Episode Transcript
Alara Sage (00:01.315)
Hello, hello, and welcome to another episode of Wealth Embodied, where we activate and inspire you in wealth consciousness, your creative genius, and your visionary impact. I'm your host, Alara Sage. And today, we're here to talk about something that honestly I know very little about. And so I'm excited. I'm excited to learn from our beautiful guest today. We're here to talk about income investing. I know so little about it that I actually had to ask him what it is. So I'm excited. I'm excited to learn.
Steve Selengut (00:27.895)
you
Alara Sage (00:30.989)
from Steve. So our guest today is Steve Selengut. He's a 40 plus year professional investment manager advisor, our IAIAR, whose current adventure is coaching both individuals and other advisors in creating income independence for themselves and for their clients. Steve, welcome to the show. I'm excited to dive into this conversation with you.
Steve Selengut (00:57.486)
Well, thank you, Lawrence. Nice to be with you.
Alara Sage (01:00.279)
So tell me, where did this come in for you? How did you come about understanding this so deeply and mentoring others?
Steve Selengut (01:09.23)
Well, I came into it at the very early stages of my career and I started mentoring others, you know, much later, you know, but I started primarily, my father had a business and I'll try to be as brief as I can and he, it was a real estate development business, but he developed it in a way that he had several different streams of income coming in.
He had rental properties. He took mortgages. He gave people the money and took mortgages back on homes he sold. He had the development and the sale of the homes itself. He even had a lumber yard that he and his attorney owned that he'd sell the materials to his contractors and so on. So he had four major streams of income coming in. So there was
there was always something going on. And he always emphasized with us as children that when you start to work, it's the income that's important. It doesn't necessarily matter what your title is or how much property you own. You can't do anything without the cashflow. And you'll find that's true of most businesses. The way businesses go out of business is when they don't have significant or sufficient.
cash flow. And I've sort of taken that way of thinking and put it into the investment portfolios that I managed. I thought of them as almost like stores, you know, that we'd have a whole diversified bunch of products on our shelves represented by stocks in different areas like Walmart or other types of industries or services.
and we set a markup, we're going to sell them at this price, just like a store would. People come in to buy them. We don't say, nah, prices are going up, we're going to hold on to this and we'll sell it you later when we make more profit. We don't, we turn it over as fast as we can. So that becomes a source of income, as does the income itself that is produced as a function of the security zone.
Steve Selengut (03:38.319)
Stocks pay dividends. Closed-end funds are a managed portfolio of hundreds of stocks, all of which pay dividends and all of which can be traded. And the fund is a trust that has to pay us 95 % of the income it produces. So it's an income-focused type of an investment. And so then picture the store with 200, 300 of these income
producing things in it and you can buy and sell them and so forth. And that's how I got into income investing and that's how I got my customers to a state and myself of course to income independence where they knew regardless of what happened in the marketplace they'd have enough income to pay their bills, go on vacations, do whatever they had to do. Didn't matter.
Alara Sage (04:34.85)
I that's really powerful. I want to go back to what you said about your father, because when Steve and I first connected, he asked me how I defined wealth, and I asked him how he defined wealth. And my definition of wealth is to be well resourced. And right away, Steve, when you went into the story of your father, I could really feel how he was well resourced. And what you're doing now with these portfolios of creating these different products,
Steve Selengut (04:58.22)
Right.
Alara Sage (05:03.874)
And like you said, they're always available to sell. You're not holding onto them. Like that would be silly of a store, wouldn't it? Where you walk into a store and you're like, I want to buy that. Like, no, sorry. That's not available. You'll have to wait. And, you know, creating all these products that are making different streams of income for you and different ways that you're creating income from those products is definitely well-resourced. And I can see how this absolutely leads to that independence.
Steve Selengut (05:16.117)
Right, right.
Alara Sage (05:33.538)
for your clients, what do you feel is that really makes this methodology unique? Or did we already kind of cover that? We may have covered it.
