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Episode 2 - Savings and Such
13 Plays1 month ago
Austin and Derek chat about the different 'traditional' ways of investing out there that they have been taught to do. Investing in 401Ks and Roth IRAs or Real Estate. Ultimately they come to similar conclusions in BTC but differ in some of the Pros of the other asset classes!
Let us know your thoughts on X @2171Podcast
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Transcript
Power Grid and Market Insights
00:00:00
Austin
That's really the reason why you'd want to do that. But if they can do that, I mean, that's a pretty good thing. I like to see them try, though. But...
00:00:10
Austin and Derek
I don't know. the Like I said, it was just an ad that I saw on Twitter that I just scrolled through essentially. i was like, oh, that's cool. But it it basically the people were kind of excited because they made it seem like if the regular power grid went down, then maybe they would still have access to some.
00:00:29
Austin and Derek
like So it was just a backup in essence. sense i don't I don't know what the cost benefit was. I just i just think with the toll market pullback that Like I said, some stocks I think are on sale. Tesla's one of them.
00:00:40
Austin and Derek
I think even at its high, it was still kind of on sale. I mean, Cathie Wood of ARK, she thinks it's going to go to like $1,000 just based off the the robots themselves, the humanoid robots.
00:00:51
Austin and Derek
Think about what that could do. Like that's $40K for a human. That's cheaper than most people's salaries plus no benefits, dude. I mean, don't know.
Investment Strategies and Global Markets
00:00:59
Austin and Derek
don't know.
00:01:01
Austin
Wait for, said, you said Cathie Wood?
00:01:02
Austin and Derek
as
00:01:04
Austin and Derek
Yeah, you know who she is?
00:01:06
Austin
Yeah, yeah.
00:01:08
Austin and Derek
What, uh, what other stocks do you invest in?
00:01:12
Austin
Honestly, man, it's just, it's just Bitcoin, MicroStrategy, and ah ah vt VT, which is just the total world index. So instead of the S&P, it also includes the foreign markets as well, because
00:01:27
Austin and Derek
Foreign markets.
00:01:32
Austin
And that's where most of my that's where most of my stock is in, I'd say. It's obviously growing towards more more towards the Bitcoin with MicroStrategy and the ETF because just simply because of the performance of it.
00:01:47
Austin
Which by then, I think it takes up... a but I think right now it's about almost like 40% of my total. Actually, no, more so. think like 30%. But I think even if don't...
00:01:58
Austin and Derek
what What is? you said it You said it's like 30 or 40% of your total. What you what is?
00:01:58
Austin
even if i don't
00:02:05
Austin
The like the ETF and micro strategy.
00:02:09
Austin and Derek
okay.
00:02:10
Austin and Derek
And that's just in stock portfolio?
00:02:10
Austin
Yeah.
00:02:10
Austin
Cause yeah. Yeah. For my stock stock portfolio, those are the only things I have. i did VT initially just as like, essentially just betting on the world rather than just betting on a select few companies, because i think picking stocks ultimately, if you're going to be as passive as possible, cause this is, this is what my IRA consists of.
00:02:32
Austin
I'm not, I don't use like a brokerage or anything. And with regards to an IRA or a retirement account, you really don't, in my opinion, i don't want to do a lot of stock trades. I think that's appropriate more so with a brokerage account, but with regards to something that I just want to set and forget, i i think if you're going to pair, if you're going to do a strategy, I think the perfect one is total world index.
00:02:58
Austin
You have the S and P you have markets outside of it, because if you look historically, Right. The U.S. doesn't always win all all the time.
00:03:08
Austin
Right. There's periods where the U.S.
00:03:10
Austin and Derek
Bold.
00:03:11
Austin
does bad and the there's other markets that perform better. And there's there's little information on this. You can look it up. But there's periods where stocks, U.S.
00:03:22
Austin
stocks underperform and the. These stocks from other places of the world, such as Asia, Europe, they basically outperform. So I'm taking into account situations like that. And that was evident more the last time where 2008 happened pretty much.
00:03:40
Austin
It was bad for all of them, but the U.S. stock basically underperformed the most because that's where the problem originated from with the banking crisis there.
00:03:48
Austin and Derek
Well, it it was it was called the global financial crisis still, though.
00:03:49
Austin
Yeah.
00:03:52
Austin and Derek
I mean, it was the the the whole world had to reset after that.
00:03:53
Austin
yeah
00:03:56
Austin
Yeah, that's true, but it mostly affected the US. like stocks If you look at stocks globally outside the US, they underperformed, but not as much as the US.
00:04:09
Austin
So it's it's basically taking that into account. And I think in my in my worldview or in my investing mindset,
00:04:20
Austin
The US, yes, it's a center of economics or the economic world, but we're only 400 million people, right? And the world consists of like 8 billion. So why aren't you putting your money in the rest of 7.4 billion people or 7.6 billion people out there?
00:04:38
Austin
ah ah seven point six billion people out there I know that corporations in America, they they have multinational corporations, but let's not forget about multinational corporations in Japan, Europe as well. So it's just a way to diversify out of it. but So I get less growth from it, at least in recent years, compared to the S&P. Of course, the S&P is going to overperform on that.
00:05:04
Austin
But I compensate that through the use of Bitcoin, right? Because Bitcoin... is actually more so of a world
Influential Advice and Market Concentration
00:05:10
Austin
asset than what people even realize to begin with, right? I think my strategy with buying that and buying 30%, I mean, I'm really investing in the more more of the sense of the rest of the world when I buy Bitcoin because there's a lot of countries that rely on it way more than people in the US do. So that's kind of my strategy is I'm investing in the world's ability to progress, I guess, but...
00:05:38
Austin and Derek
I definitely agree with you on that one that there's some global aspects to it. But i do it a little bit different. I definitely am and not invested in the only ETFs I'm invested in are are Bitcoin ETFs, but i do have a lot of individual stocks.
00:05:57
Austin and Derek
it's It's kind of, i mean, Ray Dalio and Warren Buffett and these people, they they are they are funds, they run funds, they're managers, but they also do believe that you should have, I mean, warren Warren Buffett is a value investor. He finds individual companies that are undervalued in the eyes of the market, buys them,
00:06:19
Austin and Derek
helps them in some cases to grow. Ray Dalio, the same. I just read a book about him and he says that the Holy Grail, quote unquote, that's what the book was called, Holy Grail of Investing.
00:06:27
Austin
Thank
00:06:29
Austin and Derek
But the Holy Grail of Investing is finding eight to 12 uncorrelated assets And that's it, not not assets as a as a whole. Because even if you look at, we'll just take the S&P 500, because that's what most people normally and normally invest in, right? So you have your your SPY, your s SPY, which is the ETF that's got the most liquidity. And then you got VOO, VOO, which is the ETF by Vanguard that's got the lowest expense ratio.
00:06:58
Austin and Derek
So most people will go between those two. But realistically, those stocks, if you look at the weights, are very heavy in the MAG7 stocks.
00:07:08
Austin and Derek
So even though you're invested into 500, quote unquote, because there's I think there's more than 500, but regardless, 500 are the most profitable. Actually, I don't even think it's most profitable.
00:07:19
Austin and Derek
there's There's a set of criteria that you need in order to get to it, to get into that fund.
