How to Build a Portfolio If You Are Worried About An AI Bubble

What if AI really is in a bubble? Should you sell your investments, avoid tech completely, or change your portfolio? The answer isn't to predict the next crash. It's to build a portfolio that can handle uncertainty while still allowing you to participate in long-term growth. 👉 Want personalized help from Andrew? Join Master Money Academy at https://www.skool.com/mastermoneyacademy/about 👉 Join Andrew’s FREE Investing for Beginners Masterclass: https://event.webinarjam.com/q05p7/register/0o8z9io?webinar_id=21 👉 Live Call Registration Form: https://docs.google.com/forms/d/e/1FAIpQLSeqIw5xncfn5tZbGG_U22iZ3BUmyHe9fPvBQaC1vW_x1D7bJA/viewform 👉 One-on-One Coaching Application Form: https://docs.google.com/forms/d/12UHo5Zmu1AyY_G4Gmbrcx9vThIZhxqFnaJ5dIihZL24/edit 👉 Master Money Wealth Building Strategy Call: https://calendly.com/irene-mastermoney/master-money-wealth-building-strategy-call?month=2026-09 What You'll Learn in This Episode Why you shouldn't try to predict whether an AI bubble or market crash is coming The difference between betting on AI technology and betting on the price of AI stocks How much AI exposure you may already have through broad-based index funds How index funds can help reduce concentration risk when individual companies fall How equal-weight, value, small-cap value, and international funds can diversify your portfolio Why adding bonds can make sense depending on your age, goals, and stage of wealth building How rebalancing can help keep your portfolio aligned with your original investment plan Why selling everything and waiting for a market crash can hurt long-term returns How to create an investment plan that removes emotion from your investing decisions How to determine your risk tolerance and build an asset allocation around it How to organize investments across multiple retirement and brokerage accounts What a Backdoor Roth IRA is and why it can be useful for high earners Start Here Join the community built to help you master your money, stay accountable, and reach financial freedom. 👉 Try Master Money Academy FREE for 7 days today! https://mastermoney.co/join/ 👉 Join Andrew’s FREE Investing for Beginners Masterclass https://event.webinarjam.com/q05p7/register/0o8z9io?webinar_id=21 👉 Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! https://expert-hustler-605.ck.page/6aa7bb9a79 Partner Deals Hostinger → Build your website step by step at https://www.hostinger.com/ and use code PFP for 10% off Indeed → Get a $75 sponsored job credit at https://www.indeed.com/podcast Wayfair → Shop thousands of products for every style and budget at https://www.wayfair.com/ Leesa → Get up to 30% off mattresses plus an extra $50 off with promo code PFP at https://www.leesa.com/ Policygenius → Compare life insurance quotes for free at https://www.policygenius.com/ DeleteMe → 20% off with code PFP https://joindeleteme.com/PFP20/ Resource/s Car Insurance https://secure.money.com/pr/gc43ce394da5 Best HYSA https://secure.money.com/pr/r453ecf4d190 Stock Brokerage Accounts https://secure.money.com/pr/v8d06f8de92c Best IRAs https://secure.money.com/pr/oe09b73d1952 Favorite Travel Credit Cards https://milevalue.com/best-credit-cards/?aff=mastermoney Watch Next The Millionaire Money Rules (Get to $1M Faster!) https://youtu.be/CNeIBcfXtUA The EXACT System I Use to Manage Every Paycheck https://youtu.be/o-URBMRnItU The 7 Habits of Great Investors https://youtu.be/TxI_S5rP9X4 How to Reach Financial Independence Without Putting Your Life on Hold with Justin Peters https://youtu.be/UuY_c3OuQ6I 5 Signs You’re Overthinking Investing! (Plus Money Q&A!) https://youtu.be/amtxpMBllmc Connect with Andrew Instagram → https://bit.ly/Skool-Instagram TikTok → https://bit.ly/Skool-TikTok Facebook → https://bit.ly/Skool-Facebook Podcast → https://bit.ly/Skool-Podcast Youtube → bit.ly/Skool-Youtube Newsletter → https://bit.ly/Skool-Newsletter Website →⁠ https://mastermoney.co ⁠ X → ⁠https://x.com/mastermoneyco LinkedIn →⁠ ⁠⁠https://www.linkedin.com/in/andrew-giancola-45027b340 ⁠ Question for you: Are you worried about an AI bubble, and if so, what changes, if any, are you considering making to your portfolio? Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Andrew Giancola?

  On this episode of the Personal Finance Podcast, how to build a portfolio if you're worried about an AI bubble.

• 0:14Andrew Giancola?

  What's up everybody and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of MasterMoney.co. And today on the Personal Finance Podcast, we're going to talk about how to build a portfolio if you're worried about an AI bubble. If you guys have any questions, make sure you join the Master Money Newsletter by going to mastermoney.co/newsletter and don't forget to follow us on Apple Podcasts, Spotify, YouTube, or whatever podcast player you love listening to this podcast on. And if you want to help out the show, consider leaving a five star rating and review on Apple Podcasts, Spotify, or your favorite podcast player.

• 0:55Andrew Giancola?