Steve Selengut (05:43.129)
Well, it's unique when you just think of yourself and when you get your statement or you go online and you look at your portfolio statement, wherever you have your brokerage, the first thing you look at and the first thing most people look at and pay attention to is their market value. And they're led to think that that is the number one issue, that that has to grow.
And the bigger that gets, the more likely it is that they'll be able to retire on time. And somehow it will give them the money to do what they want to do. But the only way it really does it in most people's portfolios is they have to sell pieces of it to get the money to pay the bills. Whereas this approach is totally different. It builds the portfolio so that the portfolio bill produces that income. And it produces...
in whatever climate you happen to have economically. So that's the big difference.
Alara Sage (06:43.776)
Yeah, that's massive. And like you were saying, this is something that you actually want to turn over sooner, you know, faster, whereas most people are just holding on to the shares that they have and they're kind of trying to ride out the market or whatever. And so that flipping it over sooner rather than later and really where the portfolio is creating that in and of itself.
Steve Selengut (06:55.51)
Right.
Steve Selengut (07:00.845)
Mm-hmm.
Alara Sage (07:11.936)
That's extraordinary. Like I've never heard of this and you have completely piqued my interest.
Steve Selengut (07:15.566)
Well, you know, it's again that that same type of a business Analogy where you you know, there isn't a company in the world that wants to see the value of its inventory go up That means they're not selling anything Right, they're not getting any profits. So they're not going to get any cash flow. They're gonna die What you want is to have this constant cash flow that you can reuse businesses use it to
build more stores, hire more people that can sell products and so on. Portfolios take the income that's produced and they add more, they add to the size of their holdings, they add new holdings, all of which are producing more income. So it gets to the point, it gets to the point where if you spend less than 70 % of your income and you put the rest back to work,
you can actually grow your income every year. You grow the amount of capital that's used to produce income. know, like a Monopoly board, each time you get more money in each month, you buy another one, another little green houses, you know, and eventually you got so many houses, you got so much income coming every month, you can do whatever you want. That's the premise. And it's worked. I started doing that when I was, what, 34 years old and 79. I started managing money for other people.
And what I did to get new clients is I showed them my own portfolio. This is the amount of income that my portfolio, okay, is, now let's see here, your portfolio is two, three times bigger than my portfolio and you're getting one third the income. We can make this, we can switch this up so that you're making more income than I am, you know? And that's today, it's,
Alara Sage (09:03.81)
Wow.
Steve Selengut (09:13.762)
the same condition. There's no reason why you can't have income being generated from your portfolio. It's much more important, much more usable than holding on to buy and hold mentality of, know, set it and forget it and hope the market value keeps going up.
Alara Sage (09:35.475)
And as you said, what you're creating are portfolios that are creating income, regardless of what the market is doing, which is enormous. That's an enormous statement. And specifically, you know, with kind of where we are now, the markets are volatile. There is a lot of like uncertainty in the financial systems and structures. So to be able to have that sense of security is really massive for people.
Steve Selengut (10:02.114)
Yeah, I think so. it's not to say that there's nothing guaranteed in the markets. But what you do is you're placing yourself with this diversified field of high quality vetted instruments that are paying a lot of money. So even if one of them goes bust, the overall impact is small. It's a way of actually minimizing the risk, the financial risk of an investment portfolio.
high quality stuff, diversify properly, everything pays you income. And the fourth one, is the most one, the one that's most often not even thought about is profit taking. You sell your winners. Famous people get up there and they say, know, keep your winners or sell your losers and let your profits run is the mentality that Wall Street runs on right now.
when it should be just the opposite. It should be just the opposite. Take your profits, add to your ones that aren't going up to increase the yield of everything, and you'll grow your income every year.
Alara Sage (11:13.89)
I love any direction that isn't the normal. It's usually the right way to go.
