Top Tips from Steve Selengut:
1. Avoid Emotional Decisions:
“And investing is really very logical and practical and all that. It’s just if you let your emotions get involved, then you’ve got a problem. So I saved my emotions for the rest of my life, and keep them out of it when I’m sitting in front of my computer making investment decisions.”
2. Focus on Income:
“Start getting an income perspective. And then the second most important thing is when. You’re an investor, and this is the emotion and the love and all that stuff. Set a profit target for everything you own.”
3. Setting Profit Targets:
“Set a profit target for everything you own, you know, and a reasonable profit target not 25% you know. I use in my closed end funds. I use 5% if it gets above 5% unless everything is up 5% I’m going to take my profits, end of story. No questions asked. I’m just going to do it. When I was doing regular stocks, I was my target was 10%.”
SUMMARY KEYWORDS
income, business, portfolio, closed end funds, people, stocks, money, invest, market, buy, pay, years, investment, sold, talk, shares, bonds, stock market, securities, diversification
Steve Selengut 00:00
Nowhere else in your life, would you buy things when they’re the most expensive? Would you go shopping to a store and say, Hey, what’s your most expensive? Whatever I want that. That’s why I want because it’s so overpriced. You don’t do that. But in the stock market, that’s the type of mentality that Wall Street has developed in investors. That’s the way they look at things. Investing is really very logical and practical and all that. It’s just if you let your emotions get involved, then you’ve got a problem.
Debra Chantry-Taylor 00:42
Welcome to another episode of Better Business, Better Life. I’m your host, Debra Chantry Taylor, and I’m passionate about helping entrepreneurs lead their ideal lives by creating better businesses.
Debra Chantry-Taylor 01:01
I’m a certified EOS implementer and FBA accredited family business advisor and a business owner myself with several business interests. I work with established business owners of their leadership teams to help them live their ideal lives using EOS the entrepreneur operating system, my guests come on the show to authentically share the highs and lows of creating successful business, and how they turn things around in their business to create a better business and better life. In today’s show, we’ve actually got an expert who specializes in working with entrepreneurs, and he himself has created a much better life through his business. Today’s guest has written three books on investment, the latest one called retirement money secrets. He’s one of the few investment authors who’s directly managed other people’s money. He’s got 40 plus years of experience of active investing and a philosophy of in retirement. It’s all about the income. Today is going to share with you how to focus on the income, not the market value of your investment assets, so you can truly live the life that you love. Welcome to the show. Steve, lovely to have you here.
Steve Selengut 02:03
Well, Debra, it’s a pleasure to be in New Zealand again. It’s been about five years for me since I’ve been there, and I and you said you’re in Auckland, and I get that’s really I guess. We flew into there, and we flew to from there back to the States, and we spent several days some great restaurants there.
Debra Chantry-Taylor 02:21
Oh, yeah, Auckland is a great it’s a great city, and it’s certainly grown up a lot too. I know that when I first came here, almost 30 years ago, it was a little backwater town, and nothing was open after four o’clock and you couldn’t get a coffee anywhere on a Sunday. But it’s certainly grown up a huge amount since then. It’s become almost like an international city.
Steve Selengut 02:39
It is, well, it sure is.
Debra Chantry-Taylor 02:42
Yeah, thank you. Hey, um, Steve, we’ve just been having a chat before the podcast, but I would love for you to share your story with the listeners, because you, you know, got a few years experience under the belt now, and I’d love to know how you got to, how you got to be the income coaches.
Steve Selengut 02:55
Oh, well, like I said, it started a long time ago, actually a little bit before what I shared with you. So I I started, I started investing when I was 25 I had had a lot of odd jobs and almost a little business, a long, long type business when I was a kid, and I had really selected my parents well, so I they didn’t need any of the money I was making, and they took care of all the education stuff so I could keep it all and my dad was an entrepreneur. He had a vertically integrated business. Does Are you familiar with that term? It means from top to bottom, he sold, he built homes, he sold them, he rented them. He owned the property. He gave them the mortgages. He financed, he financed them, and he did the insurance. So he had four different streams of income. And what he told me, what he he told me, was that he was going to he was suggesting to me that I give him 25% of the money I was making so that he could have it invested for me, and then go from there. So, okay, that’s that was fair enough. And he always emphasized income. He put it the way. He put it, sort of whispering to the side, I couldn’t keep your mother in the state that she’d likes to be in if I didn’t have a lot of income. You know, it was one of those things. Don’t tell her. I said that so, you know.