  Now, before we dive into the show, I want to say that we are taking on a small group of one-on-one coaching clients. There are limited spots available, but if you are interested in getting coached by me one-on-one, we are taking a very small group on if you make over a hundred thousand dollars per year, or if you have over a hundred thousand dollars that you are looking to invest, we are taking coaching clients on based on those two criteria. If you are interested in that, make sure you shoot me an email, [email protected]. That's [email protected]. All right, let's dive in to the episode. So today, we're going to be talking through how to build a portfolio if you're worried about an AI bubble.

• 1:37Andrew Giancola?

  And one thing I want you to understand is I see these headlines left and right of people trying to scare folks into selling investments because they are worried about an AI bubble. And many times I see today compared to the tech bubble of the late 90s and the early 2000s, where if you don't know, the internet companies of the 90s, their prices started to surge and people were overvaluing a lot of those different companies. And so many people feel as though, hey, maybe AI is having the same situation and it is worth being cautious about it, is worth looking into, and it is worth understanding what is going on with AI and understanding the different pricing pressures that we could be seeing currently in the market.

• 2:21Andrew Giancola?

  Now, I want to say this upfront, if anybody in the world tells you that they know what is going to happen, that they know a crash is going to happen, or they know this is going to surge and go to the moon, I want you to write that person off because nobody in this world has a crystal ball. Nobody knows what's going to be happening in the future and nobody can predict what is going to happen in the market. If they could, they would be the wealthiest person on the entire earth. And I want you to note right now that this is something, if you see people trying to make predictions, you need to write those people off. It is not worth your time. It is not worth your energy to try to stress out on what could happen. Now, what you can do, and what we're going to talk about in this episode, is some things

• 3:05Andrew Giancola?

  to combat against the risks of AI over inflating, or the risks of the market over inflating, which can be something that you can do a few different things that are going to allow you to reduce those risks overall. But as you're going to see throughout this episode, AI is a very real part of what we are going to have to deal with over the course of the next few decades. And if you are not along for the ride, you may fall behind. And so you need to make sure that this is something that you understand. Now, can you be over indexed into AI? Absolutely. And many folks probably are out there. But is this something that you should avoid completely? Not if you want to become wealthy, not if you want to be someone who is investing in the right companies, because the top companies are going to rise to the cream of the crop, even in every single bubble out there.

• 3:49Andrew Giancola?

  The top companies rise to the top and the ones that aren't worth their weight in gold, or if they're getting overinflated by the market, or if the market is using hype to overinflate those stocks, those are the companies that begin to fall. And people who overindex and overbuy with those types of companies, those are the ones who get hurt. And so in this episode, we're going to be diving through eight different steps on things that you should consider when you start to build out your portfolio. And as you start to build out your portfolio, or think about your current portfolio, you can decide what you want to do next based on doing some research. Now, I encourage every single person out there, you need to understand, don't listen to me, don't listen to anybody else, you still always need to make sure that you are

• 4:33Andrew Giancola?

  doing your own research. This is for education purposes. I want you to get educated on this kind of stuff, but you still need to do your own research as we start to talk through this, okay? So, without further ado, if you're ready for it, let's get into it.

• 4:51Andrew Giancola?

  Number one is you need to first understand what you're actually worried about. Are you worried about AI because your emotions are starting to flutter up? You're reading too much stock market news and every single headline seems to say that the market is going to crash because of AI. Well, if that's the reason why you feel this way, then maybe you need to dive a little deeper, understand the numbers, and understand the reasons why people are saying this, because AI itself is overhyped. Yes, right now, AI is being overhyped by every single person out there. When I scroll through my X or Twitter feed, every other tweet is a different tweet about the amazing revolution of AI. And typically, it's just another chatbot, or it's another AI agent that can do some pretty cool things.

• 5:34Andrew Giancola?

  You have to learn how to figure out what is noise and what is actual real news that you can use. This is the big difference between people who are wealth builders and people who just react with their emotions to the news. You need to understand the difference between those two. Now, the second concern could be that AI-related stocks have become too expensive or overly concentrated. Now, that is a real concern that you can look deeper into. That is something that you can quantify, and that is something that you should be diving deep into with every single industry that you're invested in. Because what many people say is that they are worried about the AI bubble, but they

• 6:14Andrew Giancola?

  have never separated these two things, because the first bet is on technology and the second bet is on the price. And the difference between those two things is going to be something that you want to dive deeper into. They are completely different risks, they are completely different subjects, and one of them is a real problem for a long-term investor. Now, AI could completely change the economy over the next 20 years, and AI stocks could still fall 50% along the way, because these are two very different things. The technology can be revolutionary, but if there's a bunch of different stocks that have no financial backing, that are losing money every single month, which many of them are, then we need to understand which ones we should consider and which ones we should

• 6:58Andrew Giancola?

  not consider when we are thinking through this. And again, not the analysts, not the people on your TV, not all the experts, not even Wall Street, nobody knows if this is a bubble or not, and they don't know if this is going to crash. Now, they can look at the financials, and the financials will tell them if this is overinflated. This is why people who made money in the Great Recession of 2007, 2008, made big money during that timeframe, because they looked at the financials and they understood what was going on. But for the majority of people out there, thinking that you are going to allow that this major crash is going to come down the line, is something that I think is a fool's errand for the average investor. What is an example of this? Let's think about Amazon, for example.

• 7:40Andrew Giancola?

