the expert on all these things. I know, Christina, you are. But I wanted to make sure people are up to speed on some of the stuff we talked about earlier.

Yeah, that's good.

Does that make sense? Do you have anything else you wanted to add to those before we move forward, Christina?

Yeah, now you said that so well and you're exactly right. And it's to understand that that government still having a government job, they still promise pensions in many cases, like a policeman or fire department or a teacher and others, but only governments do that currently. But to your point that will the money be there 20, 30 years from now? Who knows? And corporations, the reason why they no longer do pensions is because pensions are obligations. So when you're 401k, you're so limited and controlled, like you just said, but it's in the market and there's no guarantee the market could be down on the day you retire. And you have to live off whatever that value of that money Is pensions, on the other hand, were guaranteed. So that means you can be guaranteed to make $7,500 a month if that's the case for life. And that obligation is on the government's books, which is a problem because they have to fulfill in those obligations through tax dollars. And but for the company, the company valuation, and especially public companies, those obligations look bad on the books because the companies have to pay those. And granted now, back when we lived seven years on average for a pension, the obligation wasn't that great. But now with health care the way it is, doesn't mean people are healthy living an extra 20 years, but they're unhealthy living in an extra 20 years. But those companies would have to keep that payout going for how many thousands or tens of thousands of people and so on. So that's why there's no longer pensions and why it's been move to 401k. Except 401k is not an obligation on the company's books.

Okay, so just let me stop you right there for a sec. So number one, the pension, no matter how long you lived, the company has this liability to pay out all their retirees, this set amount of money that they guaranteed. So that is tough for the companies to swallow and they don't want those liabilities on their books, especially in today's world. The 401k number one, something you said, Christina, is like, I don't think people understand this that, that. Well, it is not guaranteed that you will have any money. You could have put a million dollars into your 401k. But if you chose, because it's on us to choose the investments that are offered. If you chose investments that were no good, or if all the investments that were offered to you lost money, then you could have significantly less than the money you put in and therefore not have enough money to even retire at all, potentially. Because just because you put a bunch of money in over a long period of time, there's no guarantee that you will have anything at the end of that time. So I wanted to make that clear. Like that's pretty significant what you said there.

Absolutely. And you know, the day you retire, the stock market crashes or something, and, and you have no diversity. You don't own, also own real estate, you don't also own crypto, you don't also own gold or silver. You don't also own. So the way I like to think about this is that we're, we are all, you know, where we need to be at. Cause. And we're responsible for our finances and we really are responsible for our financial futures. And, and if we want to have the financial future that's as secure as possible, we want to learn about these things. Which, that's why I'm so happy that you're doing this type of segment. But in part of that is I like to think of, think of a pie chart. So when I have my pie chart of my portfolio again, I'm like, this is my portfolio. So I'm proud of my portfolio. I want people to, to understand what is a portfolio, what's on my portfolio, and to have some, to have to create the portfolio portion of it. Like to have to be at cause to create what this thing is. Because this portfolio is our financial future. And what we're doing by just putting it, we're putting it in the company, in the government's hands to say, hey, let me put my whole financial future in your hands. And that's what we're doing. But when I think of my pie chart and you think of little pieces of the pie, I do have a piece of the pie. That's retirement. So I'm taking advantage of certain government programs where I can put in a certain amount of money. I put it in there that it's some future point time. It's supposed to be tax. I'm able to pull that money out tax free. So I max out those balance like in a separate or something, but it's just a small piece. I also have some retirement through a whole life insurance policy. So these are controlled. And yeah, I take advantage of some of the benefits like tax free, pulling out at some of these like on a, on a set. But it's just one piece of the pie. Now I have another piece of the pie which is real estate. I have another piece of the pie which is crypto. I have another piece of pie which is my business and you know, the enterprise value. I'm working on my business. I have another piece of the pie which are like more higher risk investments. And that's the playground that I'm playing in today while I'm running my business and growing my business and you know, running my household and do all the things. That's that other playground where I'm looking at, okay, this is how much money I want this portfolio to be worth by the time I'm a certain age. And then this is what I'm doing personally to grow it. Some things are in my control, like real estate and sometimes are out of my control, like what I have in my retirement accounts so to speak. So that's really the point I like to make, is that people were just blindly thinking, oh, I've got this 401k, I should be fine at retirement without thinking any more about it. And what I like to have people do is do this exercise, which is to ask the question, how much money is enough? So if we're going to look at, hey, I want to be officially able to retire at, let's say, 65, then it's okay, how much money do I need in assets, asset value that can amount to some amount of cash flow that's going to cover the cost of my life at that period of time. So that way we can at least look at, hey, based on the trajectory of my 401k, after fees and everything else, am I going to have enough money? But I think the latest statistic I read is that 75% of those that retire will retire on a max of 30% of their working income through 401s. So double check that. There might be some statistics, but to make the point is that, hey, do we want to reach 65 and be 30 to 50% of our working income? And probably not, especially when health care goes up. We want to travel more. We want to take advantage of the fact that, that, you know, we have more time, yet we have less money than our working years. And our goal, hopefully, is that we're making we have at least the same amount of cash flow in our retirement years as we do during our working years. I don't think we want to go down. And if we can have more, even better, obviously.