Steve Selengut (11:18.094)
Yeah, okay, you're you're kind of contrary and contrarians right I I like it too. I mean if believe me because really My approach my approach benefits from those other approaches Because well, I'm looking for my target five percent profit on one of these funds Probably 75 or 80 percent of the people that
invest in closed-end funds are still buying them and holding them. You know, so they're letting their profits go up and that allows me to get in there and take mine and buy something else, you know, and keep growing my base that's producing the income. So I'd almost be hurting myself if I were to get everybody to do it my way. I guess it would almost create an equal, you'd still be getting plenty of income, but you wouldn't be getting the profits.
Alara Sage (12:08.546)
you
Steve Selengut (12:16.088)
You know, so.
Alara Sage (12:16.994)
The good thing is usually it's hard to get everybody to do one thing anyway, so you'll always have people who are doing it a different way. Yeah.
Steve Selengut (12:22.866)
It's hard to get people to change their mindset. And that's what it is. Well, even wealth is a mindset, isn't it? I mean, you have to, like, for example, I feel that my wealth is, our wealth, our family wealth is adequate, but my wife is more of a pessimist and she doesn't see it quite the way I do it. I'll show her the numbers.
Every month you want to see this month's numbers, okay? And there'll be a lot of buts. know, as like, but we're putting a new roof on the house actually right now, know, but we got that, we got this. And so it's, everybody looks at it differently. But I look, when I look at income, I can tell how long, if I stop working, how much longer, how will that income last?
Are we living on my income now or are we living on the income from the portfolio? That's the important thing. And it's important not just when you're old like me, but when you're young like you and you feel that you want to change things. You want to move, you want to change your career, you want to get out of one business and start another. If you know that you have that constant flow of cash coming in, that gives you
the ability to say, I'm done here. I'm starting something new. I got plenty of money coming in and I can take my time and develop my new strategy, approach, business, whatever. I don't know. I think it's important to get started with income. I started when I got my, I was fortunate when I got my first lump of money at age 25, I started right in with focusing on income.
Alara Sage (14:14.22)
Yeah, I mean, definitely, you know, cushion like that or a buffer creates a sense of security, which enables you to have a relaxed nervous system. So you can be responding rather than reacting to your environment, right? Particularly in those very big transitional states of our lives, because yeah, if you're changing career, if you're starting a new business, that's already bringing a level of stress and potential trigger.
Steve Selengut (14:27.896)
There you go.
Alara Sage (14:39.02)
to your nervous system. So when you have that buffer, you can feel a bit more relaxed, safe and secure as you're making those big transitions. That's really big.
Steve Selengut (14:47.566)
Yeah, and it gives you the ability to look at the broad picture like when the dot com, I don't know if you're familiar, turn of the century when all the tech stocks really started to become big just before in 99, 98, 99 for 2000. And then their prices got blown up so high that eventually it crashed.
The reaction of most people when a crash or like the great recession in 2008, their initial impulse, oh my God, I gotta sell everything. I gotta sell, I gotta sell. When you have the point of view that I have and you already know that, well, everything I have is good quality, everything I have is producing income, this is an opportunity, it's not a problem. It allows me.
I have the income coming, I can buy things now at a much lower price and a higher yield. So I've never sold anything under those kinds of pressures where Wall Street encourages that type of behavior actually.
Alara Sage (16:00.259)
Yeah, and again, that's reacting. That's a reactionary state that generally, yeah, absolutely leads to not what you're really desiring for it to lead to, ironically enough. So with something like this, how much time do your clients work on their portfolios? Is this something that you're doing for them largely? Kind give us a little bit more in depth about how you help.
Steve Selengut (16:03.368)
reaction yeah like you said
Steve Selengut (16:19.886)
I used to do it for them. had 150 families that I worked for throughout the country, some overseas. And I had a staff, my wife helped me a lot. I was working for a brokerage firm and there was the person that took orders from me and she had people working for her. So we had a team to do that many portfolios. Now it's just me doing mine. So I spend...
I spend an hour after the market closes every night to get all my orders ready for tomorrow. they're actually, with today's technology, you can actually place your orders. You don't place them in the aftermarket, so to speak. You just place them for entry tomorrow morning when the market opens. So I get that all done. I'm upstairs doing my work at five o'clock every day.