00:07:23
Austin
Yeah, there's separate break criteria.
00:07:25
Austin and Derek
But you're getting only, I mean, realistically, a very heavy share into those seven stocks. That's you know Amazon, Google, Apple, Microsoft, Facebook. Is Tesla a Mag7? It might might be, might not. But regardless, that's still putting a lot of your...
00:07:41
Austin and Derek
your your risk into seven stocks, essentially. So one of those stocks could underperform while the rest of the market still does. And I would assume, i mean, the global the global thing that you're saying, was it v it just VT, right?
00:07:56
Austin and Derek
Total total stock market, or is it VT?
00:07:58
Austin
know There's some people that do VT. I think, well, it's kind of funny. If you look into this whole, I've done so much research, at least on YouTube and just reading stuff online, people get emotional about this stuff. Like people will say like, Oh, VT, you're just de-worsifying.
Retirement Accounts and Tax Implications
00:08:15
Austin
Like you're just putting money into countries that don't perform as well in the U S. So just buy VTI, which VTI is every stock in the U S rather than the VU, which is the 500 most profitable companies. But yeah, people get into a real argument about it. And to me, it's, I, I just prefer investing, especially in a retiree.
00:08:43
Austin
It's different when you're doing a brokerage. I think if you're doing a brokerage, I would never do that because I'm, like in the sense of a long-term retirement account, I'm purposefully dampening out my returns for the for the to deal with the risk of, you know, if I bet 100% in the US, then that could be a problem if there's a period where it doesn't do too well compared to other countries, right?
00:09:10
Austin
But I'm willing to make that bet in a brokerage account where my time horizon is like less than five years or less than 10 years, where if i'm if I'm going into a retirement account where We're talking 40 years, like a lot can happen in 40 years, right?
00:09:23
Austin
You have to deal with those risks and time plays a big factor in that. So,
00:09:29
Austin and Derek
I guess I don't understand why why you would treat them different differently. but like a A brokerage account is is taxed, right?
00:09:38
Austin
yeah.
00:09:39
Austin and Derek
But your Roth IRA, you can make a trade and not pay taxes on it. So wouldn't it make more sense to be doing more short-term stuff so that you could get out of those trades easier and actually take some money?
00:09:49
Austin and Derek
say And even more so to a 401k where there's a match, you're using you know the house's money essentially in that.
00:09:55
Austin
Yeah, but the thing is though is, yeah, so I'm not afraid of taxes actually.
00:09:57
Austin and Derek
your house's money and when you sell, you don't pay taxes on it.
00:10:03
Austin
I think a lot of people, and I think I've made this mistake and I've learned this through Jack Mallers. I think he puts it perfectly. like The whole tax thing, again, this is something to where in the 401k and the Roth IRA, it's a long-term account and it's something that I don't want to manage, right? Because this is money that I'm supposed to expect 40 years later, right?
00:10:26
Austin
If I'm, I'm more so the type of person, if I'm going to manage something, it's going to be one thing rather than two separate things. And you're putting more, like to me, it's just a savings account, right? Like for a savings account in the sense of purely saving, I don't want to trade in and out of a savings account.
00:10:45
Austin
The whole purpose of a savings account is just to put money in and let it grow and not have to worry too much about it. Whereas with a brokerage account, you make it's like essentially making bets and seeing if it pays you off, right?
00:11:00
Austin
And to be honest with the tax thing, it's like if you get taxed on a brokerage, it's really not that big of a deal because it's only you're only skimming 20% to 30%. But if your returns are so great,
00:11:14
Austin
like you're making hundreds of percent, what's 20 to 30% to me. And then that's money that I can use right now. Right. So that's the whole purpose of it. Right. If you're looking for short term, in my opinion, if you're looking for short term gains and short term money, I'm not going to let the tax man shake me out.
00:11:31
Austin
whereas Whereas like with a long term solution to where there isn't because long term solution for retirement, it's like, I see what you're saying where you're not getting taxed. You can trade off of it. I'm just not a fan of putting a shit ton of management into into a retirement. I think the purpose of a retirement is to basically save once you can't work. and then cause i've seen this I've seen this before. like With my grandparent or with my grandpa, for example...
00:12:02
Austin
he will mess around with it and he's just making bets on it It's like, dude, this is your retirement like for after you work. And he's like making active trades on it on his retirement. it didn't If he simply would have just kept in hold and just had the S&P throughout that time that you know once he started working and just kept it in and didn't touch it, he wouldn't have this problem to where he's actively trading on it.
00:12:28
Austin and Derek
Yeah, no, i definitely I definitely agree with you on that.
00:12:28
Austin
So...
00:12:30
Austin and Derek
i just I was throwing the question out just to see what you'd say about that whole tax thing. my Me and my dad actually were talking about this once. i I forget what who said it.
00:12:41
Austin and Derek
so It was something about taxes. And then I was like, you know what? i don't I don't really mind paying taxes either because that means you made some money. You know what i mean?
00:12:48
Austin and Derek
like You don't pay taxes if you if you take a loss.
00:12:49
Austin
Yeah.
00:12:49
Austin
it's
00:12:51
Austin and Derek
So first of all, like you're you're making money.
00:12:52
Austin
Yeah.
00:12:53
Austin and Derek
But my retirement, I actually...
00:12:59
Austin and Derek
Don't contribute to them anymore. For one big reason that you said was that in your regular brokerage account, you actually have the money.
00:13:09
Austin and Derek
Like you have access to it.
00:13:10
Austin
Yeah.
00:13:11
Austin and Derek
One of the pros of stocks is that you can sell it and get your money tomorrow. But if you sell the stock in your Roth IRA or 401k, you can't get your money tomorrow. Even in there was one time I was trying to see what it would take to to liquidate my 401k just to see what I could do.
00:13:26
Austin and Derek
You have to have, at least at the time, a specific reason why you're pulling your money out. Like, I don't feel like I should have to have a reason to just say, hey, I want my money. Yeah, I'll pay the penalty and the taxes. No, no big deal. But like, give my money. No, like I had I would have had to submit a reason for pulling my money out.
00:13:45
Austin and Derek
So I use my company let's puts money in without a match. So I let them put the money in. I put that all into the Bitcoin ETF or MicroStrategy. And then my by Roth IRA, I don't think I put a penny in this year. I probably put like 500 bucks last year.
00:14:04
Austin and Derek
And I mainly fund my excuse me my regular traditional brokerage, sorry, just taxable brokerage for the sense of You can actually leverage it with margin.
00:14:04
Austin
Yeah.
00:14:18
Austin and Derek
So the Bitcoin ETF, I think it's like 33% or 25%, meaning that if I wanted to, I'm not going to, but I could buy three to one or four to one. i have to redo the math on it. It might it might just be one to two to one.
00:14:35
Austin and Derek
But
00:14:35
Austin
with You're saying there's a leveraged ETF or you're saying you can leverage with that?
00:14:40
Austin and Derek
No, I can't leverage it. Let me, let me pull it up. I got my phone. So
00:14:44
Austin
Because there's also there's a micro strategy leveraged ETF. I think it's MSTY.
00:14:50
Austin and Derek
yeah, but didn't that one, didn't that one burn people recently?
00:14:53
Austin
I mean, yeah, then I haven't looked into it, but I'd assume with the price action, then yeah. So...
