Two-time Emmy and Three-time NAACP Image Award-winning, television Executive Producer Rushion McDonald interviewed Steve Selengut.
Also known as The Income Coach. Here's a detailed summary of the episode:
🎙️ Guest: Steve Selengut
- Veteran private investment manager with over 40 years of experience.
- Author of Retirement Money Secrets, his second book.
- Focuses on helping people achieve income independence through smart investing.
- Runs an educational income investing community.
📘 About the Book: Retirement Money Secrets
- Written as a conversational story about a couple on a river cruise who learn about a different approach to retirement investing.
- Emphasizes common sense financial strategies over complex jargon.
- Focuses on closed-end funds as a key investment tool.
💡 Key Concepts Discussed 🔒 Closed-End Funds (CEFs)
- One of the oldest investment vehicles, dating back to the 1800s.
- Structured as pass-through trusts that must return 95% of earnings to shareholders.
- Focused on income generation rather than capital appreciation.
- Can invest in stocks, bonds, mutual funds, and ETFs.
🔥 FIRE Movement
- Stands for Financial Independence, Retire Early.
- Steve aligns more with generating sustainable income than early retirement per se.
🎯 Income Independence
- The goal is to generate enough income from investments to replace employment income.
- Allows flexibility to retire, start a business, or pursue other passions.
🛡️ The Four Risk Minimizers
- Quality: Invest only in what you understand and in companies with a proven track record.
- Diversification: Spread investments across sectors, geographies, and management firms.
- Income: Only invest in securities that pay dividends or interest.
- Profit-Taking Discipline: Set target profits (e.g., 5%) and sell when reached, reinvesting gains.
💬 Common Sense Investing Tips
- Buy stocks in companies you use or understand (e.g., Home Depot, Apple, Chipotle).
- Use tools like Yahoo Finance or CEFConnect.com to research dividend history and fund performance.
- Avoid speculative or zero-income investments.
- Treat your portfolio like a retail store—sell when profitable and restock wisely.
🌐 Connect with Steve Selengut
- Available on Facebook and LinkedIn.
- Offers access to an educational investing community with 450+ members.
- Book includes full contact details and resources.
#SHMS #STRAW #BEST
Support the show: https://www.steveharveyfm.com/
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hi, I'm Rashan McDonald, our host this weekly Money Making
Conversation Masterclass show. The interviews and information that this show
provides are for everyone. It's time to stop reading other
people's success stories and start living your own now. If
you want to be a guest on my show, Money
Making Conversation Master Class, please visit our website, Moneymakingconversations dot
(00:20):
com and click the bi.
Speaker 2 (00:21):
A Guest button.
Speaker 1 (00:22):
If you're an entrepreneur, small business owner, influencer, motivational speaker,
or got a product, I want you on my show.
Let's get this show started. The income Coach, he has
accumulated over forty years of experience as a private investment
manager with a strong focus on increasing the suspendable income
generated by clients portfolios. That's very key, that's what we
(00:43):
want to talk about today. Today, his role has transitioned
into that of an income coach, where he's dedicated to
teaching investors how to more than double the income produced
by their portfolios. Please welcome the Money Making Conversation Masterclass.
Steve sullen Gut you.
Speaker 2 (01:00):
Know, Steve, I'm great, Sean, Nice to be here with you.
Speaker 1 (01:03):
Well, I read your book, which is really fascinating because
it was common sense. I didn't get lost into all
these acronyms about how to win with my money and
how not to lose my money. This is your second book.
Why did you write a second book, Steve Retirement Money Secrets.
Speaker 2 (01:21):
The first book was more of like something your your
business or economics teacher might have written. You know, a
lot of lecture, a lot of details, and a lot
of ranting about this and that and the other thing.
This one is a conversational story. Myself and my wife
(01:44):
on a trip and we meet another couple, become friendly
with them, and learn that they paid for their trip
and have been paying for their retirement a much different
way than we had been. Not that I'm really retired,
but we're we're in the same age group, so to speak.
The second part is that this book is entirely based
(02:07):
on the use of closed end funds, and I had
just been using in the original book. I was just
using them for the income portion of my investment portfolios,
and more recently, over the last twenty years or so,
I've been totally enclosed end funds for both equities and
(02:28):
fixed income investing.
Speaker 1 (02:30):
So help me out, because I don't want to lose
my audience when you say closed in funds, what are
you talking about?
Speaker 2 (02:36):
Okay? Closed end funds amazingly to me, and although I
didn't really discover them until thirty years ago, they're the
oldest of all of all types of investment funds. They
were developed in the early eighteen hundreds. They are passed
through trusts, and what that means is they're a trust
(02:58):
vehicle where the management company goes out and invests all
the money it gets from its IPO and invests it
not in properties or employees or anything like that, and
invest it in securities of a certain type that that
particular trust is going to focus upon. So it could
(03:20):
be New York Stock Exchange stocks, it could be corporate bonds,
it could be municipal bonds, anything any type of security
that a person can invest in. They can use the
individual securities themselves, the stocks, the bonds, et cetera. Or
they can use mutual funds, which we all know about.
(03:40):
They can use ETFs, which are really brand new kids
on the block they started in the nineties. Cefs contain
the exact same securities. The focus of closed end funds
is to as passed through trust they must give back
ninety five percent of what they earn to their shareareholders.
(04:01):
So their focus is much different than all the other
three forms. The individuals, the mutual funds, and the ETFs
are all focused on growing their market value. Cefs are
focused on generating income for people.
Speaker 1 (04:17):
That they have to give back.