It's not a lot of time. During the day, when we get off the phone, I'll look and see how my orders are doing, and I'll look and see if there are more profits for me to take.
Alara Sage (17:28.78)
So it's not this full-time job. It's more of kind of a tapping in regularly.
Steve Selengut (17:30.06)
It's not.
Steve Selengut (17:34.069)
Right. I use Fidelity and I have an app and I'll be going to Europe in April and we'll be there pretty much three to four weeks in a month. And I'll do all my orders when we're sitting around for cocktails before dinner. And if we're not in a hot conversation with somebody else, I'll just go into the app, bing, bing, bing, and I'll do my orders.
Today's technology has made it a much less time-consuming operation. And when you look at portfolios, you can put them in a sequential order of what you're looking to see. So I'll put them in as highest amount of profit. And I'll just sell the top three. Bam, that's it, done. I like to sell at least three.
Alara Sage (18:26.338)
you
Steve Selengut (18:30.232)
I take three profits in each of my three portfolios every day.
Alara Sage (18:36.096)
I think, you know, painting that picture of being able to do it from your phone on holiday before your cocktail hour. That's going to really entice people to want to be a part of this for sure.
Steve Selengut (18:45.678)
Well, you know, there are a lot of people the book has sold a lot of copies, you know for a finance book I mean not too many of them sell more than five thousand and we're approaching the six so It's
Alara Sage (18:59.55)
fantastic. So if people are interested in this and they're kind of, you know, wondering how do they take next steps if they're just want to play in their curiosity or how do you recommend somebody starts taking action on this information?
Steve Selengut (19:16.194)
Well, there's not a whole lot of financial education in our schools and things like that. And people, you know, and even when they get older, their only experience with investing is a 401k or if they're lucky, an IRA and stuff like that. And rarely, in those things, they don't really do their own, they don't really do their own. They may choose the types of securities that they're gonna go into.
But I would bet that many of them don't know the difference between a stock and a bond, you know, between an ownership interest in a company and the other side loaning them money for their operation. That's what it is. So I think education is extremely important. And I've tried to put that into my books, an education on what these things are and how they function. But after that, I can't help, you know,
I have always used an income focus. And even when I started out and I was primarily in the stock market, I only bought stocks that paid dividends. So I was always looking for the income. I always diversified and I always had very strict rules as to the quality of the companies I would buy. I never bought an IPO, an initial public offering of a company because I just thought it was too risky.
I'm not risk averse, but I know how to minimize that risk. we talked about quality and diversifying and income. So to get started, I think you got to understand those basics, those fundamentals. You can't be listening to talk shows on TV or the radio and taking tips. This guy talks about how this AI company is
definitely got all the horses to be a success. Well, it's still a startup, you know, it's never made a penny of profit. And even if it does, it's not going to pay you any dividends probably until it's 20 years old, if it gets that far. I read in the news that one of the AI companies went bankrupt just last week. You know, so
Alara Sage (21:35.359)
It's interesting because, you know, the beautiful thing about entrepreneurs is their visionary spirit. And it's rather delusional, which is what makes most, not most of them, but what makes them successful is their delusion and also their failure is their delusion. So, you know, entrepreneurs will be like, this is the thing I can see it. You know, they're, they're all in all the passion is there. That doesn't mean that it will actually become successful. Yeah.
Steve Selengut (21:54.062)
yeah, yeah.
Steve Selengut (22:00.299)
Right. mean, if you looked at the statistics over the years on new issues that go public, it's probably only, I don't think it's even 10 % of them that even become very successful. I mean, you picking a Google or an Amazon or something like that is a very minimal chance. And most people, of course, will hold on to it and then they'll get one of them.
who eventually goes the other direction. And they'll lose that peak, you know, and then it'll fall back and they'll wind up. I used to say most unrealized gains wind up in the tax form on Schedule D. That's where we put our losses, right? On Schedule D. So, yeah, so you have to have a mindset, education, a couple good books.