So. So, Christina, you said, match, don't max your 401k. That hit me because I'm like, oh, I should max out my 401k. And you're saying, no, that's not necessarily the best thing to do. So, for example, my company matches the first 4% that I put in. So if I put in 4% of my salary, they'll match 4%. So I'll get a total of 8% of my salary per year into this 401k. I can put as much as like, let's say 14% of my salary in, so I would get a total of 18%. But you're saying you may not want to do that. Or maybe you're saying, definitely don't do that. Just put the minimum amount that your company will match. So is that what you're saying? That just take the match and if you are saying that, tell us, and then what should we do with the Money that's going to come to us because now we're going to get taxed on that money.

Yeah, well, you're going to be taxed one way or another anyway. So, you know, I always say don't make financial decisions just based on taxes alone. Taxes is the last thing you're working on after all the other numbers are working, but you want to map. So I have to preface it by saying it depends what kind of person you are. So if you're never going to invest unless you max out by putting it away like this, then absolutely do it because at least that money's being put away.

Okay, so, so your first thing is if you match and don't max and the extra money that you're now not putting in the 401k comes to you in your paycheck, and then you spend all that money on your lifestyle, that's a bad idea. So if you're that kind of person, put more money into your 401k, you're saying because if you get the money, you're just going to blow it all.

Exactly. So better that at least it's being, you know, put away. But if you can afford that amount, obviously that if you're going to put up to that 14%, for example, but you, your company only matches 4%. My recommendation is you take that other 10%, you put it into an investment bucket and, and now you invest that money directly because now you have control over that money. You can put it in other places that might get much better returns and low to no fees. And you could put it in, you could put it any, any other investment. And so that's what I'm saying, that's really great opportunity to say, hey, I have a portion that's going into my retirement. I get this really great employer benefit that I as an entrepreneur don't get and to, to do that. And now I'm going to use the rest of this money to be able to build out my portfolio with control. And the thing is, is, you know, with the line of business that I do, which I help people with personal finance for the most part, is that I hear stories every day and life happens. And so I hear stories of people say, yeah, man, I took money out of my 401k and I paid penalties and I had to pay taxes and but I did that because I got sick, or I did that because my kid got sick, or I did that because I lost my job. And so now they've paid penalties, they paid taxes, they have to pay it back or there's going to be even more consequence. And that's part of the problem is that for example, if that were, let's say when I got sick about a decade ago and I had my money in real estate, that money in real estate, so I didn't expect to get sick. I didn't think it was going to cost me a quarter million dollars to get my health back. I didn't think my business was going to just burn to the ground once I quit working on it. Like that wasn't even in my, you know, that wasn't in the cards whatsoever. Like we don't expect like life to happen, but if I had had that money in a retirement plan, I'd have been in that situation. So I would have access that money in that point in time to, to save my life or to, you know, taking care of this kind of catastrophic life event. So that's having money invest in places we have control. Is I just able access, sell some real estate, do some things and get, get my money that I invested and that, you know, had equity in different things. So it's just understanding also that when we don't have control over our money when we need it, we don't have access to it. And we just, it's just important, you know, we spend money on our current lifestyle and our month to month paying our bills. But it's really important that we have cash out there like that rainy day fund that we talked about last time, but also investments that we have control over in bad crisis situations like I just mentioned, but also to be able to take advantage of opportunities that come that we couldn't take advantage of if our money was locked up and inaccessible.