So at 25 and I, my brother, went to an Ivy League school, and I went to, I don’t know if you ever heard of Gettysburg College, but Gettysburg, Pennsylvania, you probably have heard of and I went to college there, so it was much, much cheaper than the Ivy League. So at 25 I got this big folder on my birthday table where we were having this little celebration, and it was full of stock certificates, and this, this is what come of the money I put away and the money that he didn’t spend on education, and he plopped it down and said, Here, son, now this is your us, your responsibility. Don’t lose it. So then I studied and I studied. I learned about stocks, and I learned about the markets and how they cycle up and down and all that stuff that a lot of people today don’t pay attention to, because all they ever see is the money is in their retirement plan, particularly in the US. People have a 401K, they don’t even they. Some of them probably don’t even realise they’re in the stock market, you know, so, so I got my start early, and at the same time, I was commuting to New York to this what really I was convinced, my wife was convinced, was a dead end job, and I was making nearly five times the money I was making at my job, investing, you know, dividends coming in, profit taking. I was just, you know, I wasn’t taking any risks. Everything was a dividend paying stock, you know, I wasn’t taking any gamblers.
Steve Selengut 06:13
So I, I convinced two of my friends to let me manage some of their money, and I got my RIA registered investment advisor designation. Can’t register with the SEC in the United States, so I did that. I got these two customers, and I started this business of managing other people’s money. And I did that for more than more than 40 years I had a broker. I worked for a broker. They did all the trading. I told them what to do. They did it. So when I sold the business last, last May, not this past May, but the one before. So it’s almost almost 14 months now, and and I sold it for, you know the expression, an offer you couldn’t refuse. It was the equivalent of about six years income from the business. I said, Okay, I think I’ll do that at my age. I was what I’m 79 I was 78 when I did that. Anyway, the reason I could do that and not have the income I was getting. I was making a lot of money, and we were spending a lot of money, like we traveled to New Zealand, you know, just did what we did, what we wanted to do. But when they buy a business for me to give you all the money up front. In fact, I still don’t have the final payment.
You know, 14 months later. So if you’re going to take your lifestyle making what I was making and say, here’s this amount of money, well, I can’t invest that and make that kind of money. You know, what am I going to do for the next year if you didn’t have a portfolio that was generating as much money as you were making from your business, you wouldn’t have been able to take their offer. You would have had to borrow money. You would have, I don’t know how you would have, how you would get by and not change your lifestyle if you hadn’t set it up just like I had on a on a much smaller level, when I first started the business, I was already making five times my salary. When I sold my business, I was pretty much. I was making within, you know, a very reasonable amount, within 25% of the same money from my investments. So I was able to take the deal, and that’s, that’s what I’m all about now, that’s what I’m trying to teach professional people, executives, the type of people I get in my coaching business. I started a coaching business when I when I sold, when I sold that business and wrote the book we we talked about.
Debra Chantry-Taylor 09:03
Now the listeners haven’t heard about the book yet, so the latest book that you have written, what is that called?
Steve Selengut 09:10
That’s called Retirement Money Secrets, and they can probably see it over my shoulder back there. It’s black and blue letters and big golden letters, money right there, so you can’t miss it, you know. So I did that, and what I’m what I’m all about now, is looking at people’s portfolios with them, not only checking out how risky it is, or, you know, trying to minimise the risk unit, but also showing them how to transition into something that pays them significantly more income than what they are used to, or what they’ve been told they can achieve, whatever you know, the average portfolio, and if your listeners were to take the time after we get done here, to go in and look at their portfolio statement. Dollars, I would bet that most of them are making less than 3% on their investment in actual income. Not talking about the up and downs of market value, I’m talking the physical money that you could spend if you wanted to or if you needed to. So it’s, it’s, it’s not a pretty picture for most people, and we can change that. It’s easy. It’s easy to change. And the key thing, when you look inside of what I do, I’m really using the exact same securities that they all love so much, the ones they follow on the New York Stock Exchange. It’s the same stuff. It’s just in a different package.
Debra Chantry-Taylor 10:37
And I think you made a really valid point. I think that every business owner kind of goes into business with the expectation they’ll sell that business and they’ll walk away with a big board of cash from it. But it’s very rare that you get somebody that comes in and purchase a business outright. You usually do have that buyout period, a time frame, where they’re actually going to, you know, pay that money over time. And I, I guess I hadn’t really thought about it. But you know, making sure that you don’t have to go backwards in lifestyle whilst that transaction takes place is really important, isn’t it? So? So yeah, the average portfolio makes sort of three to 4% what is the biggest mistake then that people make in terms of investment? Why does, why is it so low?