00:14:59
Austin and Derek
i think i think I think they had it to where you, if you owned it, they gave you like a a fat dividend or something and dropped the share price from, don't know, 40 to 10.
00:15:12
Austin and Derek
So people who actually held it or were playing options on it lost a lot of money. Let's see. So balance position. So this, I have one share.
00:15:25
Austin and Derek
or one share would cost in this account, $13 and 89 cents. And that
00:15:31
Austin
Dude, the yield the yield on it is 157%. On the MSCY,
00:15:36
Austin and Derek
on the Y MSTY that was based off the last one, probably the last dividend though.
00:15:38
Austin
the msc why yeah.
00:15:45
Austin
Yeah, yeah. yeah i don't yeah this It's not that old, so it's probably going Yeah, it's not even a year old, so it'll probably go down after a while, yeah.
00:15:56
Austin and Derek
Yeah, I can't remember. there was There was something that had happened to it to where they they dropped the share price, but to give everybody an individual dividend.
00:16:05
Austin
like Like a huge dividend is what you're saying?
00:16:08
Austin and Derek
Yeah, like a non-standard, non-quarterly. Some companies do that sometimes, you know.
00:16:13
Austin
yeah yeah. That makes sense.
00:16:23
Austin and Derek
But yeah, so so theoretically, so like one share of IBIT, which is the BlackRock one, it's $46.36. It only costs in this brokerage account $13.91. So what is that?
00:16:23
Austin
What were you mentioning before, though?
00:16:43
Austin and Derek
A third?
00:16:44
Austin
Yeah.
00:16:45
Austin and Derek
So that means I can use it for margin, whether it's buying more stocks or just selling naked puts against it. or for anything else, you know what i mean? So i don't have but I don't have a ton in this account, but it's something I'm like kind of considering.
00:17:03
Austin and Derek
You can't do that in the, and and you can't do that in the Roth or the the Roth IRA or the 401k.
00:17:11
Austin
You can't use margin.
Real Estate vs. Bitcoin Investments
00:17:13
Austin and Derek
No, there's there's ways to take out loans against them, but
00:17:17
Austin
Yeah, that's the only thing I've heard of.
00:17:19
Austin and Derek
But even like the loans that I've looked at are, you got to have a hundred K plus or something like they're not going to give me, don't, I'm not, you know, rolling in the dough in my four one k I've only had a 401k for a year and a half. it so I mean, realistically a year and a half, but it's, it's not something that's stacked up fat. So I basically don't have any access to that money that I'm putting away every, every paycheck, you know what i'm saying? So that's, that's where I kind of got away from, from that.
00:17:46
Austin and Derek
You know, that's kind of a more of a Dave Ramsey school of thought, save your money, save your way to retirement type of thing, which.
00:17:47
Austin
yeah
00:17:53
Austin
Well, he even says like if you if you have expenses that need to be made, there're there will probably be a time where you can't contribute to it, right?
00:18:04
Austin and Derek
I don't know.
00:18:04
Austin
So...
00:18:04
Austin and Derek
I don't really enjoy a lot of the things Dave Ramsey says.
00:18:08
Austin
Oh, no, I don't either. i Yeah, but... Yeah, he he he recognizes that there's situations where... Like there's times where you can't and it's not the end of the world if you miss out time where you can't do that.
00:18:21
Austin
But it was it's more so with the debt snowball thing.
00:18:22
Austin and Derek
see
00:18:24
Austin
Like if you if you have to have a lot of high interest debt, then that's the number one thing. But that's what,
00:18:30
Austin and Derek
That's not what he says, actually. That's not how he recommends you pay off your debt.
00:18:36
Austin
what, how is it?
00:18:37
Austin and Derek
he does the debt He does the debt snowball, which is paying off the smallest balances first.
00:18:45
Austin
Yeah, that makes sense. Yeah.
00:18:47
Austin and Derek
no it should it's It's cheaper in the long run to pay off the highest interest first.
00:18:54
Austin
No, that's true. No, but I'm remembering what you're saying, and I remember him saying it was the smaller balances, but for some reason I thought...
00:19:00
Austin and Derek
he He says it's a it's a psychological thing. it's He's saying that it's it's it's easier to see you, you know, cancel out.
00:19:04
Austin
Oh, well, that's just... Yeah. Yeah.
00:19:07
Austin and Derek
And finally, oh, you lost one one one of your credit sources. Right. You lost one. That just feels good. You're taking the smaller wins quicker so that you're able to push through. But it it actually is more expensive in the long run.
00:19:20
Austin
No, that's true. Yeah, I think, yeah, he's saying in the more psychological sense, but the psychological sense isn't the actual mathematical sense. Yeah, absolutely.
00:19:29
Austin and Derek
Yeah, I think he has a lot of good things to say for people who are, I mean, realistically, like in our shoes young and have a lot of student loans. Maybe they took out a car loan. Maybe they took out a mortgage too. So they've got crap tons of debt.
00:19:43
Austin and Derek
Not saying that I don't have crap tons of debt from all, not all of those sources that I just mentioned. But it for people who don't understand what's going on, the way that the system, the system, you know, quote unquote, the proverbial system is against them.
00:20:01
Austin and Derek
It's probably good. But that being said, I don't think that that's necessarily bad in a sense. I mean, you got the guys like Robert Kiyosaki, who has, he takes out debt all the time.
00:20:14
Austin and Derek
That's tax free.
00:20:14
Austin
one
00:20:14
Austin and Derek
That can buy him assets that produce cashflow. He's a big real estate guy. and obviously What are your thoughts on real estate?
00:20:23
Austin
on real estate overall personally wouldn't make money from it or go into the business into it maybe my mind will change but You know, I've read i've read i've read Robert Kiyosaki's book, or I didn't read it, but listened to it on an audio book. And it makes sense in terms of what he does, borrowing money, tax-free.
00:20:46
Austin
And then what was it? the ten That one rule to where like if you sell a property and then you don't pay, what was it? Capital gains if you use it to buy another one. Is that correct?
00:20:58
Austin and Derek
Yeah. So the 1031 exchange says you have to, to reinvest it in a like property, which I always thought it meant like the same.
00:21:00
Austin
Yeah.
00:21:07
Austin and Derek
So two bedroom, one bath, three bedroom, two bath, they had to be too the same. But my uncle who's actually an accountant, he says he does those all the time. And basically as long as it's an under the real estate a category,
00:21:22
Austin and Derek
it'll count. So like my, my grandmother just sold a a condo or a house in Florida and 1031 exchanged it for, a condo, condo.
00:21:30
Austin
Another house. Yeah. Yeah.
00:21:32
Austin and Derek
So it's not even, it's not even the same property type. So it's like a condominium versus a house. And, from my understanding, it went, it went okay. So that's like a little bit exciting, to know that it's, it's not just,
00:21:49
Austin and Derek
one to one, like it can real estate to real estate, and it's still be same. I don't know if you go across categories in a sense of residential versus commercial versus industrial, if that will count, but
00:21:59
Austin
It probably doesn't, I'm assuming. For what?
00:22:01
Austin and Derek
I don't have any idea. that's That's not something I've really dealt with quite yet. But there's there's a lot of stipulations with it. Like you have to have the money great or you have to have the signature for the next house within 30 days or something and then a closing with that. Like there's rules and it goes state by state as well.