So somebody decides that they want to invest their own money and have control over it. They match their 401k and suddenly they, they've been putting more money in their 401k. So now they have extra money in their paycheck that they're taking home every two weeks or every month or however it is they get paid. What do they do with that money, Christina? Like it seems like there's two options that they could do with that money. And I want you to help people understand like how to choose. And option two has lots of choices, option one doesn't. So option one is they can save that extra money in an account that when an opportunity opens up, they can spend it on that investment opportunity because maybe they are going to buy a house. But you get so many thousands or hundreds of dollars a week or a month and Then you have to have enough to put a down payment on a house as an investment property. So you've got to save it to get to that point. So that's option number one. Option number two is like, I want that money going into investments that are under my control and I want it making more money or paying me more money every month. What, how do they know? How does somebody know what option to choose? And if they choose option two, where do they invest their money outside of a 401k?

Yeah, I love the questions. So, yes, you're right. Two options, basically. Now, first of all, I want to say that, run your numbers. How much money is enough for when I retire? Which means how much do I need to invest on an annual basis to be able to retire at that age? So let's just say, you know, make up a number. Is it 10,000 a year, $20,000 a year? You have to note, know how much that is. It needs to be quantified. So that's really important whether you put it do that through your 401k or whether you do it, combination of both. You just do it on your own. So that's point one. It's really important to know your numbers to make sure that we have enough money in old age, period. Now, for most people that start, let's say, in their mid-30s, by the time they really start investing or doing anything, you're looking at putting 15, taking a minimum of 10%, but usually close to 15%. If you want to hit these numbers and have plenty of money to live for this, you know, 25, 30 years, you're looking at taking 15% of your total income to invest it somewhere. And like you said, you can invest up to 14%. That's probably a pretty good number. So let's use 14, 15%. So know your specific number, but let's use the 15% example in this case.

So when, when you say your specific number of how much you need to save by the time you're age 60, you're going to back out the amount you need to save per month to get there. But how do you. First before you say, how do you know that number?

Okay, great. So let's say if I want to, here's how you do it. You go to ChatGPT and you say, chat, how much money do I need to invest on an annual basis at an 8% compounded return for 30 years, retiring in 30 years, how much would I need to invest on an annual basis? Chat, chat GPT will tell you now what's so cool about that is I used to go to compounding calculators and you can Google compounding calculators and reverse compounding calculators. But now you don't have to do that. Just chat will tell you and it's great because you go to chat and chat will give you all different, any different scenarios, well, what about 10 years? What about 20 years? What about 30 years? What about 10% versus 8%? And you just get your numbers so it's easier now than ever to come up with that. And you know it's going to. Some of the variables are how many years meaning do you want to retire in 10 years, 20 years, 30 years and what ir what annualized kind of average interest rate. 8% is market. So if you want to be conservative, you might use 8% for example. But that's, that's what you're looking at. And then it will tell you how much do you want to invest on annual basis to be able to hit that. But let's use 15%. So 15%, let's say that you know you're putting in four, so the rest we can put somewhere. So the question is do I put that in account or do I put it, do I invest it directly? Now again, it's going to be individual. There's three answers. One answer is someone like me and I saved the cash and I'm very clear how much cash I need to save on an annual basis. And I like stockpiling a bunch of cash because your highest returns, when you're looking at double digit returns, again I'm generalizing but in most cases you're looking at $100,000 investment to get in the types of deals that are going to get you 12, 15, 20%. Like because those are more private type of opportunities and they don't invite people in for $20,000 or $10,000. It's too expensive and too much of a headache for the investor. So I like double digits, I like getting high returns. And so I save money so that I have six figures available when those opportunities come across my desk or I want to buy the next piece of real estate or whatever the case is. So that's what I do. And I'm able to do that because of my kind of income and what I'm doing. And I'm very intentional about filling that six figure bucket to be able to amplify how fast I can continue to build this portfolio. So that's one option. Second option is that you can put it directly, let's say I don't want to be in the investor game. It's too scary. I want to just focus on my job maximizing how much money I can make, maybe have a side hustle to make some extra income. So you can just put it in something called an index fund. You can go to Vanguard, choose an index, it's going to average out what your 401k is going to do. If the 401k is kind of just normal indexes but you're going to pay less in fees. So the benefit you're going to get as opposed to putting that through your 401, even assuming it's in the same investments, you're going to pay lower fees which means you're going to keep more of the money and that's going to compound. And people don't realize how much those fees take out of their compounding ability. I mean it's can be hundreds of thousands of dollars. It's crazy. So we want to pay less in fees. And then too like I said, you have control over it. If you want to go access and get that money back, you can. So that's why you can do the same investments but do it through an index fund versus through your 4.1k.