  Amazon in 1999 traded at about a hundred and seven dollars per share in December. This was pre-split before Amazon split its shares, you know, years later. Everyone who bought it was correct about everything. They were saying, hey, online shopping is the future. We need to invest in this company because Amazon would win this race. And Jeff Bezos would turn out to be one of the best CEOs of the last century. If you go back and read Jeff Bezos' letters to shareholders, they are fantastic reads. I would highly encourage everybody to do so if you have not done so already. And the company would go on to dominate retail, it would go on to invent cloud computing with AWS, it would go on to become one of the five most valuable businesses on this entire earth.

• 8:22Andrew Giancola?

  Every single person listening to this podcast has most likely used Amazon before. But the stock fell 94% and by late 2021 was under six dollars per share. This is because of the tech bubble. It was wrapped into all the other tech stocks that were out there. And someone who put $10,000 in at the top was sitting with around $600 by the time it fell to six dollars a share and holding shares of a company that was going to win the internet. It took until 2009, roughly 10 years, before you would actually break even from that happening. 10 years of being right, and the reward was just to get your money back. And I want you to remember this story, because if at any point in time, AI turns out to be

• 9:07Andrew Giancola?

  a bubble, or AI turns out to be something that drops sharply, some of the strong companies out there could take a very long time to recover. So if you're concerned about AI being a bubble, then think about what you are investing in when you are looking at AI. If you're investing in the individual company, the risk level could rise, but if you're investing in a different type of wrapper or a index of some sort, then the risk level may drop a little bit, depending on what you're investing in.

• 9:39Andrew Giancola?

  When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI Website Builder. I told it what kind of website I wanted, and I built the first version in minutes. No coding, no designer or developer needed. And Hostinger doesn't stop at launch.

• 10:23Andrew Giancola?

  Their AI can help with SEO, website copy, email marketing, and more. Plus, your domain, website, email, and marketing can all live in one account with plans starting at just $3 every single month. Hostinger builds your vision step by step. Create your website today. Go to hostinger.com/pfp and use code PFP for 10% off now. If you've been listening to this show for a while, you know it's not just me anymore. It takes a great team behind the scenes to make everything happen. And if I had to hire someone tomorrow, I'd want someone who could jump right in and make an impact. That's why I'd use Indeed Sponsored Jobs. When workplace chaos hits, Indeed Sponsored Jobs helps you reach qualified candidates

• 11:08Andrew Giancola?

  faster. Your job gets boosted in search results, so you're spending less time searching and more time interviewing the right people. Plus, you only pay for results, which I absolutely love. Sponsored jobs posted directly on Indeed are 95% more likely to report a hire than non-sponsored posts. That's a huge advantage when you're trying to grow your business. Spend less time searching and more time actually interviewing candidates who check all of your boxes. Less stress, less time, more results. When you need the right person to cut through the chaos, this is the job for Indeed Sponsored Jobs. And listeners of this show will get a $75 sponsored job credit to help get your job

• 11:49Andrew Giancola?

  the premium status it deserves at indeed.com/podcast. Just go to indeed.com/podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com/podcast. Terms and conditions apply. Need to hire? This is a job for Indeed Sponsored Jobs. Now, if you watch this podcast on Spotify, Apple Podcasts, or YouTube, you've probably noticed the wood slat walls behind us. We wanted this podcast set to look professional, but also not be a project that was overly complicated. And I found these slat walls on Wayfair, and it completely changed this space. And it's now basically the background that you see in every single podcast or piece of content that we record. And that's one of the things that I love about Wayfair.

• 12:32Andrew Giancola?

  You can shop thousands of products across different styles and budgets, use customer photos and reviews to see how things actually look in real homes, and find something that fits your space. They also have Wayfair Verified Products that are hand vetted by product specialists using a 10-point quality inspection. And with more than 20 million verified five-star reviews, you can feel a lot more confident about what you're ordering. I've used Wayfair for this studio and our home, and I absolutely recommend them for your space. So transform your space with pieces that hold up to real life. Join Wayfair Rewards today and get 5% back on every single purchase. Head to wayfair.com or shop the Wayfair app for all things home.

• 13:17Andrew Giancola?

  That's W-A-Y-F-A-I-R.com. Wayfair, every style, every home.

• 13:29Andrew Giancola?

  Now, the second thing I want you to think about here is to accept that you cannot avoid AI. And in reality, the most likelihood is you should not try to avoid AI because you can make a lot of money understanding how AI works. Every company in your index fund is now an AI company. If you look at the S&P 500, go across the board, every single one of those companies is using AI in some way, shape, or form. You'd be hard-pressed to find a company that is not utilizing AI in some way. The people who avoided tech in 2010 got wrecked, and that was without a crash whatsoever. There are plenty of investors who sat out of tech stocks in, after 2008, because they remembered 2000. They were worried about another bubble again.

• 14:14Andrew Giancola?

  And many of them missed out on a lot of different gains. Your job and your income are also already exposed to AI. How many of you out there are working in the corporate world right now and using AI? Or how many of you are blue-collar workers and you're using AI? Maybe you're using softwares that use AI. Maybe you're using tools that use AI. Maybe your company is in the AI ecosystem. This is something that is very, very hard to avoid now because it creates efficiency. It allows us to work in a much faster way. And so, efficiency with companies is going to be something that you really need to note. So what if, instead of avoiding AI, you became the person who understood AI within your department? You knew everything about AI and how to use it within your company and within your department,

• 14:59Andrew Giancola?

  and you became that expert? Everyone came to you when they had questions about AI. Do you think you would look good in front of management? Do you think you possibly could get a promotion? Yes, why? The reason for this is because you're increasing productivity, you're increasing efficiency, and what does that do? It increases the bottom line. So if you're trying to get a promotion, for example, at your job, you work in the corporate world, or you don't work in the corporate world, maybe you work a blue-collar job, you're a teacher, you're a physician, it doesn't matter what you do. If you can figure out how to make AI more efficient at your job, you're going to be a better employee, you're going to be a better person, that is going to be helpful long-term. Now, sure, is there a case to be made that AI is going to be, have a negative impact on the world? Yes, there's a case to be made for that.