Speaker 2 (04:19):
Yeah.
Speaker 1 (04:21):
Now I'm talking to Steve sullen Gut his book Retirement
Money Secrets, his second book. Now let's get out the
way here.
Speaker 3 (04:28):
Steve.
Speaker 1 (04:29):
You're not an accountant. You say that is in your book.
You're not a lawyer. You say this in your book.
Speaker 2 (04:35):
Why do you say that? I guess I don't want
anybody to think of and I guess most of professionals,
and particularly in asset management in the stock market, have
to do all kinds of caveats and say, hey, I'm
not recommending individual stocks to you. I'm not trying to
(04:55):
give you legal advice or accounting advice. I'm giving you
my opinion, my suggestions, and any individual security I do mention,
I encourage you to do your own research about it.
That's pretty much what I had. That's what we had
to write on the bottom. If you ever got an
email from a financial advisor, you had one a couple
(05:16):
of paragraphs of what you had to tell you, and
then a page and a half of caveats. Right, you
know that kind of stuff.
Speaker 1 (05:25):
Well, I respect that because I always tell people, because
I do a lot of financially literacy experts on the show,
people who are investors in recommendations on how you should
handle your money. But the bottom line, do your research.
Don't just jump out there like you're buying a lottery ticket.
Do your research.
Speaker 2 (05:42):
Now.
Speaker 1 (05:42):
There was a phrase in your book called the Fire
movement f I r e. The Fire movement. What exactly
is that.
Speaker 2 (05:52):
It's a movement of people of all ages. It means
financial independence, retire.
Speaker 1 (06:00):
Early, yeah, financial independence retire early, yeah.
Speaker 2 (06:06):
Or earlier said they may say earlier. I'm not exactly sure.
I'm not directly a member. I don't know if it's
really a membership involved where you get a certificate to
put on your wall or anything like that. But it's
a state of mind, and it's a state of mind
that clearly either focuses on gaining enough wealth that you
(06:30):
don't have to worry about spending some of it and
depleting it, or in my case, I do it by
growing so much income from a portfolio that you kind
of replace your employment, well your employment income. So you
pretty much are free to do whatever you want. If
you want to retire, fine, I never chose to retire.
(06:52):
I sold my business and I decided to become a
coach and help other people do what I did.
Speaker 1 (06:57):
You know, well, thank you. That's why you're on the show,
so you can help me help other people. That's the
purpose of money making Conversations masterclass. You know, I don't
charge people to listen to my show. I give you
your time and I would guide you through consistent this
type of consistent programming. I try to give people options
(07:18):
so they won't go Well, he's only talking about this
one longone of opportunity, but again everything's tied to research. Now, Steve,
what is the goal of income independence? Because we have
a lot of people listening to the show work forty
hour week jobs, which means they get extra money from
over time, they got got sick days, they got vacation days.
But you say you make a statement of the importance
(07:40):
of goal. What is the goal of income independence?
Speaker 2 (07:44):
Yeah, well, income independence is what I try to develop
for people, primarily to people I work with already have
some investment portfolios, typically six figures or more. So what
I'm doing with them is transitioning them from a mindset
(08:05):
on let's grow this market value and make it big.
I feel better how bigger the market value is. I
try to get them to focus on, let's take that
market value and invest it so it generates enough income
and keeps growing that income so that you can achieve
the point in time you say, hey, I'm making as
(08:26):
much or more from my investment portfolios as I am
from my career, my job that gives me the opportunity
that independent to saying, Okay, I'm going to go start
my own business. I'm going to find a different career.
I'm going to go travel and spend the money on
that instead of commuting to New York, which is exactly
(08:49):
what I did back in seventy nine. I was making
about five times my salary investing, and at that time
I was in dividends dock and municipal bonds and corporate
bonds and g mays and things like that, and I said,
at that point, it doesn't make sense for me to
(09:10):
continue this commutation to New York every day. When I
could I could clearly find people who would want me
to do this for them.
Speaker 1 (09:21):
You know some Steve, you say municipal bonds, you said
word stock, you said, we'd dividends, which can turn into
a foreign language for the average person.
Speaker 2 (09:30):
You know.
Speaker 1 (09:31):
The big thing about that keeps a lot of the
everyday people, everyday person out of the stock game or
the growth or the income growth game is education and
also a conference zone and so now, but they are minimizers.
They are you know, we don't want to put our
money somewhere we don't understand, Steve, And next thing you know,
(09:52):
it's gone. You know, to a lot of people, the
stock market may seem like a scam, but they are
minimizers that can put your risk. Are therefore that you
can tell us about?
Speaker 2 (10:03):
I sure can the what I call the four great
risk miss minimizers. If you picture a stool, yes, sir,
a stool with four legs on it, you know, and
if you take one leg off, you're going to fall.
The stool is going to fall. So the four risks
(10:25):
minimizers really have to be used together. And the first
and primary risk minimizer is quality. And this applies to
all types of securities. The things we discussed before the
closed in funds as well as anything else that you
invest in. Quality is job one. And I know that's
(10:47):
Ford's trademark, but I use it to Quality is job one.
You never you never buy something you don't understand. You know,
you don't go out and say somebody tells you, hey,
it's this You've got to get in this company. They
make this type of product and it's going to be
a great thing. Well, you don't know anything about that
product or that company, you know, so you stay away
(11:09):
from things you don't understand or you can't see the quality.