Steve Selengut 11:17
Well, it’s it. It’s low because of two well, one thing for sure, they don’t focus on income again, particularly in the United States. And I don’t know how the business press operates, where you are, but you know, if the market goes down, that’s always bad. Market goes up. Oh, we’re so excited it. It went up. And the only thing they focus on, the only thing you ever hear them talk about, is this, the market averages and the direction they made the market value of things. Look at this stock, it’s going through the roof. You should buy more of it, which is, of course, crazy. You wouldn’t Nowhere else in your life. Would you buy things when they’re the most expensive, would you? Would you go shopping to a store and say, Hey, what’s your most expensive? Whatever I want that that’s what I want, because it’s so overpriced. You know, you don’t do that, but in the stock market, that’s the type of mentality that Wall Street has developed in in investors. That’s the way they look at things. So, so that’s, that’s the most mistake they’re focusing on market value instead of focusing on income production.
Debra Chantry-Taylor 12:35
And that’s really the whole thing about your book, isn’t it’s like you talk about that the market value fuels the ego, income fuels the yacht. Tell us a bit more about that, that philosophy.
Steve Selengut 12:45
Exactly that’s, that’s what it is that’s, that’s exactly what how people approach investing. They want that market value to go up. You know, they’re so excited, and they can tell their buddies at the golf club or at the bar. Look at my Nvidia. Look at my Nvidia. It’s worth so much money, and it doesn’t pay a penny in income, not a penny. I don’t know if the company’s ever turned a profit yet. I don’t I don’t really know about because I don’t invest in things like although in the securities that I invest in. The video is in there. But, you know, they focus. That’s the thing that that that focus is, is where it’s at. Let me tell you a little bit about the types of securities that I use, because I’m certainly not against the stock market. I’m for the stock market. I love stocks. That’s how I got where I am today it was stocks, but I looked at them differently. I looked at the dividends they paid me and the opportunities they gave me to take profits, just like if I was running in a department store, just like I was running an everyday Mom and Pop grocery store or a pharmacy or whatever.
People come into your place and you have a markup on your goods, so you’re gonna make money when you sell them. That’s what I do. I put a target profit on everything I own, and my target is reaching. It’s a variable target, depending on how things are going. I sell it and buy something else but the security I use, which is kind of exciting. It’s really the oldest type of fund on the planet, and I think it was developed the in Amsterdam, they say they’re the ones that developed it, and here we say we’re the ones developed it, but it’s called a closed end fund, and it’s a trust vehicle. And a trust vehicle a pass a pass through trust like you would when you do your estate planning, you would put something that where the income from the trust goes to the beneficiaries. Well, the income from these securities, these closed end funds, 95% of it must be paid out to shareholders. So it’s job. The job is a fund managers. This is to take the same securities that people invest in in their 401, KS or IRAs or whatever. I don’t know kind of retirement plans you guys call yours, but.
Debra Chantry-Taylor 15:09
Superannuation or KiwiSaver.
Steve Selengut 15:11
Yeah, KiwiSaver, that’s cool.
Debra Chantry-Taylor 15:16
Yes, but it’s managed by um, fund managers. You don’t get much say in it, but you can have a little bit of a say around whether you want to go, you know, high growth, or you want you want to be more.
Steve Selengut 15:23
You can label what you want to do, yeah, and just that’s the same. Most of them are like that. But the same securities that are in there are inside these closed end funds. Like I can have a closed end fund that’s just in IIA, you know, the automatic processing stuff, or just in the energy sector, or just in healthcare. So what I do is I, like I said, I treat them like a department store, and I have a whole collection of them there in my portfolio. So whatever is happening, I’m going to feel it, I’m going to see it, I’m going to be able to touch it. I’m going to be able to take advantage of it. I’ll be able to take advantage it, of it when it goes up by selling it, and I’ll take advantage it one goes down by buying it, you know. And it’s not, it’s not trying to predict where the market’s going. It’s just taking what the market gives you.
Debra Chantry-Taylor 16:12
And I suppose, in very simplistic terms, I remember when I bought my first investment property, um, having always bought homes that I wanted to live in, you went, I always went into a home to see if I could live in it. But when you buy an investment property, it doesn’t matter whether you want, you know, you could live in it. It’s actually about the return that that property will give you. And I think the first investment property I made the mistake of, I wanted it to be a beautiful home that I thought, you know, somebody could live in, but it wasn’t great for the investment returns. The second one we bought was very much more around. It didn’t matter whether it was something that I could live in, it was like, Was it something that actually had a market value, that could produce good income for us, that we actually made income from it? And I suppose that’s similar in terms of your investments, right? You’re not looking for the ego thing, which is, look at the beautiful house I live in, a look at the stocks that I have that are worth this much, but actually, what? What return are they getting?
Steve Selengut 17:01
What they give you, exactly. And that’s and that’s how my dad did his real estate business, and that’s how most Realtors real estate people do. If they’ve got a bunch of apartment houses, they want to keep them filled up with people who are paying rents, and they want to get more in rents than they’re paying in mortgages and and maintenance, you know.