• 15:43Andrew Giancola?

  And there absolutely are risks that come into play when we use AI, when, as AI begins to grow. But if you don't adapt, if you don't utilize it and understand how the world is working with this, you are missing out on an opportunity. You can't argue that you're not missing out on an opportunity. And so, there's things like that we can dive deeper into.

• 16:03Andrew Giancola?

  Now, number three, the third thing I want you to consider here is I want you to look at how much AI you already own. Let's say, for example, you own an S&P 500 index fund, something like VLO or SPY, or a total market fund like VTI. The top 10 holdings are roughly a third of the fund if you look at VTI, for example. And if you look at the top 10 holdings of something like an index fund, what are we looking at? Apple, Amazon, Nvidia, the ultimate AI company there? You're looking at companies like Microsoft, like Google, Amazon? These are the top 10 holdings inside of an S&P 500. In fact, the one that would not qualify in that range is actually Berkshire Hathaway,

• 16:46Andrew Giancola?

  which is Warren Buffett's company, who just stepped down from, as chairman of Berkshire Hathaway. That would be the only one in that list that would actually fall into potentially not being an AI company. And I'm sure someone at Berkshire Hathaway is using AI currently. Meta is a big one there, Broadcom, you can look at all of these different companies. Maybe you hold a NASDAQ fund, something like QQQ or QQQM, which is my preferred way. Most people think that they are diversified across 500 companies, but they are still a heavy, heavy usage inside of AI. It's the same argument when we talk about international funds and we say, okay, well, if you own VTI, a lot of those different companies within VTI are already doing business internationally. And it's the same concept.

• 17:31Andrew Giancola?

  If you own VTI, a lot of those different companies are going to be AI companies. And so, you've already got exposure to these AI companies, but it's diversified across a bunch of different ones.

• 17:44Andrew Giancola?

  Now, let's talk about this for a second, because if you own broad-based index funds as your core, that means you are diversified across a bunch of different companies. If you own VTI or VLO, and I'm just using these as an example, maybe you own QQQM, maybe you own other index funds or ETFs out there, maybe you own SCHD, which will probably have a reduced exposure to AI, maybe you own dividend funds, or maybe you own, you know, emerging market funds. It doesn't matter what you own, the likelihood that you have AI companies inside of that fund is going to be very high. But what is beautiful about index funds and ETFs? Well, if a company is struggling, a company is not doing well in the S&P 500, for example,

• 18:26Andrew Giancola?

  it is kicked out of the S&P 500, and a better company is added in. So if AI turns out to be a bubble, sure, the fund will go down for a certain period of time, but all the AI companies that are currently in the S&P 500 that really should not have been there, they will all be removed, and stronger companies will take their place. And this is the beautiful thing about index funds, because you own a basket of stocks, and they have to meet certain qualifications to stay inside of that basket before they get thrown out of that basket. And so, essentially, what you are doing is diversifying across these different companies and not having to worry as much about concentration risk in a handful of single companies.

• 19:09Andrew Giancola?

  Let's say, for example, you owned Nvidia, and all of a sudden Nvidia was cut out of a lot of the current deals that it has. Nvidia exclusively has the majority of their deals in America and the majority of their deals in China. Between those two countries, that's where most of their deals happen. And let's say, for example, one of those countries like China cuts Nvidia out. Well, Nvidia would still be a very profitable company, but it would take a hit on revenue, and that revenue hit could cause a lot of pressure on the stock price. And if that stock price began to drop, all of the sudden, you would see an impact on your overall portfolio. But let's say that you're holding an S&P 500 index fund instead, and Nvidia had that same issue. Well, Nvidia in an S&P 500 index fund is anywhere, depending on the time that you're

• 19:54Andrew Giancola?

  listening to this episode, from 5% to 8% of that S&P 500 index fund. Because it is the top holding in the index fund, and so that's the reason why it is so heavily weighted, it is still something that you would not feel the impact as much as if it was 100% of what you were holding. And so, you gotta think through having a diversified portfolio on how that is going to help you if you feel as though you are worried about something like this. In addition, you can add in more international exposure if you wanted to. You could add in more concentration into other things, which we'll talk about in a second. But this is going to be something that if you hold broad-based index funds as your core, which I believe personally, that's what I do as the core holding of a lot of my funds,

• 20:39Andrew Giancola?

  well, then you should have some diversification in play there.

• 20:45Andrew Giancola?

  Now, a second thing that you could do is you could look deeper into an equal weighted or value fund to dilute this concentration. And so what many people are worried about is that this is overly concentrated. They're saying, okay, well, a lot of the top 10 holdings inside the S and P 500, at one point in time recently, they were up to 40% of the S and P 500 was the top 10 holdings. Now it has gone down, I think to like 37, 36 at the time of recording this. But when that, when those concentrations get higher and higher, people start to get concerned because now you have 10 different holdings, that's 40% of your portfolio inside of the S and P 500. But there are also other funds out there that you can look into, which are equal weighted

• 21:27Andrew Giancola?