Would you, would you Christina, for that option you said there's, you have three options. One was save cash to index fund. Would you open a Roth IRA to put money into or would it just be complet be outside of any of those types of programs?

I mean if you want to, if you for a Roth IRA in most cases you're going to be self employed or something. So you have a max amount you can do there. So it's usually not what an employee is going to choose. They're going to choose a 401k. There might be occasional things and in that case I recommend doing a Seth ira which means that you're paying, you're funding it with after tax dollars and then you supposedly won't get taxed when you pull out that money. Taxes are probably going to be higher in the future versus today. So I say pay taxes today and don't pay taxes tomorrow is my thought about that. But again those still are government control that has a lot of immense limitations to what you can and can't do. You already have a bunch of money locked up into control. So I want you to invest money where it's not locked up. So that's, that's what the goal that we're trying to do there and with. So yeah. So but in an index fund Again, safe, You just put it in there slow grow, let it be. Grow over time like your 401k is. And one day when you retire, you have your retirement plus, you know, whatever you have in your index. So that's kind of an option too, or, you know, if you just want to invest in stocks or whatever the case is. And then option three means it's, you can do both. Meaning I'm going to put my money in an index or I'm going to put my money into crypto. I'm going to put my money into, in a place, but it's, it's like a container. So, for example, I can put my $100,000 into my high yield savings account. That's getting 4.25%. Or maybe if I think crypto is going to go up, bitcoin's going to go up. I can put it in Bitcoin. And I'm just, it's just a bank account or an index fund or. So think of this money that it's like a bank account, but it's, it's yielding higher interest, so meaning more appreciation. So if I want to put money in an index and let's say it's averaging 8%, I'm doubling, almost doubling what my high yield savings account is going to do. So again, you're putting the money there as a bank account looking for, okay, If I have $100,000 sitting around in one of my funds and I see this investment opportunity that is this, I want to invest in a company or I want to invest in my own business, or I want to buy this piece of real estate you can sell for basically for free. I mean, you're going to pay some fees selling that money, but not much. And then you can move the money to take advantage of a better opportunity. And that's ultimately what we want to do if we looking for the deal. You're always looking for a place to invest and you're, you're moving your money. It's like, you know, it's, it's chess pieces on a chessboard. And, you know, that's a different level of play. But again, having that money that's your money allows you to do that. Now the risk to that is that if you're putting your money in the market, it's. You're either selling it while the market's up or you're selling it while the market's down. So that's the risk you're taking by putting it in different investments that if the market's down Then you're not going to want to sell it to take advantage of this other opportunity, for example. So, you know, I'm always. Personally, I'm playing with both of those. I'm going to put my money in investments where I can get the highest yield, but I'm going to have some money sitting around in a cash account that I always have access to for investing, so that if the market is down, if it's a bad bitcoin day, that I am, you know, I'm not selling it at a low to be able to take advantage of what I want to buy for sure.

So is this the advice that you're giving Christina? Is this for people that are in corporate. Because this is a corporate escape artist podcast. Right. So I'm going to kind of.

I'm going to.

I'm going to reel you guys back in a little bit. Is this is the same advice you give to somebody who is an entrepreneur or who wants to play both sides or. I guess that's my question.

Yeah. Yeah. I mean, investing is irrespective of an entrepreneur. W2. An entrepreneur. W2 is just how you make your money. You make a money. You make your money working for somebody else. You make your money working for yourself. So right. Where you make your incomes irrelevant. The. The benefit of working for a company is most companies have matches. And so that is a really nice benefit that as an entrepreneur. Many entrepreneurs don't invest in anything. They're only reinvesting in their business. So they wind up older. And they don't. Since this wasn't automatically taken out of their paycheck, they don't have that nest egg. And that's, you know, something I'm trying to teach entrepreneurs all the time now. On the flip side, with the employee, you just don't have as much control over your life. So everything's a balance. But my point is that regardless of where your income comes from, oh, the danger of the W2 is thinking, oh, my company is going to take care of me, so I don't do anything. The danger of the entrepreneur is, oh, I'll just be fine in the future, so I'm going to do nothing. And in both cases, 85 to 90% of people wind up at retirement age with not enough money, regardless of which camp they're in.

Okay.