00:22:19
Austin and Derek
I don't know if that's a Fed or a state thing, to be honest.
00:22:25
Austin
for
00:22:26
Austin and Derek
I don't know.
00:22:27
Austin
for what
00:22:27
Austin and Derek
1031 exchange. Like if that's a state law or a Fed law.
00:22:30
Austin
it's I think it's federal.
00:22:34
Austin and Derek
Okay.
00:22:34
Austin
Yeah. But yeah, going back to it, I mean, personally for me right now, I don't really see purpose for me in doing that more so because don't know, view housing as just like simple use housing.
00:22:52
Austin
you know, you buy it just to live in it. I'm not really into the whole thing where you buy as much as possible and you get cashflow from it. And then now you have to hire people to manage it for you. And then there's all these problems that you could deal with. It's, to me, especially with having a job or if it, if that is your job, then i think that's a good, you know, a good strategy if you're in the industry, but as sort of like a part-time,
00:23:17
Austin
gig or like a secondary thing personally i wouldn't do it unless if i did it full-time that's sort of my idea on it but because i just see i just see bitcoin as a better store value in terms of that sense you don't have to do any of those things and you can still borrow against it now you can't really do it as easily now but there will eventually be a point to where you can and you can use that as a strategy but
00:23:46
Austin
Yeah, I don't really view... it's it's It's kind of the whole mindset on it is more so using housing as money, which you can't because it doesn't... if It fulfills the the press the was it the value of store value, but it does it's not very a very good medium of exchange or it's not a very good unit of account. People just buy it just to store their wealth because they don't want store money in a bank account, because obviously, that's not going to really do too well for you with preserving wealth, right? So part of the reason why housing is where it is now is because of that aspect where people just are trying to find a way to move their money around and put it somewhere where it keeps its value.
00:24:32
Austin
So and I think in that sense, it makes it even difficult, even more difficult, depending on the market, right? i mean, different markets act differently, right? you know,
00:24:42
Austin
a small town Ohio is not going to be the same as Miami, Florida or new York city. So for those markets where it's really big, it's, it's going to be hard to scrape off the cream when you're having your expenses and you're getting your rent coming in.
00:24:46
Austin and Derek
you
00:24:57
Austin
So as you know, most people, millionaires and billionaires, they're just keep buying more property as their store value. That's going to drive only drive up your price. And then,
00:25:08
Austin
Now it's going to get even harder to get into the game as time passes because housing is just going to go up forever. So it's getting more difficult right now at least to make money from it depending on where you're buying it from.
00:25:19
Austin
Yeah.
00:25:20
Austin and Derek
Well, there's a couple of things with real estate that I want to touch on. One of them being that you're right. Everybody's using it as a store of value. Rental income, whether that's short-term, long-term, medium-term, doesn't matter because they know they can park their dollar there, trade their dollar for this house, and it's going to go up in value, quote-unquote.
00:25:44
Austin and Derek
And that's how the mindset's always been. But recently, my mindset has changed in a sense that I don't necessarily think that...
Leverage and Borrowing Strategies
00:25:55
Austin and Derek
the value of the home has gone up by the percentages that they have. I think that like you're shaking your head a little bit. I think that the value of the dollar has just gone down also supplying supply and demand economics, right?
00:26:03
Austin
more
00:26:08
Austin
No, yeah.
00:26:10
Austin and Derek
So the supply has remained about the same. There hasn't been a lot of new home production production in the past. Oh, don't know, four years. And the, there's been a huge rise of people wanting to buy homes or whatnot. So the demand is going up, supply is staying the same and the value of the dollar is decreasing.
00:26:29
Austin and Derek
That to me sounds like people who had homes or assets in general, not just homes, but it sounds like they're getting a payday. You know what I'm saying? So that that's one like kind of mindset change that I've had. But a couple things I do like about real estate. One is the banks love it right now.
00:26:47
Austin and Derek
Interest rates are higher than they were the past couple of years. So they're making more money. It's a stable, quote unquote, stable asset that they no they've known for years, they've loved for years. So you can you can leverage the crap out of them, meaning you can have 20% of the money that you need to buy 100% of the home.
00:27:07
Austin and Derek
And then over the year, not only are you making... over the years, you're not only making the steady cash flow, but you're also getting, paying down the mortgage. So that's cash flow.
00:27:18
Austin and Derek
You got mortgage down payment, which is increasing your equity plus there's the added value that you can do. You can, you know, change up the yard, you can repaint the walls, you can have an addition, you can put a new heater in, you can do all these things that what should hopefully also just raise the value of the property.
00:27:35
Austin and Derek
So that's exciting. You can work for it You can't really work for your stocks. Trust me, I'm trying to.
00:27:40
Austin
yeah
00:27:40
Austin and Derek
But you can work for the properties and and leverage them. and thats that's like how Robert Kiyosaki does it. He buys a house. And one of his books that he wrote, he talks about how he's, he buys houses for free. Like he leverages hundred percent of it. He will get a loan for 80% and that he will convince somebody else to loan him 20%.
00:28:01
Austin and Derek
And so he has basically two, two mortgages on it. he has the loan or he has.
00:28:06
Austin
yeah that's crazy that's insane
00:28:14
Austin
Are you there?
00:28:15
Austin and Derek
Yeah.
00:28:16
Austin and Derek
Are you there?
00:28:17
Austin
For what?
00:28:23
Austin
You good?
00:28:42
Austin and Derek
Check chat.
00:28:44
Austin
Oh, yeah, you you crashed out a bit there.
00:28:47
Austin and Derek
Yeah, the hotel Wi-Fi must have taken a dump for a second.
00:28:52
Austin
nice. yeah
00:28:54
Austin
but you Yeah, you're talking about the Robert Kiyosaki thing where he bought it for free, basically. Just got the 20% from someone else.
00:29:05
Austin and Derek
Yeah, so so there's ways ways to do that, that people understand. And like you said, there are ways to take out loans against Bitcoin, but we're not there yet to where banks understand, to where big private equity understands. like it's Have you looked into how to how to leverage your Bitcoin?
00:29:24
Austin
No, I haven't, honestly. i've I've talked to people that have have done it before or that are looking into it, but I'm i'm not too i'm more so with on the boat of accumulating it.
00:29:38
Austin
And then once the value goes up, then I can start looking into different ways, but i don't think it's probably the best time to use it now.
00:29:48
Austin and Derek
So it's not super easy. There's kind of two schools of thought, one of them being strictly peer to peer. So there are websites out there.
00:29:58
Austin and Derek
think one's called HODL HODL. That's kind of the big one. But it's basically somebody posts whatever they would be willing to give. And then you just have to accept it. So it's like they'll they'll say, oh I'll do $50,000 for, you fifty thousand dollars for you know two two times leverage, they give $100,000 worth of Bitcoin, I'll loan it out at a 50% loan to value.
00:30:19
Austin and Derek
But that's it. Like some some of these, there's only four or five different people willing to do it on those platforms. Now I know in the private world, there would be like like stuff that's not advertised, stuff that's not on a website or something.
00:30:33
Austin
Yeah.
00:30:35
Austin and Derek
There's probably ways to do it more. i just haven't been able to find them yet. Because one thing
00:30:41
Austin
Yeah. Go ahead.