  S and P 500 funds that are going to give an equal weight to every single stock inside of the S and P 500. Now, the problem with these is many times they do underperform something like the traditional S and P 500 fund. An example of a fund like this would be RSP. RSP has equal weights with every single company and it gives every company the same 0.2% instead of it letting Nvidia be 7% of your portfolio. Or a value fund like VTV or a small cap fund like AVUV owns the boring company that AI money has completely ignored. And so if you want to adjust to an equal weight fund or something like a value fund to dilute the concentration, that is something you can do if you are seriously concerned about this. Is it something I'm doing?

• 22:12Andrew Giancola?

  No, and here's why. How has RSP performed against something like SPY? So SPY is an example of an S and P 500 ETF that is not equally weighted. It is just the standard S and P 500 ETF. Well, over the last 10 years, SPY has returned 251% to investors, whereas RSP has returned 207% to investors. So we are looking at something a little over 40% difference between those two funds. Now, if that, over the course of 10 years, is worth it to you to decide, okay, actually I'm going to invest in RSP to reduce that risk, then that is something that is your prerogative that you can look deeper into.

• 22:54Andrew Giancola?

  But over the last five years, for example, since the start of 2022, SPY is up roughly 54% and RSP is up 38%. So during the, the entire AI run currently, RSP has lagged behind SPY and that is exactly what you would expect because there are seven major companies right now that are driving the market moving up and that includes Nvidia. But having Nvidia as the same weight as Kellogg's, for example, is gonna mean that you're not going to have as high of returns. You'll still have some great returns, as you can see, but you're not going to have as high of returns as you would with something else. Now, there are other value funds out there, for example, like there is VTV.

• 23:34Andrew Giancola?

  Now, VTV has returned about 12.8% over 10 years versus 15.5% from SPY. And that value fund, you know, will reduce again concentration into AI stocks, but it still is going to underperform. What about small cap value? So small cap value is something that a lot of people love. AVUV is about, up about 18% year to date this year and about 38% over the course of the trailing 12 months because small cap value has actually beaten large cap growth by roughly 9%. And we had an episode, if you haven't heard that episode, with Paul Merriman, where we talked through small cap value a little more. And at the time we recorded that episode, small cap was actually underperforming the S and P 500. But as you can see in that episode, he dives deeper into why you may want to consider something

• 24:19Andrew Giancola?

  like small cap value and why it could be pretty helpful in times just like this. So that's another consideration there, is something like a value fund or small cap value in addition to an equal weighted S and P 500 fund. Now, is this something that I am gonna, gonna be doing heavily? No, I'm gonna be sticking to my current investment plan, but it is something that you could consider, which is why we're talking about this, so that you can look deeper into this if you want to diversify out.

• 24:45Andrew Giancola?

  Now, the next thing, step six, is you can add in international funds. Adding international funds is going to be something that will get you further away from AI, meaning AI is primarily a US trade, meaning most US companies are utilizing AI. It has not hit a lot of international markets yet, except for like in the Chinese markets, for example, they are heavily using AI and they are really far ahead of most countries when it comes to technology advancement and a lot of things they do are ahead of us too. So there's a lot of different, interesting things that you can look at like VXUS or IXUS and they have far less exposure to a handful of US mega cap names if you wanted to go that route.

• 25:27Andrew Giancola?

  International just helps further diversify against some of the US holdings and the US trends and the things that are going on in the US currently. But putting 20% or 30% into international funds can be a consideration if you want to do that.

• 25:44Andrew Giancola?

  Now, the next thing you could do is add in some bond allocation if you feel as though, you know, AI is getting out of control. But again, bonds have tremendously underperformed. If you look at something like BND, for example, I was just chatting with a Master Money Academy member and we were going through BND and looking at the, at the returns of BND and it's been like a negative 1% over the course of the last year. Now, interest rates as they rise, you know, the US Treasury is up at its highest level that it has been in 10 years. We could see some shifts, we could see even more changes to the bond market and so you have to continue to look at that. But you can also look at something like a treasury fund like VGIT and the money you put in those funds have zero AI exposure whatsoever. So this is going to be something that if you're 20 years from retirement, you may

• 26:27Andrew Giancola?

  need very little bond exposure, but if you are right on the cusp of retirement, bond exposure does help ride out some of that volatility in the market if that's something that you're concerned about. And so all of this is to say that you have the ability to kind of customize your portfolio based on some of the things that you want to do.

• 26:47Andrew Giancola?

  If you've heard any recent episode of Health Corner, you know that I have spent the last few years trying to optimize my sleep. I've tried sleep trackers, cooling my room, changing my nighttime routine, all the different things, but nothing really matters as much as having the right mattress. And that's one of the reasons I love Leesa. A great mattress is one of those things that you use every single night and you spend a third of your life sleeping and it can make a huge difference on how you feel the next day. Leesa has mattresses designed for different sleep positions and comfort preferences and their sleep quiz can help you get matched in less than two minutes. Plus they're designed and they're assembled in the USA and they come with free shipping,

• 27:30Andrew Giancola?

  easy returns and a 120 night free sleep trial. So go to leesa.com for up to 30% off mattress plus and get an extra $50 off with promo code PFP. Exclusive for my listeners. That's L-E-E-S-A.com promo code PFP for 30% off mattresses plus an extra $50 off. Let them know we sent you in the survey after checkout. Leesa.com promo code PFP. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before.