They're not taking control of their. Their future.

So what happens at Dave Asprey's bulletproof conference? It's like, live to your 180. What would happen if you live to your 180?

Yeah. If you're, if you're going to survive to 180, you're probably not going to want to be working that entire time. So we, your, your pensions would have run out. You're going to need your own independent funds. Right?

So you need a hundred years of, of money to like this. It's such a crazy, you know, that's what his conference is called this year. So I was just like, I just realized that yesterday and I was like, what? Like, I, I don't know, like we can't even manage to 80 hardly. You know, like what's.

Yeah, they're not. People aren't talking about the cost of old age. We take care of ourselves. So, yeah, we all want to live longer, but do we all want to live longer and pretty much live in poverty? Because, you know, right when we age, people don't want to take care of us. We become an obligation, a liability to the kids, the government, and different things. And, and so, yeah, if we're, if we plan to live a long time, then we need to financially plan for our old age, you know, living longer as well. It needs to be included in that conversation. Right.

Do you, do you see, Christina? So there's lots of options between crypto, which may or may not be an investment, real estate, your own business, the stock market, index funds, other people's businesses. Is there what, in your observation, a group of people that tend to have more money in retirement with a certain strategy, like the people that are all in on real estate have more money, or the people that are the most diversified always end up in a better spot. Is there some sweet spot there?

Yeah, I don't have the answer to that now. A lot of it just depends. Kind of a long game and a short game. So when you're playing with index funds and just looking at market averages somewhere to between 6 and 8%, you need a long time for that money to compound at a lower interest rate. So if you're 30 and you're starting out, then you've got 40 years, you've got plenty of time. Just set it and forget it. Keep contributing, and you should have plenty of money. Again, everybody needs to know their numbers. Now, if you start at 50 and haven't started at all, we don't have that 30, 40 years to take advantage. And so when you're looking at real estate, when you're looking at other types of investments, they're riskier, but many times with the risk comes higher returns. And so that's where you can make more money, you know, with investments like real estate and you know, then with any investment, you know, if you're in the stock market, some people trade stock. So they're watching Apple stock and buying and selling, not necessarily day trading, but you know, watching it as part of their portfolio. And you know, so they get good at that. And that might be a way like, hey, they sell all their Apple stock or a good portion of it on a high day and they reinvest that money somewhere else. And so that's when you're in the investing game and you're really working to build that wealth as fast as possible. You, you have your hands in the cookie jar like you're in it with me real estate, I'm buying real estate, I'm selling real estate. Sometimes I flip real estate, I'm cash flowing real estate. But I've made my net worth by being very active as a real estate investor. Like I hold something for a certain period of time, I max out the depreciation or maybe max out what I think the equity. I'm going to sell that 1031 into something else. So real estate, there can be big gains and there's a lot of tax advantage of real estate. So, like, why a lot of people have made their fortunes in real estate investing is because there's so much benefit to real estate investing that it's hard to find in other types of asset classes. So when people are really at a place, they're like, all right, I really want to get in this investing game and start building out my portfolio. Real estate is usually one that becomes something that people are very curious about because there is so much upside and opportunity that you know, you're not going to get in crypto, for example.

So it seems like what, what you're saying is you see the people that do the best being more actively involved in their investment. So the passive investor needs to have just basically a really long time horizon. And if you want to make more money faster, you're going to have to be active and, and be more both engaged and knowledgeable about the investment world. And it sounds like what you're saying also is that you're willing to take advantage of opportunities when they arise. So you have to have control over your money. Because the opportunity in 2008 and 9 and 10 and 11 and 12 was probably in real estate to purchase, whereas the advantages would have been, let's say, in the stock market in 2020 when it dipped or whatever it is. So it seems like there's different times when assets are really cheap and it's time to get in. And you have to both have control, but be an active and intelligent and intelligent, but knowledgeable enough investor. You don't have to be super intelligent. You just have to be knowledgeable, I think, to know that you can pick things up at a time when they're discounted and you'll make more money. And that seems to be like a Warren Buffett strategy. Now, he might be all stocks, but they hold on to a huge amount of cash and they, they wait, they wait every like 10 years before they make an investment because they wait for those opportunities and they have control over that money. Kind of sounds like you're saying, act, be active, gain some knowledge around the different types of investments of what you're comfortable with and be really good in at least one area and have control over your money so you can actually make those investments.