00:30:43
Austin and Derek
going to say one thing that i want to do and is one of my main goals for this year is to leverage my Bitcoin to buy real estate with it. now I have, I mentioned the cashflow from real estate paying off the mortgage. So you're getting equity over time. And then also the added added value that you get when you paint the walls and do put a new driveway and a new water heater and stuff.
00:31:09
Austin and Derek
But also, now also Bitcoin, which is appreciating. So I have two levels of appreciation, one in debt repayment, one in cashflow. And then once the house is paid off, I'll just re-leverage it because the banks love giving out mortgages against homes, you know?
00:31:29
Austin
yeah for Yeah, that's the thing. You mentioned the peer-to-peer one. i don't think I would ever do Bitcoin loan peer-to-peer because that requires trust. It's kind of decentralized like finance. It doesn't really make sense to me because you need a central entity to set the rules of the loan, right? Because this is a situation where you can't pay it off and then they're the person who loaned it out and you're like, well, where's my money?
00:31:58
Austin
And there's no way of enforcing that. Then what are you going to do? Right. But, yeah, I think, uh, there is a case to be made to borrow against your Bitcoin to buy real estate.
00:32:10
Austin
actually seems like a decent idea. the only thing is, I guess my issue would be,
00:32:21
Austin
is i would prefer to buy to loan against Bitcoin to buy something that can outperform Bitcoin. And I'm not too sure if real estate can do that. I think if you're probably doing like fixer upper type deals where you can get like a very high percentage return from that just from improving a property that can make sense. But you know, now you're dealing with something to where there's like no guarantee with that, I guess. But
00:32:45
Austin and Derek
why Why would you need to outperform Bitcoin? I mean, yeah, that'd be cool if it did. Don't get me wrong, but you wouldn't need it to because you're also would still have the Bitcoin appreciating too.
00:32:50
Austin
Well,
00:32:53
Austin
yeah, but you could use that money to buy even more Bitcoin, actually. that's That's the thing. It's like you have to compare what you're, let's say you borrow against your Bitcoin, you get cash, right? You have 50, let's say you get 50% of your loan to value, right? You're going to want something that's going to outperform what you're already holding, pretty much. Like, why would I borrow against something and have the risk of losing it if I can't pay it off and buy something that underperforms against what I already own.
00:33:26
Austin
Does that make sense? like That's why it's kind of hard to get yourself in a position to even borrow against Bitcoin to begin with because it's just better just to get the the the value appreciation just from the Bitcoin itself.
00:33:31
Austin and Derek
it
00:33:45
Austin and Derek
I understand what you're saying, but there's, there's other things that come with real estate that Bitcoin and doesn't have.
00:33:45
Austin
I guess.
00:33:53
Austin and Derek
One of them being yield. Now I know Bitcoin doesn't necessarily need a yield because when you're at a 60% compounded annual growth rate per year, I think, I think, Saylor just said today he's projecting a 29 over the next 20 years or something like that. 29% annual growth rate.
00:34:14
Austin and Derek
which is pretty significant still. But you don't necessarily need a yield. But that being said, that means the only way to live off of Bitcoin would be to sell some of it over time or create a system that's not there yet. Not saying it won't ever be there, but where you can just trade in Bitcoin. You know what mean? you can go to the grocery store and buy but and Bitcoin, go in all these other different places. You know, you can get a car in Bitcoin. You can pay for home in Bitcoin. Like there's so many things that,
00:34:42
Austin and Derek
is not there yet that will be there. But as of where we're at right now, there's no yield on Bitcoin. So the way to create yield on Bitcoin would be to trade it for something, which I wouldn't do. Definitely not for a piece of real estate. Right.
00:34:58
Austin and Derek
Because like you said, Bitcoin is definitely going to appreciate much quicker than real estate. And it's definitely going the benefits that Bitcoin doesn't need, that real estate does need and outweigh. Like, so Bitcoin doesn't need tax,
00:35:12
Austin and Derek
advantages because if you don't sell it, you don't pay taxes, right? Bitcoin doesn't need cash flow because it's going to appreciate a ton. But that being said, as humans, we do need recurring income of some sort in order to survive.
00:35:29
Austin and Derek
So that's where you could leverage it, put it into a home that hat does have cash flow. that also appreciates that pays for itself. So then after 15, 20, 30 years, whenever the home is paid off or you re-leverage it, there's more cash.
00:35:44
Austin and Derek
what saying? So adding another layer to it creates the one thing that I think it lacks, which is yield.
00:35:55
Austin
Yeah, Bitcoin, doesn't it's not designed to have yield. It's not supposed to do that.
00:35:59
Austin and Derek
Correct. Correct.
00:36:00
Austin
it's It's a money. It's just simply a store of value, medium exchange, unit of account, right? I'm not really a fan of the whole, i don't know, when it comes to yield and Bitcoin, that those are like mixing water and oil. like
00:36:13
Austin and Derek
Then you just tell me before this, that you buy the micro strategy yield performing preferred shut for first year.
00:36:22
Austin
Yeah, I just put a small percent in it. It's only like five, four, probably less than 4%. And the only reason why I do that is because i get an 8% guaranteed yield on it.
00:36:34
Austin
And then if the stock goes to 1000, which it most likely will, then i get I get Bitcoin from it, essentially.
00:36:39
Austin and Derek
my
00:36:44
Austin
And then over time, as that share price goes up, the Bitcoin to the bitcoin per share goes up, right so That's how they measure their value. It's as over time, there's more Bitcoin per share, right? So every time they buy more Bitcoin, that you're essentially without buying any stock. Like let's say you just keep 10 shares.
00:37:09
Austin
You're accumulating more Bitcoin by not buying Bitcoin because they're buying Bitcoin for you. So your Bitcoin per share increases without you ever having to spend your money on it, which at that point,
00:37:20
Austin and Derek
But wouldn't that make more sense? Wouldn't that make more sense to just buy MicroStrategy, the company that they're actually buying the Bitcoin for? That way, all you know, 100% of that yield is going right back into Bitcoin, right? Like why?
00:37:31
Austin and Derek
Like you're taking future Bitcoin buys from them.
00:37:37
Austin
Are you saying compared to just buying Bitcoin?
00:37:39
Austin and Derek
Just compared to buying MicroStrategy, like what what's the point in having the yield That means that MicroStrategy has to pay you that they can no longer hold. So that loses a little bit of their leverage, which is the point of why people buy MicroStrategy is it's a Bitcoin lever.
00:37:56
Austin and Derek
So in you taking a 8% to 10% yield, you said it's 8% guaranteed. Not only that, but also with future... ownership potential, wouldn't it just make more sense if they would just keep their 8% for all of their shareholders in that and then just buy more Bitcoin with it and then you just buy MicroStrategy?
00:38:14
Austin
Well, but they're using the money that I'm buying to buy more Bitcoin from it. And that's what the...
00:38:18
Austin and Derek
I and understand that.
00:38:19
Austin
Yeah.
00:38:21
Austin and Derek
but they're also but But he also is it has in the past, i don't know if he's still doing it, but has in the past just issued more shares at MicroStrategy, like the regular MSTR to buy Bitcoin.
00:38:32
Austin
Yeah, so he's diluting it to buy more. And that's just another way it will... The reason why that exists is because there's some institutions that can't simply just buy micro strategy stock.