• 28:11Andrew Giancola?

  And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company. They're an online marketplace that lets you compare life insurance quotes from some of America's top insurers, side by side for free. And their licensed team helps you compare coverage, prices and terms, answers your questions and even handles the paperwork so you can get the right policy without the hassle. For me, having life insurance isn't about expecting something to happen, it's about knowing my family is protected so I can actually enjoy these moments together instead of worrying about what comes next. And with PolicyGenius, you can find 20-year life insurance policies, starting at just

• 28:55Andrew Giancola?

  $276 a year for $1 million of coverage. Head to policygenius.com to compare life insurance quotes from top companies and see how much you can save. That's policygenius.com.

• 29:09Andrew Giancola?

  The last thing I would say is that, you know, step eight is if you want to make sure that you are not over inflating your portfolio with AI, rebalancing one year is a great AI bubble strategy. Meaning let's say, for example, that you decide that you want to make sure that you have 70% in US stocks, 20% in international and 10% in bonds. Well, if AI starts to overinflate your portfolio, you get to the end of the year and you end up having 78% in US stocks and 2% in bonds and, you know, 20% international and you feel as though you need to rebalance, then you can rebalance your portfolio. All rebalancing means is that you go back to the original plan that you have of the mix of stocks and bonds in play.

• 29:51Andrew Giancola?

  So the way that this would work is you would sell some of your winners and put them back into your losers so that you can have a balanced portfolio. Now, some people argue against rebalancing because they feel as though it's a fool's errand because you're selling winners and buying losers. Some people like it just because it keeps your portfolio on track and it keeps it balanced. And that is going to be depending on where you are in your wealth building journey. For me, during the accumulation phase, I am less likely to rebalance than I am in the preservation phase, meaning when I am deciding to live off my portfolio, I may want to rebalance a little bit more. But when I'm deciding to not live on my portfolio, then that's the point in time where I would like to get the maximum amount of growth. And so it just depends on what you are trying to do and how you are trying to think about

• 30:36Andrew Giancola?

  wealth building as you're going around this route. Now, one of the things I would say too, is don't over correct when you're rebalancing. Some people will get uncertain and they'll start to buy, you know, gold or they'll over correct into bonds or they'll over correct into commodities or international funds. Unless it fits your criteria in every single storm, I wouldn't just over correct into something else. A lot of people over correct into gold, for example, during uncertain times. When we had tariff issues. Gold was rising at a rapid rate and people were just jumping on the gold train, trying to get more into precious metals. Now, I have nothing against precious metals. If you want to buy precious metals, you absolutely can, but they don't have intrinsic value. So I am less likely to buy gold than I would be some other investments that are out there.

• 31:18Andrew Giancola?

  But if you love gold, if you feel as though you're convicted with gold, you've done your research and you understand why you are buying gold, more power to you. Nothing wrong with that. There's a lot of very smart people who buy gold. And so don't completely rebuild your long-term portfolio just because there is short-term uncertainty is what we're really getting at here. This is where I want you to think through, okay, why am I in this portfolio? Am I still willing to stick to this long-term? If I'm not, then maybe you need to reevaluate, but you should be willing to stick to your long-term portfolio if you built it based on a certain criteria. Now, a reason to not stick to a long-term portfolio, for example, would be is if you say, okay, well, bonds are really underperforming. I'm 25 years old. Why am I holding so much in bonds? And then you, you add more to maybe your broad-based funds or your international funds. You can have a little bit of a higher growth.

• 32:03Andrew Giancola?

  Well, that'd be a reason to look into something like that. But if you are selling a bunch of broad-based funds to buy into gold because you think it's uncertain times for the next one year, that's a different story. And I think some people, maybe they'll do that. But then in the long grand scheme of things, if you're a long-term investor, sticking to the long-term is the most important thing.

• 32:24Andrew Giancola?

  Now, the last thing I would say, step nine, is don't sell everything to wait for a crash. Waiting for a crash is something that is a fool's errand. Nobody has that crystal ball. Nobody knows what's going to happen in the future. Nobody has an understanding of what the market is going to do. And so you waiting for a crash and selling things is a fool's errand. Missing out on the 10 best days reduces the amount that you will have in your portfolio significantly. It can be a multimillion dollar impact. If you miss the best 20 days, your return goes down to half of what it could have been. Just the 20 best days. So taking your money out of the market when you don't know what's going to happen in the market, that is a fool's errand.

• 33:08Andrew Giancola?

  And I highly, highly recommend that you keep your emotions in check. You write down your investment plan and you make sure you know what you are doing. So then the question becomes, okay, well, Andrew, if I am trying to build my portfolio or understand what to do next, how do I make sure I have this on hand? Well, you need to make sure that you have an investment plan. And an investment plan can be a number of different things. I teach it a very specific way in Master Bunny Academy, but it can be a number of different things. You could do a simplified investment plan where maybe you have a napkin or maybe you have a one pager and you write down, okay, these are the funds that I'm going to be consistently investing in. This is how much I'm going to invest. So, and you write down, one, the funds that you're going to invest in.

• 33:52Andrew Giancola?