Yeah, that's a great summary. And really decide one, you have to know your numbers. How much money do I need to retire?

So I'll stop you there with know your numbers because I listened to one of your YouTube videos, Christina, and they're, they're like around an hour long, some of them, and you in that video. So if you're listening to this and you have not been to, it's at Christina Wise on YouTube. Tell me if I'm wrong. If that's the fireworks. We have fireworks on the video here. So at Christina Wise on YouTube. I listened to one as I was going for a walk with a dog. And you broke down exactly how to figure out your numbers. I was like writing down in my phone, like, do this calculation do. This is really simple. And you laid out like the exact steps to figure out how much money you need in retirement, the exact number, and then how much you have to invest every year to get to that number. It was really helpful for me personally. And it doesn't matter how much money you're making now. It matters what your lifestyle is going to be when you retire for how much you need. And you, you're like, here's how to get that number. And then you just divide it by this and you figure out how much you have to invest. So if anyone's listening and they haven't been to Christina's YouTube channel, all the videos are on there. And then I think, Christina, you also work one on one with a lot of clients and do you also have a program people can join as well that's kind of go at your own pace.

Yeah. So what you're talking about first is the how much Money is Enough workbook. And if anybody would like that workbook, it's wise money method.com wise moneymethod.com quiz. So it's a little 10 question. Ask these 10 questions and then what you get after you answer those questions is you get a workbook that is a complete guide that will help you calculate how much money is enough so that you know your numbers, which I always tell everyone that's the first place to start. And then yes, that if anybody did want to sell, just set up a call like this, we can have a conversation like this, look at some numbers, talk about some things. And that's Christina.com call if somebody actually wants to do a 45 minute consulting call and otherwise just go to YouTube. I'm just recording a couple of videos per week and, and I'm happy to answer any questions. If somebody throws me a question, I'm happy to even do a YouTube video on it. But I really just want to do financial education because there's just so much dono dono and just, just real true illiteracy when it comes to some of these financial basics. And I want to make sure we all have enough money and we can live a good life. And by being educated around this topic, I think just, we're all gonna be better off. So YouTube is a place just to get some free education.

I highly recommend everybody follow Christina on YouTube. It's, she has a lot, you have a lot of information there, Christina. And I see it as like, it's like the dodo bird. It's, everybody is following the same advice because that's what everyone tells them to do and it's what everyone else is doing. And as you said, if you look at the statistics, the majority, the large majority, like 80 plus percent of people don't have enough money to retire. So if you do what everyone else does, you're going to get what everyone else gets, which is not enough and that's not where anyone wants to be. So I love what you're doing around financial literacy and education. So I'd highly recommend if you're listening to this podcast and you're sinking a bunch of Money in your 401k and you're thinking that you're going to be fine, go visit Christine Hawaii's and learn a little bit more about how to be better so that you are not like everyone else and actually have more money to retire on and then more options.

Nice. I like the dodo analogy.

Yeah, well summarized. I couldn't have said it better myself.

I know, it's good.

Great, Christina. So great to have you here. I.

We got you one question, by the way. One bullet point. There's three. It's so funny. I was just kind of, like, analyzing. I'm like, should we bring up the Biden thing? The capital gains. 44%.

Stay tuned for part three, where I want to talk about what's the difference between financial security and financial freedom? And if so, this was a. A potential White House thing where they could increase the capital gains tax to 44% or some other large number. How would that impact investment strategies for those of us that are actively involved in our investing?

So you'll have to stay around for episode three with Christina for that. Let's leave a cliffhanger, which we don't.

Have her permission to do episode three yet.

Right.

She's like, geez, you guys.

Well, if she doesn't agree, we'll ask her over email, and we'll. We'll pretend that Heidi's Christina.

I like how we're talking about you, Christina, like, as if you're not here.

I love it. I love it. Actually. Actually, that's a good one. You just gave me a YouTube video idea. Really? I'm gonna do. I'm gonna do a video on the difference between financial security and financial freedom. That's really good.

Nice. I love. Somebody broke that down for me once, and I was like, oh, I never thought about that. That there's a difference, and there's a huge difference, so in, like, what you can do with your life, and most people have neither one, so.

Exactly. You guys are so much fun as always. Thank you.

Thanks, Christina, for being here. Really appreciate it, and love all the things you're doing around this. I'm learning a ton, and I study this stuff all the time, and I'm still learning every day from you. Thank you so much.

You're welcome.

Thank you.