You can see quality by how long it's been in business,
whether it's if it's a stock, if it pays you
a dividend and it's been paying a dividend for years,
and if you're a quote dividend investor, you want to
see that it's been raising its dividend, you know, to
(11:31):
show that it respects your ownership of the company. I
look at things that have been in existence at least
five years, are profitable and actually another quality element for me,
and it relates to another one of these risk minimizers.
I like volatility, and I'll explain that later. Because I'm
(11:54):
a profit taker and I understand that the market goes
up now, but but quality is the main thing. The
next thing. Okay, you're gonna ask a question, go.
Speaker 1 (12:03):
Ahead, now continue with that because I want to talk
about the risk taker. But I want you to finish
with your your top four so people will be able
to write that down.
Speaker 2 (12:11):
Okay, the second one, and it's uh. I would say
it's it's second, And it's diversification, Yes, diversification. You want
to invest in different types of companies different uh. If
you're using funds like I do, you want to invest
(12:33):
in different types of sectors. You want to invest invest
with different management companies like and most of you have
heard of black Rock and New Veen and.
Speaker 1 (12:45):
Eaton do have black Rock?
Speaker 2 (12:47):
I do have black Rock and things like that. They
all provide these closed in funds that I'm talking about.
But if you look at the stock market, you know
there are companies like Pfizer that's in healthcare and exxons
and energy, and there's others. There are actually others that
pay dividends that are in high tech, like IBM and GE.
(13:10):
You know, So you want to diversify by sector, you
want to I like to diversify by country probally, I
like to make sure I'm invested in the whole world
economy in every possible sector. So there's many different ways
of diversifying, but that's it. And also you diversify by
(13:30):
not having a large amount, a large percentage of your
portfolio of your money in any one security. You should
never have anywhere near five percent of your of your
investment capital in any one entity. I have a relatively
large portfolio, and I own over two hundred and fifty
(13:54):
different securities, and I don't have two percent invested in
any one of them.
Speaker 3 (13:59):
Please don't go anywhere. We'll be right back with more
Money Making Conversations Masterclass. Welcome back to the Money Making
Conversations Masterclass, hosted by Rashaan McDonald.
Speaker 1 (14:16):
We're talking to Steve sullen cut his book Retirement Money Secrets,
a Financial Insighter's Guide to Income Independence. It's his second book.
When you start talking about stock, a ruler has been
preached to me is when you don't understand stock by stocks,
where you shop or what you buy. In other words,
(14:36):
if you go to home depot all the time, buy
stocking home depot. If you buy their computer, that's your computer,
or Charice by that if you're Android phone user, by
staying that lane. If you're not an Apple guy, you know,
if you different different lanes of if you if you'll
eat it Chipotle all the time and their stop, go
buy that type of stop. You drive a Tesler, you
(14:59):
might want to look at that stock. Is that a
good train of thought to think of when you trying
to get into the stock buying game.
Speaker 2 (15:07):
When you're Yeah, and in the sense of diversifying and quality,
I mean, those are all quality companies that we all know,
and yeah, that's important. Just like you'd say, Okay, I
know Pfizer is a good drug company. It's been around forever,
I you know, and there's probably there's probably twenty different
companies in various fields that you are familiar with. And
(15:30):
if you were going to go select individual stocks, which
I wouldn't recommend for an initial way of investing, that's
my mind, that's pretty risky. You're better off buying diversified
portfolios of stocks. Yes, that is a good approach. Stick
with things you know. Cool, you know, stick with things
(15:51):
you know are successful and have been around. That is
a way of eliminating risk. Cool.
Speaker 1 (15:58):
You can go to number three down State I just
want to get that ideal because it was tied to
that conversation and I didn't want to get too deep.
Speaker 2 (16:04):
Number three, That's a great I got, and I have
to tell you that's the first time anybody's mentioned that
to me as an approach to get started and investing.
I mean, I do that, but I'm not thinking about
it exactly. You know what I mean? Right well?
Speaker 1 (16:20):
You know on this show, I try to be as
every day common sense as possible because I want people
to venture in that direction. That's the only way you're
going to separate yourself from a forty hour week job.
I'm sorry you can't get there and then, but you
can get there by applying principles that you feel comfortable
(16:40):
with that you see as successful if you, like I said,
you know, I may not eat there, but guess what
when I go into drive out Chippotely. I'm just saying
that as an example. I see people in there all
the time. There was always a line, so I have
at least consider if I was looking at McDonald's, stop
looking at the burberkey stock and I'm looking at it Chipotly,
(17:03):
I'll go, well, Tipotly is always has a line when
I drive by, I have to consider that option versus
the other two options, and that becomes common sense, and
that's all I try to bring to the show.
Speaker 2 (17:15):
Steve I Forge it's great, and I think that if
you have children or grandchildren that are getting at the
age where they have some disposable money they could invest,
I think that's a great way to talk to them
about getting started. Number three is income. That never buy
(17:36):
any type of security that doesn't pay some form of income,
Like when you're talking about the bond market. I never
would buy a zero coupon bond. I would have to
have a bond that paid every six They usually pay
every six months, so that's in the stock market, I
would never buy a stock that didn't pay me a dividend.
(17:58):
Stock dividends usually come out quarterly, so it's another It's
also a way of judging quality, but it's also a
way that you can assure yourself that you have the
wherewithal to grow your portfolio, because if you take your
your accumulated dividends, you can then buy more shares, and
(18:21):
you can buy more shares of either another company, another
closed end fund, or you can if you already have
a significant portfolio. Then you then you have two choices.
Then you can add a new security or add to
positions of your high quality, diversified companies that might be
down a little in price because there's still you know,
(18:45):
your companies, there's still your securities. There's still good investments
because they meet all these tests we're talking about. So
so those are the first three income, diversification.