  What are the reasons you're investing in these funds? Are you investing in broad-based US funds? And if so, why are you investing in international funds or not investing in international funds? And if so, why? Are you investing in bonds? And if so, why? And then you can start to write out a thesis and reasons for why you are doing what you're doing. The reason why we do stuff like this is to make sure that we can refer back to our plan and remove emotions from the equation. Now, this is what we do and this is what we invest in every single month. Maybe you want to invest in some individual stocks. So you can add that into your plan. Maybe you want to invest in small cap or you want to invest in small cap value or you want to invest in dividend ETFs or you want to invest in real estate investment trusts.

• 34:37Andrew Giancola?

  You've got to list out the reasons. You've got to list out why you're doing what you're doing. You've got to list out your long-term plan for this as you go about doing this. So first, at the top of any investment plan, I would make sure to have the asset allocation and the reason why you have that asset allocation. Now, if you've never done an asset allocation before, or you don't know what that is, that's just a mix of stocks and bonds that you have in your portfolio. And typically, your asset allocation is a direct reflection of what we call your risk tolerance. Now, your risk tolerance means how aggressive do you want your portfolio to be? And how tolerant are you to have a, an aggressive portfolio or a non-aggressive portfolio? Because the more aggressive your portfolio is, the higher the volatility.

• 35:21Andrew Giancola?

  Now volatility just means how much is your portfolio going to go up and go down? Let me give an example of this. Crypto is a very highly volatile investment. If you look at Bitcoin, sometimes it's at a hundred thousand dollars, sometimes it's at $50,000. And that is a massive swing that happens virtually just based on different things that are happening in the economy, different things the president says, different things big whale investors in Bitcoin say. I mean, there's so many different factors that come into play with Bitcoin and how volatile it is. And the reason why it moves so much is because it doesn't have intrinsic value. Okay? It's only worth what someone else is willing to pay for it. So it's going to fly around and move all the time. Whereas something like a bond fund has very low volatility, meaning it doesn't move up

• 36:06Andrew Giancola?

  a lot, it doesn't move down a lot, it's very steady. You can kind of predict where it's going to go based on what the Fed does. It's a very low volatile investment, but it doesn't move much and your returns are going to be significantly lower because of that. Something right in the middle, for example, could be an index fund or an ETF because typically we kind of have an understanding of what direction those go over the long-term. But day-to-day, week-to-week, month-to-month and year-to-year, it could have some swings going in, in two different directions. And so this is where I think when you understand your risk tolerance, then you can develop that asset allocation. Now, there are quizzes online that you can take or ways that you can develop your risk tolerance. If you join Master Money Academy, we have a new investing course going in there that's going to have a risk tolerance quiz that we will have in there for you, for members in there as well.

• 36:51Andrew Giancola?

  So there's all these different ways that you can do this and understanding your risk tolerance. And I would encourage you, if you're a new investor or if you've been investing for a long time, to have a deep understanding of your risk tolerance. Have a deep understanding of, you know, who you are as an investor. I, for example, know that with certain investments, I have a very high risk tolerance. If it's the market and I'm investing in index funds and ETFs and I am just investing for the long-term, I have a very specific plan on how I am doing that. And if you are not doing that specific plan, then you need to make sure you have it in play, but I have a very specific one. And so I can withstand almost anything in the market when that, when it comes to those. When it comes to crypto or Bitcoin or whatever else, I just know that if Bitcoin drops 75%, I'm like, ah, it's over now because I don't fully believe in Bitcoin.

• 37:36Andrew Giancola?

  I don't fully believe in the long-term impact of Bitcoin. And so many times if it drops all the way down to 75%, I am not convicted enough to continue to believe that it is going to go back up. Now, many times it has come back up and many times it has recovered. But for me to, you know, put $10,000 down, for example, when Bitcoin drops 50% would be very difficult. Where to put $10,000 into an S and P 500 index fund if it dropped 50% would be very easy for me. So sometimes certain investments have very different risk tolerances and I have found that within myself. And so I know my risk tolerance very well. I spend a lot of time thinking about it. I spend a lot of time working on it. I spend a lot of time understanding it. And so that's another big thing when you come up with your investment plan. The next thing is kind of what accounts you're going to have these in.

• 38:21Andrew Giancola?

  And then holding the right accounts can be super important. And so listing out those accounts is a very impactful thing that you can do. And then have an understanding of why you are opening those accounts, the tax reasons. If you were to change your mind, why would you change your mind? Those types of things. Then have a section on if you are going to invest in speculative things, things like Bitcoin or Pokemon cards or, you know, those types of things. Make sure you understand the percentage, the max percentage that you were willing to have in your portfolio with that. For me, it's 5% or less. And make sure that you understand how impactful that can be to your portfolio if you try to increase it even more. And then your long-term plan, what are you going to do when the market goes up? When are you going to do what the market goes down? And how much are you going to be investing every month?

• 39:04Andrew Giancola?

  Well, are you going to be consistently investing every single month? Are you going to be doing this no matter what? Every single paycheck, you were going to make sure that you're investing a percentage of that. And that is going into these separate accounts automatically and you're auto-investing into these different funds. And why are you investing in those different funds? See, coming up with an investment plan is one of the most important things that you can do. And writing it down allows you to remove emotions from the equation. It allows you to make sure that your plan is something that is super impactful to you as an investor because your goal is financial freedom, just like my goal is financial freedom, just like everyone else's goal, listening to this podcast is financial freedom. And the further along that you get by putting that investment plan together and the more

• 39:46Andrew Giancola?

  that you understand that's why you have that in place, the easier it all becomes. And so I highly encourage each and every single one of you to make sure that you have that investment plan in place.