Alara Sage (22:52.78)
So definitely.
Steve Selengut (22:58.562)
Mine's not the only good book out there. But if you really want to focus on income, there aren't a whole lot of others that use all the streams of income that I do. There are many that show you how to make that income, but they're still buy and hold mentalities. They don't take profits. They don't add that second source of income.
Alara Sage (23:21.632)
And so tell us what the name of your book is Steve and how people can find it.
Steve Selengut (23:26.298)
it's retirement money secrets. Okay. It's primarily on Amazon, although all the other, it's available through brick and mortar stores and ebook only stores. And the audible version is only available on Amazon. They give you a great deal to do that. Yeah.
Alara Sage (23:31.744)
And is it on Amazon?
Alara Sage (23:51.232)
love Audible.
Steve Selengut (23:53.401)
But it's a deal you can't refuse as an author, because it's basically free. And you split it with whoever's doing the audio part. Yeah, it's wonderful. It's wonderful. No, no, I don't like my voice. Don't embarrass me. But I don't like it. And I wanted somebody else to do it. This guy is great.
Alara Sage (23:57.591)
Right. Right.
Alara Sage (24:04.482)
Yeah, that's wonderful. So you didn't do the audio yourself.
Alara Sage (24:11.401)
I think you have a great voice.
Alara Sage (24:17.341)
Ha ha ha ha ha.
Steve Selengut (24:22.925)
guy did it.
Alara Sage (24:24.308)
No, I definitely understand. If you don't like your own voice and then you put it out there on audible, you're probably not going to be very satisfied with it. wonderful. So Steve, you've got the book on Amazon. Are there other ways that people can reach out to you, connect to you?
Steve Selengut (24:27.982)
Yeah, geez, no, I don't want that. I don't want that. So.
Steve Selengut (24:39.766)
Yeah, and most of my contact information is also in the book, but it's, I'm at theincomecoach.net and I have an educational community. It's kind of new. It's called RMS for retirement money secrets, RMS income investing community. And it's on the school platform and it's growing and it's nice and it's, we do.
Q &A's three or four times a month for members and provide them a lot of tools, universes of the securities they can choose from that fit all my requirements and so on. So it's a pretty good thing and it's not really expensive. No. Yeah, it's 30 bucks a month.
Alara Sage (25:21.105)
wow.
Is that free? Small investment. OK. Beautiful. I always think paying is better. I think the human nature is that we don't really pay attention to that what's free. When we pay for something, we tend to pay attention.
Steve Selengut (25:43.658)
Yeah, yeah, if it's free, you get what you pay for. That's what it's worth, you know? So this is as close to free as it can get, though, really. It's not much money. Sorry.
Alara Sage (25:47.98)
Yes, yes, yes.
Alara Sage (25:54.787)
Beautiful. Yeah. Wonderful. Thank you so much. I definitely learned a lot. And again, piqued my interest for sure. I'll be reading your book. And I might even join the community to see what goes on there. Yes. And OK, I would love that. Yes, please do. For the audience, if this has piqued your interest, definitely get the book and reach out. Again, as I mentioned,
Steve Selengut (26:09.154)
That'd be great. I can send you the book.
Alara Sage (26:23.702)
We're in a time, I talk about this often, where the financial systems are really shifting. And these kinds of opportunities where you have well-resourced money, where you have plenty of resource, when you have different channels of resource, these are all going to make any level of transition just more smooth for you. And again, create that sense of security where you can be responding to your environment rather than reacting from a triggered state in your nervous system.
All of those things, know, honestly, just make our life a lot better and a lot easier. So buy his book, reach out to him if you want to join the community and absolutely share this episode because how many people do you know have a portfolio and maybe aren't using this method or people who have been wanting to start a portfolio? What a great way to just start off right off the bat and this income investing. Thank you so much for being here, being part of the audience. I appreciate you so very much.
And until next time, much love.