Speaker 1 (18:56):
Quality, cool, and number four.
Speaker 2 (19:00):
Number four is something you're not going to hear included
in most people's statements. We are in the financial community.
UH pitches an idea that they're going to tell you
what to buy and if you hold on to it
for your whole working lifetime, by the time you retire,
(19:21):
it will have grown to such an amount that it'll
be all you need. And they have this buy and
hold philosophy, and it applies to all securities, whether they're
income producers or not. You know, and they and and
not necessarily too high quality either, because they'll they'll play
the same game with new issues, you know, UH, speculative
(19:46):
type of securities. I, on the other hand, am a
firm believer in treating your investment portfolio in the same
way you would treat it if it were a retail store,
if it were a Donald's, or it were a home
depot that you mentioned before, where you have all these
different companies or closed end funds inside that represent different products,
(20:11):
different sectors, whatever. And when you run a store, the
last thing that you want to see is the value
of your inventory go up. That means you're not selling anything,
you're not making any money. So my idea is to
place a target profit on every entity within your store
(20:36):
and make it a product that you think is reasonably
it's going to be reached frequently a reasonable amount of money.
So I use five percent as my maximum. If if
any of my securities goes up five percent, I'm going
to sell it no matter what anybody says about what
the future is, because I don't have any hesitation with
(20:59):
my store or after I sell that pair of genes
to go out and buy another pair of genes to
replace it with on my shelf. And that's exactly how
I approach securities markets. I own a wide variety in
every sector at varying prices. I have a target price
(21:19):
on them, and when somebody comes in, I sell them
for that price and I replace them now with the
market as it cycles up and down. You're going to
have times when a lot of things are up in
price and others when they're down in price. So sometimes
you have to have a sale and say I'm going
to take I'll take less profit today on these things
(21:40):
so that I can take that money and invest it
in some of these other things that have gone down
in price.
Speaker 1 (21:47):
Basically, you're saying you start out with fifty dollars and
go up to two hundred and fifty dollars. Take that
two hundred dollars, keeping your base of fifty where you start.
You're not selling. You're saying you're not telling people to
liquidate your stock, which a lot of people do. We
talk about the Crane couple that you made in your book.
They took a vacation, they liquidated some of their stock
(22:07):
their portfolio to go on a trip. And you're not
saying it to think ahead. And that's a common sense
approach that I've always.
Speaker 2 (22:14):
Had in my head.
Speaker 1 (22:15):
I'm to tell you, Steve, I've always thought that way.
This is the first book retirement money Secrets that I've
read that and I was like, Wow, it took me
this long, this many years, this many decades to finally
read a book, they had the same common sense approach
that I thought always made sense, and in a sense
it kind of validates the way I think. But it
(22:36):
also to me sounds like common sense. But before I
go any further, let's talk about dividends. Because of the
fact that I got a couple of stocks that I
accidentally have in my portfolio that pays dividends. How do
you find out if a stock pays dividends?
Speaker 2 (22:54):
In the description that you find if you go to
a Yahoo Finance or or some other If you go
to if you have an account at Fidelity, you look
to see what the yield is. If it says there's
a yield on it, that means it's paying something and
this is the percentage it's paying. Uh. But in the
(23:15):
description of most companies, if you go and you look,
you'll you'll see the history, the dividend history. You can
look up anyone and say what's the dividend history for IBM,
and it'll show you how much it's paid each time.
With the closed end funds that I used, it's a
(23:37):
really neat website called CEF Connect. Its cef connect dot com.
And you go there and you put in the security
you're looking for, and there's a tab that says distributions,
and it'll show you the monthly amounts that that thing
is paid. And then you can hit a button and
(23:59):
it'll give you the monthly amount it's paid over the
course of its history. So just with that one piece
of information, you can see how long it's been in business.
You know, how long it's been spitting out this amount
of money, right, how dependable it is, and you know
it's a And there's another place where can look to
you can see how many different companies or bonds or
(24:21):
whatever it owns inside, so you can see if it's diversified.
And when you look at the chart of its price movement,
you can say, okay, yeah, look at all these times
I could have bought it at a lower price and
sold it. Because they trade since they're not going to
grow a lot in market value because they're giving out
ninety five percent of their earnings, so they can't really grow.
(24:45):
That's not their intent they're going to. They trade in
a very narrow range, and you can take advantage of
that aspect and take profits periodically in them, and I go,
I go in and out of the same ones. There
are some that I've traded for profits at least ten times.
Speaker 1 (24:59):
Are ready to ye cool, Steve your book. Retirement, that's
the word that's up there front. Retirement can happen for
people in their twenties, their thirties, their forties, sixties. Sometimes
the word retirement seems like, oh, you got to be
in your sixties, that's what retirement means. And I think
that really doesn't bode well for the generation to today
because they want to retire tomorrow. And I say, bless
(25:21):
you think that way. He's been doing it for forty years.
He's the income coach. I said, that is my intro.
Steve Selling cut his book Retirement Money Secrets. How can
we find you? My friend is social media websites. As
we close out the interview.
Speaker 2 (25:40):
I'm on Facebook, I'm on LinkedIn, Steve Selling gut you
can probably find you with that tag. The book, of
course has all my contact information in it. And I
also run an educational income investing community. Okay that once
you read the book, if you still have questions, you
can just join that. And there's about four hundred and
(26:01):
fifty people right now that are just waiting to answer
your questions. Wow. And a whole educational course on top.
Speaker 1 (26:08):
Of it, my brother, Thank you for contacting me, Thank
you for allowing me to walk through your book.