• 39:58Andrew Giancola?

  All right, now we're going to jump into a couple of your questions. All right, the first question coming into play is, I am wondering the best way to organize my investments. I have multiple retirement accounts and have a mix of different stocks, bonds, S and P 500 index funds, and even target date funds inside that account. What is the best way to organize my funds inside of my account? Well, this is a great question, and this question is basically getting at the thought process of how do I figure out what my asset allocation should be in every single account? So here's a couple of things that you can do when you think about this. Number one is you can ensure that you have the same asset allocation across all the different accounts.

• 40:37Andrew Giancola?

  Now, this can be difficult sometimes if you have different investment options in your 401k, from like your taxable brokerage, from like your Roth IRA. Then it's not as easy to have the same exact investments across the board. But if you have a specific asset allocation that you want to stick to, you can do it across the board on all those different accounts. Maybe it's an S and P 500 index fund that is, you know, SPY in one fund. Maybe it's a Vanguard S and P 500 index fund in another fund. Maybe you have an ETF in your Robinhood account. It doesn't matter which account you have it in, but if you have the same type of fund and they mirror the same index within those different funds, then you're still sticking to your asset allocation. It doesn't mean like just the exact fund, no matter what, that's the only one you invest in.

• 41:18Andrew Giancola?

  No, there's so many different options out there now that you can find one that should be very similar, similar expense ratio, mirroring the same index, and that is going to allow you to stick to the same asset allocation. Then when it comes to bonds and other things, then you can add those in. But then also I have separate accounts, like for example, where I invest in individual stocks. I don't throw my, sprinkle my individual stocks across the board. Instead, I ensure that I just have one account with those individual stocks. It makes it a lot easier, especially since it is a smaller portion of my portfolio. But I do love investing in those stocks, and so I keep them in certain places. And so as long as you have a tracking tool that allows you to see where all this stuff is and you understand where those investments are, it is super helpful to have that in play and make sure that you have that going.

• 42:04Andrew Giancola?

  The second question is about a backdoor Roth. So, hi, I wanted to get your opinion on if it would be beneficial for my husband and I to do a backdoor Roth IRA contribution this year. We as a household make $270,000 per year and we max out our 401ks, but are considering doing a backdoor Roth. Should we consider this? So for those of you who don't know, a backdoor Roth IRA is a way for high earners to get their money into a Roth IRA. If you make too much money, Roth IRAs have income limits and you begin to get phased out at a certain point in time. So if you're making over $153,000 per year in your single filer, or if you're married filing jointly and making over $242,000 per year, that's when you begin to get phased out.

• 42:46Andrew Giancola?

  And as you approach those numbers, that's when I personally consider doing backdoor Roth. So backdoor Roths, I think are fantastic. It's the first thing I like to do at the beginning of every single year. And so when you look at the backdoor Roth, basically you can contribute money to a traditional IRA. Then, once it's in that traditional IRA, you move it to the Roth IRA, and that's how high earners can get their money into a Roth IRA. And if you are really interested in that tax-free growth and being able to pull that money out tax-free, then a Roth is a fantastic account. It's one of my top accounts, no matter how much money I earn, even if I have to pay taxes on those dollars, because the growth of that money is so powerful. And so for me, I always like to make sure that I do the backdoor Roth to get those dollars into the Roth IRA, because you can't get those years back.

• 43:28Andrew Giancola?

  And so for many folks out there, looking at something like a backdoor Roth can be incredibly helpful. Awesome. Well, that is it for today's episode. Thank you guys so much for being here. If you want to learn how to build a DIY portfolio for financial freedom, consider Master Money Academy. Master Money Academy is the community that has courses and you can ask me questions on the live coaching calls every week. If you want to build out your portfolio and make sure that you are on the right track. We will link it up down below in the show notes if you are interested in it. You get to talk to me every single week on those live coaching calls. We have courses that take you step by step through building your portfolio. Even if you're just getting started, you'll know exactly how to build a portfolio, learn about investing.

• 44:10Andrew Giancola?

  We also have Index Fund Pro in there, which teaches you how to invest in index funds and ETFs as well, in addition to a bunch of other courses, courses on how to automate your money, courses on how to do so many different things. So if you're interested, join Master Money Academy, because this is a place and a community of people who are all working towards building wealth. Also, if you want to work with me one-on-one, feel free to send me an email, [email protected], and I will get you connected with our team to fill out an application. If you are approved in that application, you'll jump on a call with my team and have a conversation about how it all works. Again, thank you so much for being here. I truly appreciate each and every single one of you. If you're getting value out of these episodes, please consider leaving a five-star rating and review.

• 44:53Andrew Giancola?

  Cannot thank you guys enough for leaving those five-star rating and reviews. And if you know that someone can benefit from this podcast, share it with a family member, share it with a friend. I know there are so many of you who have friends or family members who could benefit from this information. I get emails every single day of people that are transforming their lives just by listening to the show. So I know if you have a friend or family member who is trying to get money right or figure out money, send this episode over to them. Thank you guys again so much for being here, and we will see you on the next episode.