00:38:45
Austin
They have to buy their, their debt products.
00:38:49
Austin and Derek
Really? Really?
00:38:50
Austin
Yeah. That's yeah. That's how it works. They can't, they, they, they can't buy stock. Like I think it takes, there's some sovereign nations that actually have exposure, but they don't have exposure.
00:39:02
Austin
They have exp exposed Bitcoin exposure simply through, Micro strategy of stock. So it's just a way for institutions that literally have so much yellow tape that they can't buy the stock or Bitcoin. So they just give money to them and get a debt or basically get a yield instrument through that 8%. And yeah,
00:39:21
Austin and Derek
So isn't that kind of the same a bank giving you 80% of money for a home?
00:39:22
Austin
and
00:39:30
Austin and Derek
knowing that it's, you're going to put a renter in it, knowing that it's going to yield you, let's say it's a hundred thousand dollar home, knowing you're going to get a hundred thousand dollars per month. So they'll give you a mortgage that is 750 per month in mortgage payments. Right. Isn't that kind of the same? They know that when they give you the money, you're going to buy this asset.
00:39:49
Austin and Derek
That's going to create some sort of yield, which is beneficial for you and beneficial for them because they're going to charge you seven and a half to 10% interest.
Investment Risks and Credit Crises
00:39:59
Austin
You're saying me buying that yield is the same thing as me borrowing money to buy a house to get me
00:40:04
Austin and Derek
not saying I'm not saying it's the it's similar.
00:40:12
Austin and Derek
What happens if you don't pay the bank?
00:40:13
Austin
No, no, no, no, because there's no guarantee that you'll get constant rental income.
00:40:19
Austin and Derek
no
00:40:19
Austin
Whereas with Bitcoin, there's a guarantee that the value will go up just simply because of mathematics.
00:40:24
Austin and Derek
I know, but the idea is similar, right?
00:40:28
Austin
It's similar. Yeah, it's just there's you're comparing something with less of a guarantee and I want more guarantee and the guarantee is is that Bitcoin will go up against something that's devaluing itself mathematically.
00:40:39
Austin and Derek
I'm not saying that's different, but you just said earlier how you're not really worried about the yield. And then...
00:40:45
Austin
Yeah, I'm not I'm not I that's the and the reason is like I'm not worried about gaining yield like my thing. My whole thing is not about getting passive income. It's just getting more Bitcoin.
00:40:57
Austin
And, but it's only, again, that's only 5% of my portfolio. I just simply bought it just basically see what it will do because it's, it was a new product, but I'm not actively looking out for yield.
00:41:13
Austin
If that makes sense.
00:41:14
Austin and Derek
No, it does make sense. And I agree with you to to a sense. Like I definitely, Bitcoin and Bitcoin proxies is probably 70% seventy percent of my total portfolio. So I definitely am very happy to Bitcoin as well.
00:41:35
Austin and Derek
Knowing full well that it doesn't create the yield. I just think it would be cool if I can find free ways to make it create yield.
00:41:43
Austin
Yeah, it's just you're, yeah, I think, I think I'm not saying i wouldn't do it. I just think I can't, it doesn't make sense now. And then also, what is it it? You're just like, you just have to recognize that like, there's no such thing as free yield. Like you have to take on the risk of owning a home.
00:42:06
Austin
If you're going to borrow against your Bitcoin to buy a home, there's no guarantee that it's it's going to say exactly what you do. Whereas with just simply owning Bitcoin, you're taking all of that risk away essentially.
00:42:21
Austin and Derek
Correct.
00:42:22
Austin
and And then when and when and if, when there's a credit crisis, the people who are borrowing to do that are going to lose, which with how our monetary system works, it's always credit crisis and then long recovery, credit crisis, long recovery.
00:42:40
Austin
Periods of sharp deflation measured by long-term inflation, right? So when you're making that bet and when you're borrowing money like that, it's you're running at the risk of a credit.
00:42:52
Austin
if If and when a credit crisis does come, we just don't know when that there's a possibility that you get shaken out. But that's sort of...
00:43:03
Austin and Derek
As it is right now, I don't see it being... I mean, credit crises are usually... Correct me if I'm wrong. I may be wrong on this. I'm just going to say it and then I want to see your reaction. It's usually public traditional banks.
00:43:17
Austin and Derek
And there is nobility in the private credit market that's going to be a little bit more...
00:43:32
Austin and Derek
going to use the word less. I said, I know I said, I said more earlier, but a little less fragile to that because they, they're not just going to give you money willy nilly because they can't, because they don't have fractional reserve banking.
00:43:36
Austin
Thank you.
00:43:42
Austin and Derek
They don't have some of the proxies and the abilities that the big banks like JP Morgan and all them do have. They only have, whatever money they have in their fund. So they're going to do a little bit more research on whatever home you're doing, if whether it's a flip, whether it's a long-term rental, whether it's a loan against your Bitcoin, right? So not saying that there's not going to be credit run.
00:44:05
Austin and Derek
And I don't know if in 2008 there, genuinely don't know because I've never looked it up if there was a credit run on the private credit sector as well. But I would say that you're a little bit safer in that aspect than you would be going to the the big banks with all their incentives to give out as much money as possible.
00:44:26
Austin and Derek
Would you, what are your thoughts on that?
00:44:29
Austin
Yeah, I don't really know much about private lenders other than the fact that they're, you know, especially with like hard money lenders, they, you know, is that right that they're private?
00:44:39
Austin and Derek
Yeah.
00:44:40
Austin
Yeah, I mean, the risk in that is that you get a, you know, they're more willing to give out money and there's less hoops, but they're charging you interest. And it's like, well, let's say, for example, if you get a hard money lend,
00:44:52
Austin
you know They're probably charging you, let's say, like instead of 8%, they charge you 11 or whatever, but credit availability is better.
00:44:58
Austin and Derek
Yeah.
00:45:01
Austin
Well, what happens when there's a credit crisis and then that results in people not working and then now they can't afford the house you're trying to rent out and now you have this interest bearing on you and you have to add on to that without getting rental income?
00:45:17
Austin
that That's what I'm talking about. It's like when there's a credit crisis, it's not only through, it's it's a downstream effect where like if the banks can't lend out money, then people don't have money. And when people don't have money, then they don't pay for the mortgage that you that you have.
00:45:33
Austin
Right, now you have to pay for it. so
00:45:36
Austin and Derek
Thank you.
00:45:38
Austin
And then because of that, you'll have a short deflation. And then now you have a period where housing... goes down significantly because now people don't have the money to spend in order to do that. Well, if people weren't leveraged in credit enough, they didn't over rely on credit, then this wouldn't be a problem.
00:45:56
Austin
But that's what I'm saying. It's just like, it's so over leveraged to begin with. It's like, well, if there's a credit is there's a credit crisis, then it will affect literally every single consumer because most people use credit cards anyway. They can barely even afford to pay it off.
00:46:13
Austin
Credit card debt is going insane, right? It's like, well, if there's no one out there to lend you money, like let's say, you know, credit cards become less restrictive. It's like, well, now people can't even,
00:46:25
Austin
pay for groceries a month in advance because now they don't have money in their bank account, right? And do you think they're going to want to keep living at a house that they can't afford or rent from anymore? Now they're going to probably have to go somewhere cheaper or maybe now they have to file or you know downstream from that. Let's say the company they work for, they rely a lot on easy credit and now they can't get anymore. Now they can't operate. Now they don't have a job.