Speaker 2 (26:13):
It's a great read.
Speaker 1 (26:14):
By the way, it's really interesting because it comes from
the story He's going on a river cruise and runs
into this couple and it kind of like through that
conversation is how the book is written. So it's very conversational.
It's very eye opener because it's written off the reaction
to this couple as they go through this journey. A
very well written book. I'm very happy I got to
(26:36):
read it. I blew through it really quick. I went
this is because it is written from a common sense perspective,
and I'll say congratulating. Congratulations to you Steed for creating
a book that's based on common sense and not complicating
us with a lot of who are all talking to the
stock market that nobody can't understand. Thank you again for
(26:57):
coming on Money Making Conversation About the class been another
edition of Moneymaking Conversation Masterclass hosted by me Rushaun McDonald.
Thank you to our guests on the show today and
thank you our listening to the audience now if you
want to listen to any episode, I want to be
a guest on the show, visit Moneymakingconversations dot com. Our
social media handle is money Making Conversation. Join us next
(27:19):
week and remember to always leave with your gifts. Keep winning.
Hi, I'm Rashan McDonald, our host this weekly Money Making
Conversation Masterclass show. The interviews and information that this show
provides are for everyone. It's time to stop reading other
people's success stories and start living your own now. If
you want to be a guest on my show, Money
Making Conversation Master Class, please visit our website, Moneymakingconversations dot
(00:20):
com and click the bi.
Speaker 2 (00:21):
A Guest button.
Speaker 1 (00:22):
If you're an entrepreneur, small business owner, influencer, motivational speaker,
or got a product, I want you on my show.
Let's get this show started. The income Coach, he has
accumulated over forty years of experience as a private investment
manager with a strong focus on increasing the suspendable income
generated by clients portfolios. That's very key, that's what we
(00:43):
want to talk about today. Today, his role has transitioned
into that of an income coach, where he's dedicated to
teaching investors how to more than double the income produced
by their portfolios. Please welcome the Money Making Conversation Masterclass.
Steve sullen Gut you.
Speaker 2 (01:00):
Know, Steve, I'm great, Sean, Nice to be here with you.
Speaker 1 (01:03):
Well, I read your book, which is really fascinating because
it was common sense. I didn't get lost into all
these acronyms about how to win with my money and
how not to lose my money. This is your second book.
Why did you write a second book, Steve Retirement Money Secrets.
Speaker 2 (01:21):
The first book was more of like something your your
business or economics teacher might have written. You know, a
lot of lecture, a lot of details, and a lot
of ranting about this and that and the other thing.
This one is a conversational story. Myself and my wife
(01:44):
on a trip and we meet another couple, become friendly
with them, and learn that they paid for their trip
and have been paying for their retirement a much different
way than we had been. Not that I'm really retired,
but we're we're in the same age group, so to speak.
The second part is that this book is entirely based
(02:07):
on the use of closed end funds, and I had
just been using in the original book. I was just
using them for the income portion of my investment portfolios,
and more recently, over the last twenty years or so,
I've been totally enclosed end funds for both equities and
(02:28):
fixed income investing.
Speaker 1 (02:30):
So help me out, because I don't want to lose
my audience when you say closed in funds, what are
you talking about?
Speaker 2 (02:36):
Okay? Closed end funds amazingly to me, and although I
didn't really discover them until thirty years ago, they're the
oldest of all of all types of investment funds. They
were developed in the early eighteen hundreds. They are passed
through trusts, and what that means is they're a trust
(02:58):
vehicle where the management company goes out and invests all
the money it gets from its IPO and invests it
not in properties or employees or anything like that, and
invest it in securities of a certain type that that
particular trust is going to focus upon. So it could
(03:20):
be New York Stock Exchange stocks, it could be corporate bonds,
it could be municipal bonds, anything any type of security
that a person can invest in. They can use the
individual securities themselves, the stocks, the bonds, et cetera. Or
they can use mutual funds, which we all know about.
(03:40):
They can use ETFs, which are really brand new kids
on the block they started in the nineties. Cefs contain
the exact same securities. The focus of closed end funds
is to as passed through trust they must give back
ninety five percent of what they earn to their shareareholders.
(04:01):
So their focus is much different than all the other
three forms. The individuals, the mutual funds, and the ETFs
are all focused on growing their market value. Cefs are
focused on generating income for people.
Speaker 1 (04:17):
That they have to give back.
Speaker 2 (04:19):
Yeah.
Speaker 1 (04:21):
Now I'm talking to Steve sullen Gut his book Retirement
Money Secrets, his second book. Now let's get out the
way here.
Speaker 3 (04:28):
Steve.
Speaker 1 (04:29):
You're not an accountant. You say that is in your book.
You're not a lawyer. You say this in your book.
Speaker 2 (04:35):
Why do you say that? I guess I don't want
anybody to think of and I guess most of professionals,
and particularly in asset management in the stock market, have
to do all kinds of caveats and say, hey, I'm
not recommending individual stocks to you. I'm not trying to
(04:55):
give you legal advice or accounting advice. I'm giving you
my opinion, my suggestions, and any individual security I do mention,
I encourage you to do your own research about it.
That's pretty much what I had. That's what we had
to write on the bottom. If you ever got an
email from a financial advisor, you had one a couple
(05:16):
of paragraphs of what you had to tell you, and
then a page and a half of caveats. Right, you
know that kind of stuff.
Speaker 1 (05:25):
Well, I respect that because I always tell people, because
I do a lot of financially literacy experts on the show,
people who are investors in recommendations on how you should
handle your money. But the bottom line, do your research.