00:46:51
Austin
yeah, it's It's like once the music stops, it really stops, right?
00:46:55
Austin and Derek
Yeah, no, you're definitely right. i didn't think about people lose
00:46:59
Austin
it's yeah It's just a downstream effect.
00:47:00
Austin and Derek
people lose jobs
00:47:01
Austin
Yeah, it's a downstream effect from it. And that's the thing. I mean, if you look back to 2008, it was really you know mortgage-backed securities. It was just easy credit on housing. Right now, I think the crisis is now.
00:47:14
Austin
Obviously, you have Credit with regards to credit cards, people are overusing them. We have interest rates of like 35, 30% on credit cards and people just either pay the interest or just don't pay it off at all.
00:47:29
Austin
Imagine if that started to go away and people couldn't use credit cards anymore. Now they can't spend. It just relies on
00:47:36
Austin and Derek
Dave Ramsey would love that.
00:47:39
Austin
Yeah, I know. Yeah, it's, yeah, you would. But yeah, I mean, its it's, it's the downstream effect of that. It's like when it it, you know, this reminds me of is the, is like the airlines, right?
00:47:52
Austin
We know about the airline industry. and There's a saying that when the economy is good, airlines do amazing. When it's bad, they are one of the worst places to put your money in. Right. And it's,
00:48:04
Austin
It's an industry where it's low margin, right? High credit usage. You know, if there's a credit crisis, that's going to be the first thing that's going to get hit, right?
00:48:16
Austin
I'd argue the same thing with housing too. It's an industry with a lot of credit sloshing around, you know? It's like, yeah I wouldn't want my money in a house if there's a credit crisis, you know?
00:48:31
Austin
but But that's all dependent on the market too. it's it's It's very, you know, if you're if you're borrowing money to buy houses in small towns in the Midwest or small towns in like,
00:48:44
Austin
you know, maybe in the Southeast, then I wouldn't necessarily say that's a problem. But when you talk about like where most people will do it, this is where, Like in big cities, you know, i mean, it's already kind of happening now in Florida.
00:48:57
Austin
I don't know if you know, but housing starts starting to go down there just because think unaffordability is on the rise. More people are having to borrow money. So same thing with California too, but it's already starting to go down a bit.
00:49:12
Austin
Obviously it's like a little, it's it's a little,
00:49:17
Austin and Derek
Well, California, California had the the fires, which wiped out million dollar properties.
00:49:24
Austin
Yeah, yeah. And you deal with that too, right? And then the insurance company that you pay, however many month month can't even give you your money because reasons, right? Like that's another third party risk. It's just like real estate.
00:49:39
Austin
You have to be, when it comes to real estate, you just have to be very smart. I think it requires a lot more work than what people think. A lot of, you know, that this is a problem, at least with like Airbnbs, as you might as you may know, with people doing that.
00:49:53
Austin
you know A lot of people are just buying house just to rent them out as Airbnbs and stuff like that. A lot of people get wiped out from it before they even really get their feet wet into that whole thing. but yeah it's just It's just a lot of third-party risk.
00:50:07
Austin
It's a lot of third-party risk have to deal with. and you know If your house burns down in California and your insurance company doesn't pay for it, it's like, well, now you just... now it's gone. All that money you put towards it is gone.
00:50:19
Austin
you borrow get some money on that, then you have nothing to pay back your loan from. I don't know, but
00:50:25
Austin and Derek
So what's the risk in in Bitcoin? I mean, investing has to have, you know, traditional finance says there's got to be some sort of risk in investing. And obviously the riskier the asset, the the more yield or more return you're going to receive on it. Right. Which is goes in everything. Right. The hard money lenders.
00:50:46
Austin and Derek
Loaning money on a flip are going to get a higher interest rate you know early Early stage investors in Tesla were investing in Elon. They got a huge return because there was this company that wasn't profitable and it became profitable and took off. Every asset every asset you know, venture capital, private equity, any asset that people put their money in, the higher the risk, the lower return. That's why the bond market is so, you know, people are happy with three to 5% high yield savings accounts even are, they're slowly coming down, but they're at 4%. So people are just parking their money because it's, what it's they're they're willing to take a smaller yield or a smaller return because they know that their money is quote unquote safe, right? So what's the risk with Bitcoin?
00:51:30
Austin and Derek
Because people are, putting money in, they're making really good returns. People like micro, micro strategy are levering their company to go into crap tons amount of debt, you know, riot, Mara, all these other companies are following suit with that for a, a, a asset that has, that they're saying has no risk.
00:51:55
Austin and Derek
I can only think of one thing.
00:51:57
Austin
For what, Bitcoin?
00:51:58
Austin and Derek
Yeah. at One risk.
00:52:00
Austin
yeah the only i Yeah, the only risk I can think of is quantum computing, but i really I really think with regards to that, the only thing that you would have to rely on necessarily is that you hope it becomes quantum resistant, which I don't doubt because there's already $2 trillion dollars in the network.
Bitcoin's Stability and Inflation Protection
00:52:24
Austin
I'm sure there's people that are going spend money to... to make it quantum resistant, just like how the banks will have to be quantum resistant to, you know, there's only one, there's only four numbers that separates you from your checking account, right?
00:52:38
Austin
Only four numbers. But when people like your pin to your debit account.
00:52:41
Austin and Derek
What do you mean by that?
00:52:44
Austin and Derek
Oh, okay. Okay.
00:52:46
Austin
Yeah, it's funny it's only four numbers, right? And you're telling me that quantum computers can't break that four numbers. Like, come on now, right? But, you know, there's this worry about with Bitcoin where it's literally a key that's represented by zeros and ones in 2048 different words, possible words that have to be in order in either 12 or 24 increments. of But that can get broken by quantum computing.
00:53:16
Austin
I don't know. But, yeah.
00:53:20
Austin and Derek
So that was the only risk that I had was that I would lose my 12 words.
00:53:20
Austin
yeah
00:53:24
Austin
Yeah, I mean, yeah, that's really the only risk. But I think if...
00:53:27
Austin and Derek
and And that's not even a risk on the network at all. That's just my risk personally.
00:53:32
Austin
No, yeah, it's a personal risk, right? It's the same thing like gold. I mean, we call it digital gold. When people say it's digital gold, it is digital gold, right? The only risk of back then that gold had was, oh, someone stole it, right?
00:53:46
Austin
you You lost the key to get into your safe.
00:53:46
Austin and Derek
Yeah.
00:53:48
Austin
Like, that's just on you, you know? It's...
00:53:51
Austin and Derek
yeah
00:53:52
Austin
it's ah ah it's Like the only risk is just user error. If you're a bad user, then you don't deserve the properties that Bitcoin gives you, right?
00:54:01
Austin and Derek
So I think ultimately, I think ultimately,
00:54:02
Austin
You know?
00:54:04
Austin and Derek
Bitcoin operates outside of, we'll call it the normal credit system. And actually, Bitcoin is very Dave Ramsey-esque in a sense. You can just save in it and then that's it, right?
00:54:17
Austin and Derek
you know If you just save your money, you can buy whatever you want later.