Don't just jump out there like you're buying a lottery ticket.
Do your research.
Speaker 2 (05:42):
Now.
Speaker 1 (05:42):
There was a phrase in your book called the Fire
movement f I r e. The Fire movement. What exactly
is that.
Speaker 2 (05:52):
It's a movement of people of all ages. It means
financial independence, retire.
Speaker 1 (06:00):
Early, yeah, financial independence retire early, yeah.
Speaker 2 (06:06):
Or earlier said they may say earlier. I'm not exactly sure.
I'm not directly a member. I don't know if it's
really a membership involved where you get a certificate to
put on your wall or anything like that. But it's
a state of mind, and it's a state of mind
that clearly either focuses on gaining enough wealth that you
(06:30):
don't have to worry about spending some of it and
depleting it, or in my case, I do it by
growing so much income from a portfolio that you kind
of replace your employment, well your employment income. So you
pretty much are free to do whatever you want. If
you want to retire, fine, I never chose to retire.
(06:52):
I sold my business and I decided to become a
coach and help other people do what I did.
Speaker 1 (06:57):
You know, well, thank you. That's why you're on the show,
so you can help me help other people. That's the
purpose of money making Conversations masterclass. You know, I don't
charge people to listen to my show. I give you
your time and I would guide you through consistent this
type of consistent programming. I try to give people options
(07:18):
so they won't go Well, he's only talking about this
one longone of opportunity, but again everything's tied to research. Now, Steve,
what is the goal of income independence? Because we have
a lot of people listening to the show work forty
hour week jobs, which means they get extra money from
over time, they got got sick days, they got vacation days.
But you say you make a statement of the importance
(07:40):
of goal. What is the goal of income independence?
Speaker 2 (07:44):
Yeah, well, income independence is what I try to develop
for people, primarily to people I work with already have
some investment portfolios, typically six figures or more. So what
I'm doing with them is transitioning them from a mindset
(08:05):
on let's grow this market value and make it big.
I feel better how bigger the market value is. I
try to get them to focus on, let's take that
market value and invest it so it generates enough income
and keeps growing that income so that you can achieve
the point in time you say, hey, I'm making as
(08:26):
much or more from my investment portfolios as I am
from my career, my job that gives me the opportunity
that independent to saying, Okay, I'm going to go start
my own business. I'm going to find a different career.
I'm going to go travel and spend the money on
that instead of commuting to New York, which is exactly
(08:49):
what I did back in seventy nine. I was making
about five times my salary investing, and at that time
I was in dividends dock and municipal bonds and corporate
bonds and g mays and things like that, and I said,
at that point, it doesn't make sense for me to
(09:10):
continue this commutation to New York every day. When I
could I could clearly find people who would want me
to do this for them.
Speaker 1 (09:21):
You know some Steve, you say municipal bonds, you said
word stock, you said, we'd dividends, which can turn into
a foreign language for the average person.
Speaker 2 (09:30):
You know.
Speaker 1 (09:31):
The big thing about that keeps a lot of the
everyday people, everyday person out of the stock game or
the growth or the income growth game is education and
also a conference zone and so now, but they are minimizers.
They are you know, we don't want to put our
money somewhere we don't understand, Steve, And next thing you know,
(09:52):
it's gone. You know, to a lot of people, the
stock market may seem like a scam, but they are
minimizers that can put your risk. Are therefore that you
can tell us about?
Speaker 2 (10:03):
I sure can the what I call the four great
risk miss minimizers. If you picture a stool, yes, sir,
a stool with four legs on it, you know, and
if you take one leg off, you're going to fall.
The stool is going to fall. So the four risks
(10:25):
minimizers really have to be used together. And the first
and primary risk minimizer is quality. And this applies to
all types of securities. The things we discussed before the
closed in funds as well as anything else that you
invest in. Quality is job one. And I know that's
(10:47):
Ford's trademark, but I use it to Quality is job one.
You never you never buy something you don't understand. You know,
you don't go out and say somebody tells you, hey,
it's this You've got to get in this company. They
make this type of product and it's going to be
a great thing. Well, you don't know anything about that
product or that company, you know, so you stay away
(11:09):
from things you don't understand or you can't see the quality.
You can see quality by how long it's been in business,
whether it's if it's a stock, if it pays you
a dividend and it's been paying a dividend for years,
and if you're a quote dividend investor, you want to
see that it's been raising its dividend, you know, to
(11:31):
show that it respects your ownership of the company. I
look at things that have been in existence at least
five years, are profitable and actually another quality element for me,
and it relates to another one of these risk minimizers.
I like volatility, and I'll explain that later. Because I'm
(11:54):
a profit taker and I understand that the market goes
up now, but but quality is the main thing. The
next thing. Okay, you're gonna ask a question, go.
Speaker 1 (12:03):
Ahead, now continue with that because I want to talk
about the risk taker. But I want you to finish
with your your top four so people will be able
to write that down.
Speaker 2 (12:11):
Okay, the second one, and it's uh. I would say
it's it's second, And it's diversification, Yes, diversification. You want
to invest in different types of companies different uh. If
you're using funds like I do, you want to invest
(12:33):
in different types of sectors. You want to invest invest
with different management companies like and most of you have
heard of black Rock and New Veen and.
Speaker 1 (12:45):
Eaton do have black Rock?
Speaker 2 (12:47):
I do have black Rock and things like that. They
all provide these closed in funds that I'm talking about.