00:54:18
Austin
Yep.
00:54:20
Austin and Derek
i mean, that's a very Dave Ramsey type of thing to say. But what really interests me is using it in our credit system that we have safely to allow acts. I mean, it's, if it's truly is digital gold, which I believe it is what you believe it is. If it truly is as scarce as we know it is because it's written in into code, then it should be a very marginable security that people will eventually wake up to and love, and they will love giving out loans against Bitcoin.
00:54:54
Austin and Derek
And that's,
00:54:58
Austin
I think it will be a much better tool for it than what we have now. I agree. i just think my thing is you should... I think now we're in a state in society with the dollar is that you have to leverage.
00:55:11
Austin
Like, you have to do it. It's like most majority of the people don't want to borrow against their assets.
00:55:13
Austin and Derek
Yeah.
00:55:17
Austin
They don't want to borrow against everything that they have, right? Like... we're getting into a point now to where people have a house and they have to get a HELOC in order to afford whatever else they have in their life. And it's like, people shouldn't have to do that, right? Like before 1913, before 1973, like the average worker did not have to do these things. And now we're getting to a point to where there's a very good case where you'd have to, right? Especially if you have a lot of debt, right? So
00:55:50
Austin
it's It destabilizes that whole thing, but then it also makes lending more safe. right like We want lending to be more safe. We don't want people to lose out. so I'm not completely against the whole borrowing thing. it's just I'm more so with regards to having more baring borrowing be more safer in that sense. A U.S. bond...
00:56:11
Austin and Derek
Would you ever buy a bond?
00:56:14
Austin
like a us bond
00:56:16
Austin and Derek
Just a bond in general. I don't know much about the bond market because those the yields don't the returns don't really interest me that much.
00:56:22
Austin
Yeah, so I would never buy U.S. bond because it's always going to be lower than the rate of inflation. So I don't know why you'd want to do that personally. Corporate bonds, that's i mean that's essentially what I bought in that one MicroStrategy one.
00:56:36
Austin
Guarantees you 8% and that's you're pretty much getting the yield year-to-date return from the S&P just from holding that. Yeah. you know corporate bonds you can make a case for.
00:56:48
Austin
It just depends on if you really understand the company and if you have faith in them. But you know again, that requires trust. So that that company could always fail at any moment.
00:56:58
Austin
And then now they can't pay you that yield and now your bond is worthless. right so
00:57:02
Austin and Derek
at
00:57:03
Austin
It depends. It's just like picking stocks. If have a company that and you want to give them money to grow, then they'll pay you a good yield. And if they do bad, so be it. If they do good, then you won, right?
00:57:18
Austin
But yeah, i would never buy public US treasuries. I think that's probably one of the worst things to put your money in. And also, you're supporting the the government's insolvency as well because they were they, since, why do I need, like already pay taxes, why do they need more money from me?
00:57:34
Austin
You know, but like, and now I get paid less than 8%, which is the effective inflation rate. And it's not 2%. To me, that just doesn't seem right.
00:57:50
Austin and Derek
But hey, egg prices are coming down. Gas prices are coming down a little bit. I think it's they're probably down 20 cents. Egg prices are down. i Honestly, be honest with you. I never look at the price of eggs.
00:58:01
Austin and Derek
I just know that my fridge doesn't have any in them, so i couldn't buy them. you know
00:58:04
Austin
Yeah. Yeah.
00:58:06
Austin and Derek
I just like, oh, I need eggs.
00:58:06
Austin
Yeah.
00:58:08
Austin and Derek
Cool. If that's what's raising my grocery bill, then so be it because I i i eat a lot of eggs. That's for sure.
00:58:15
Austin
No, I do too, man. Yeah. But no, I, I mean, i think we're in pretty good positions where we don't have to worry too much about that. I know there's people that do, but, but yeah, that's, that's just a trend. Usually just food, good food and energy and rent going up.
00:58:34
Austin
There's times where it can go down, but overall it just goes up.
00:58:39
Austin and Derek
Awesome. Well, I do have to get going here pretty soon. there anything else you want to talk about before that?
00:58:48
Austin
Uh, no, think that's everything. think we covered what we wanted to talk about.
Entrepreneurship and Wealth Building
00:58:56
Austin
What about you?
00:58:56
Austin and Derek
Well, no, that's it. I just wanted to talk about the different things that are out there that I consider using.
00:59:07
Austin and Derek
i mean I think about these things all the time. Now I'm at the point where, like you said, real estate's not passive income. and So you'd you work you'd be working for the yield and-
00:59:15
Austin
No, it's definitely not. Yeah.
00:59:21
Austin and Derek
My girlfriend's dad actually told me this. she He's like, well, if you're gonna have to work for it, you might as well work for something that's gonna create you a much stronger yield, much more in control.
00:59:33
Austin and Derek
I'm at the point now where i i' I'm considering like starting a business on the side just to increase more of that that income essentially at the beginning so that I can buy more Bitcoin or real estate or put it into the stock market, you know?
00:59:49
Austin
Yeah, I think the best way to go, I mean, i'm and I am as well, i'm so I'm in the works with something, but I think that's, I mean, you look at the richest people in our history, like it's it's usually not through real estate.
01:00:03
Austin
It's more so through building things, right? Like building a company, solving people's problems, because that's what people value, right? So other than a good money, right? Like Bitcoin, the only thing that's even close, that comes close to that is solving people's problems, right? And people paying you for it. So
01:00:21
Austin and Derek
Which there's going to be problems even if we don't have a credit problem. You know, let's say that everybody's on a Bitcoin standard in a quote unquote perfect perfect world, right?
01:00:26
Austin
yeah.
01:00:31
Austin and Derek
Well, there's still going to be problems that need to be solved.
01:00:34
Austin
Yeah, of course there's always, yeah. I mean, what's life without problems. Right. but yeah.
01:00:38
Austin and Derek
Yeah.
01:00:41
Austin
And that's, if you, my thing is more so if you can accumulate like, uh, value through that, then i think that's a good idea when to start investing in real estate.
01:00:54
Austin
If you so be it, but I'd rather use leverage. You know, it's kind of like when you take leverage, you make a bet. I'd rather make leverage on a business because I'm betting on myself rather than me betting on my renter's ability to pay off my mortgage. You know, I don't know.
01:01:12
Austin
That's kind of my idea is like, I'd rather use leverage to bet on business that I control, i guess, because you have a bit bit of control with it, more so with regards to real estate. Or maybe it's the same because it's all dependent on if the person you sell to is buying. So I kind i guess it would be the same.
01:01:34
Austin and Derek
I go both ways.
01:01:35
Austin
But...
01:01:35
Austin and Derek
Cause i mean, there's definitely tax advantages in real estate and there's definitely tax advantages and just owning your own business. So, I mean, if it's strictly for a tax advantage, then they're going to be there both, both ways, you know?
01:01:48
Austin
Yeah.
01:01:50
Austin and Derek
But yeah.
01:01:53
Austin
Yeah.
01:01:56
Austin and Derek
man. Well, I'm going to have to log off. So I will talk to you on the flippity flop.
01:02:01
Austin
Alrighty. Good pod. Let's keep it up. Alright, I'll see you in a minute.
01:02:04
Austin and Derek
See ya.