But if you look at the stock market, you know
there are companies like Pfizer that's in healthcare and exxons
and energy, and there's others. There are actually others that
pay dividends that are in high tech, like IBM and GE.
(13:10):
You know, So you want to diversify by sector, you
want to I like to diversify by country probally, I
like to make sure I'm invested in the whole world
economy in every possible sector. So there's many different ways
of diversifying, but that's it. And also you diversify by
(13:30):
not having a large amount, a large percentage of your
portfolio of your money in any one security. You should
never have anywhere near five percent of your of your
investment capital in any one entity. I have a relatively
large portfolio, and I own over two hundred and fifty
(13:54):
different securities, and I don't have two percent invested in
any one of them.
Speaker 3 (13:59):
Please don't go anywhere. We'll be right back with more
Money Making Conversations Masterclass. Welcome back to the Money Making
Conversations Masterclass, hosted by Rashaan McDonald.
Speaker 1 (14:16):
We're talking to Steve sullen cut his book Retirement Money Secrets,
a Financial Insighter's Guide to Income Independence. It's his second book.
When you start talking about stock, a ruler has been
preached to me is when you don't understand stock by stocks,
where you shop or what you buy. In other words,
(14:36):
if you go to home depot all the time, buy
stocking home depot. If you buy their computer, that's your computer,
or Charice by that if you're Android phone user, by
staying that lane. If you're not an Apple guy, you know,
if you different different lanes of if you if you'll
eat it Chipotle all the time and their stop, go
buy that type of stop. You drive a Tesler, you
(14:59):
might want to look at that stock. Is that a
good train of thought to think of when you trying
to get into the stock buying game.
Speaker 2 (15:07):
When you're Yeah, and in the sense of diversifying and quality,
I mean, those are all quality companies that we all know,
and yeah, that's important. Just like you'd say, Okay, I
know Pfizer is a good drug company. It's been around forever,
I you know, and there's probably there's probably twenty different
companies in various fields that you are familiar with. And
(15:30):
if you were going to go select individual stocks, which
I wouldn't recommend for an initial way of investing, that's
my mind, that's pretty risky. You're better off buying diversified
portfolios of stocks. Yes, that is a good approach. Stick
with things you know. Cool, you know, stick with things
(15:51):
you know are successful and have been around. That is
a way of eliminating risk. Cool.
Speaker 1 (15:58):
You can go to number three down State I just
want to get that ideal because it was tied to
that conversation and I didn't want to get too deep.
Speaker 2 (16:04):
Number three, That's a great I got, and I have
to tell you that's the first time anybody's mentioned that
to me as an approach to get started and investing.
I mean, I do that, but I'm not thinking about
it exactly. You know what I mean? Right well?
Speaker 1 (16:20):
You know on this show, I try to be as
every day common sense as possible because I want people
to venture in that direction. That's the only way you're
going to separate yourself from a forty hour week job.
I'm sorry you can't get there and then, but you
can get there by applying principles that you feel comfortable
(16:40):
with that you see as successful if you, like I said,
you know, I may not eat there, but guess what
when I go into drive out Chippotely. I'm just saying
that as an example. I see people in there all
the time. There was always a line, so I have
at least consider if I was looking at McDonald's, stop
looking at the burberkey stock and I'm looking at it Chipotly,
(17:03):
I'll go, well, Tipotly is always has a line when
I drive by, I have to consider that option versus
the other two options, and that becomes common sense, and
that's all I try to bring to the show.
Speaker 2 (17:15):
Steve I Forge it's great, and I think that if
you have children or grandchildren that are getting at the
age where they have some disposable money they could invest,
I think that's a great way to talk to them
about getting started. Number three is income. That never buy
(17:36):
any type of security that doesn't pay some form of income,
Like when you're talking about the bond market. I never
would buy a zero coupon bond. I would have to
have a bond that paid every six They usually pay
every six months, so that's in the stock market, I
would never buy a stock that didn't pay me a dividend.
(17:58):
Stock dividends usually come out quarterly, so it's another It's
also a way of judging quality, but it's also a
way that you can assure yourself that you have the
wherewithal to grow your portfolio, because if you take your
your accumulated dividends, you can then buy more shares, and
(18:21):
you can buy more shares of either another company, another
closed end fund, or you can if you already have
a significant portfolio. Then you then you have two choices.
Then you can add a new security or add to
positions of your high quality, diversified companies that might be
down a little in price because there's still you know,
(18:45):
your companies, there's still your securities. There's still good investments
because they meet all these tests we're talking about. So
so those are the first three income, diversification.
Speaker 1 (18:56):
Quality, cool, and number four.
Speaker 2 (19:00):
Number four is something you're not going to hear included
in most people's statements. We are in the financial community.
UH pitches an idea that they're going to tell you
what to buy and if you hold on to it
for your whole working lifetime, by the time you retire,
(19:21):
it will have grown to such an amount that it'll
be all you need. And they have this buy and
hold philosophy, and it applies to all securities, whether they're
income producers or not. You know, and they and and
not necessarily too high quality either, because they'll they'll play
the same game with new issues, you know, UH, speculative
(19:46):
type of securities. I, on the other hand, am a
firm believer in treating your investment portfolio in the same
way you would treat it if it were a retail store,
if it were a Donald's, or it were a home
depot that you mentioned before, where you have all these
different companies or closed end funds inside that represent different products,
(20:11):
different sectors, whatever. And when you run a store, the
last thing that you want to see is the value
of your inventory go up. That means you're not selling anything,
you're not making any money. So my idea is to
place a target profit on every entity within your store
(20:36):
and make it a product that you think is reasonably
it's going to be reached frequently a reasonable amount of money.
So I use five percent as my maximum. If if
any of my securities goes up five percent, I'm going
to sell it no matter what anybody says about what
the future is, because I don't have any hesitation with
(20:59):
my store or after I sell that pair of genes
to go out and buy another pair of genes to
replace it with on my shelf. And that's exactly how
I approach securities markets. I own a wide variety in
every sector at varying prices. I have a target price
(21:19):
on them, and when somebody comes in, I sell them
for that price and I replace them now with the
market as it cycles up and down. You're going to
have times when a lot of things are up in
price and others when they're down in price. So sometimes
you have to have a sale and say I'm going
to take I'll take less profit today on these things
(21:40):
so that I can take that money and invest it
in some of these other things that have gone down
in price.
Speaker 1 (21:47):
Basically, you're saying you start out with fifty dollars and
go up to two hundred and fifty dollars. Take that
two hundred dollars, keeping your base of fifty where you start.
You're not selling. You're saying you're not telling people to
liquidate your stock, which a lot of people do. We
talk about the Crane couple that you made in your book.
They took a vacation, they liquidated some of their stock
(22:07):
their portfolio to go on a trip. And you're not
saying it to think ahead. And that's a common sense
approach that I've always.
Speaker 2 (22:14):
Had in my head.
Speaker 1 (22:15):
I'm to tell you, Steve, I've always thought that way.
This is the first book retirement money Secrets that I've
read that and I was like, Wow, it took me
this long, this many years, this many decades to finally
read a book, they had the same common sense approach
that I thought always made sense, and in a sense
it kind of validates the way I think. But it
(22:36):
also to me sounds like common sense. But before I
go any further, let's talk about dividends. Because of the
fact that I got a couple of stocks that I
accidentally have in my portfolio that pays dividends. How do
you find out if a stock pays dividends?
Speaker 2 (22:54):
In the description that you find if you go to
a Yahoo Finance or or some other If you go
to if you have an account at Fidelity, you look
to see what the yield is. If it says there's
a yield on it, that means it's paying something and
this is the percentage it's paying. Uh. But in the
(23:15):
description of most companies, if you go and you look,
you'll you'll see the history, the dividend history. You can
look up anyone and say what's the dividend history for IBM,
and it'll show you how much it's paid each time.
With the closed end funds that I used, it's a
(23:37):
really neat website called CEF Connect. Its cef connect dot com.
And you go there and you put in the security
you're looking for, and there's a tab that says distributions,
and it'll show you the monthly amounts that that thing
is paid. And then you can hit a button and
(23:59):
it'll give you the monthly amount it's paid over the
course of its history. So just with that one piece
of information, you can see how long it's been in business.
You know, how long it's been spitting out this amount
of money, right, how dependable it is, and you know
it's a And there's another place where can look to
you can see how many different companies or bonds or
(24:21):
whatever it owns inside, so you can see if it's diversified.
And when you look at the chart of its price movement,
you can say, okay, yeah, look at all these times
I could have bought it at a lower price and
sold it. Because they trade since they're not going to
grow a lot in market value because they're giving out
ninety five percent of their earnings, so they can't really grow.
(24:45):
That's not their intent they're going to. They trade in
a very narrow range, and you can take advantage of
that aspect and take profits periodically in them, and I go,
I go in and out of the same ones. There
are some that I've traded for profits at least ten times.
Speaker 1 (24:59):
Are ready to ye cool, Steve your book. Retirement, that's
the word that's up there front. Retirement can happen for
people in their twenties, their thirties, their forties, sixties. Sometimes
the word retirement seems like, oh, you got to be
in your sixties, that's what retirement means. And I think
that really doesn't bode well for the generation to today
because they want to retire tomorrow. And I say, bless
(25:21):
you think that way. He's been doing it for forty years.
He's the income coach. I said, that is my intro.
Steve Selling cut his book Retirement Money Secrets. How can
we find you? My friend is social media websites. As
we close out the interview.
Speaker 2 (25:40):
I'm on Facebook, I'm on LinkedIn, Steve Selling gut you
can probably find you with that tag. The book, of
course has all my contact information in it. And I
also run an educational income investing community. Okay that once
you read the book, if you still have questions, you
can just join that. And there's about four hundred and
(26:01):
fifty people right now that are just waiting to answer
your questions. Wow. And a whole educational course on top.
Speaker 1 (26:08):
Of it, my brother, Thank you for contacting me, Thank
you for allowing me to walk through your book.
Speaker 2 (26:13):
It's a great read.
Speaker 1 (26:14):
By the way, it's really interesting because it comes from
the story He's going on a river cruise and runs
into this couple and it kind of like through that
conversation is how the book is written. So it's very conversational.
It's very eye opener because it's written off the reaction
to this couple as they go through this journey. A
very well written book. I'm very happy I got to
(26:36):
read it. I blew through it really quick. I went
this is because it is written from a common sense perspective,
and I'll say congratulating. Congratulations to you Steed for creating
a book that's based on common sense and not complicating
us with a lot of who are all talking to the
stock market that nobody can't understand. Thank you again for
(26:57):
coming on Money Making Conversation About the class been another
edition of Moneymaking Conversation Masterclass hosted by me Rushaun McDonald.
Thank you to our guests on the show today and
thank you our listening to the audience now if you
want to listen to any episode, I want to be
a guest on the show, visit Moneymakingconversations dot com. Our
social media handle is money Making Conversation. Join us next
(27:19):
week and remember to always leave with your gifts. Keep winning.
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