So it’s the same thing, but stock market and particularly closed end funds, have a whole lot less maintenance, and you can do the real estate in there too. I mean, there, there are dozens of closed end funds that specialize in real estate investments, you know. So that’s what I discovered. I discovered them early on with regard to bonds and mortgages and income, real estate, things like that. I used them early because it got so frustrating with dealing with your broker and getting markups when you wanted to buy a municipal bond or sell a municipal bond and it wasn’t, y ou couldn’t do it instantly, you know, you had to wait for the quotes. And the brokers were making money in both directions. You know, there was a markup on each side, and it was very difficult.
Steve Selengut 18:14
And then, and then they started. We discovered. We used to call them Unit Trust, corporate bond, unit trust. And then we had Ginnie Mae’s for a while so that you could actually but even then they weren’t liquid. You had to get a price and do the same for but then somehow I happened on one of the closed end funds, and I looked inside and they said, Wow, this thing is paying 7% and it’s got a whole portfolio full of corporate bonds. And then I went even further, and I said, Wait a minute. Wait a minute, this one over here has a whole portfolio full of municipal bonds. Tax Exempt municipal bonds. Now in the United States, that was a pretty big deal, because some of my customers were in pretty high tax brackets, you know.
So instead of buying them these, you know, $20,000 worth of a Port Authority bond at whatever it was yielding, I could buy portfolios of diversified portfolio of bonds, an d say, here, you got, you got, you got 376 bonds, instead of just one or two, and they pay, and it pays you a higher yield, and it’s E and if it goes up in price, we can sell it just like that on the market. We don’t have to go through all this stuff. We have to go through, yeah, so I went, I just and then right after the Great Recession, we called it in the US back 2000 oh 808, that crash. In the aftermath of that, the stocks just went straight up for almost 12 years, pretty much up until up and up until the covid crisis. That was the first significant downturn we had. Was in 2020, there were a couple little. Ones, but nothing major. So that that during that period of time I convert. I used to go on buying things when they were good companies, when they were down like 20% from their I had, I had a algorithm I used.
But the things are getting, they got so high and so high that the only ones that didn’t go up were the bad companies that you didn’t want to buy. You know. So I said, I got it. Let me see if they’re Let me see how the closed end funds are for equities. And it turns out they’re just as good and even better than than that, because the biggest yield you’re going to get on dividends and stocks is, you know, four or five 6% but you know, in a portfolio of closed end funds, you’re going to be getting over 9% right today, you know? So it’s it, but it’s the same stuff. It’s the same the same juices inside.
Debra Chantry-Taylor 20:57
So I want to, I want to go back a little bit, because I’m just thinking as I’m talking to you, is that we’re often kind of guided by our parents and our parents views on money, and our parents’ views on how you should invest. And I know that my parents were very traditional. They didn’t have a great retirement, and they never really invested anything other than property. And so as a consequence, it’s kind of a little bit become the mentality for me in terms of the way I view things. And they were always really nervous about stocks and shares. You know, they used to always put the fear of God into you about stocks and shares because they didn’t understand it. But I think a lot of people have that concern. It’s like, so what happens when the stock market crashes and that, you know, do you lose all your money? So for people who are who perhaps haven’t taken that step towards looking at other ways to generate money. What would you say to them?
Steve Selengut 21:47
That’s a very good question, and I got to tell you, my dad was the same way. He never owned a stock. He had the exact same feeling. He was into real estate, and that was it. He knew real estate, and that’s what he did. And I had that background, but I saw it more as the as an income machine, and I made the stock market my income machine. Stocks and bonds, their ownership. You have you have ownership and you have debt company. Companies go on, they do this, what they call an IPO, an initial public offering, where they sell their billion dollars of shares to the general public, and then they also borrow money in the form of bonds from the public and from other financial institutions and so on. So they have two sources this money, and then they take that and they build their business, and they either succeed or they fail, you know, so I never was interested in going after those possibilities. I wasn’t trying to find a Google or a Microsoft or a video or something like that, because when you look at the statistics and IPOs, you know, seven or eight or even nine out of 10 fail.
You know, there aren’t that many Googles out there, you know. So I never did, I never went there. I had I my basic principle of minimising my risk. And that’s what this question is really about. It’s understanding the risk in the types of securities or investments you make. I mean, what’s the risk in real estate? A government that wants to plow down your your area and build a road? You know, there’s, there’s risks in real estate too. I mean, they’re, they’re real. High mortgage rates where nobody can afford to buy it, you know, there’s, but in the stock market, they’re very real. So I set up quality checks on stocks that I would deal with, companies that I would build, they had to be in business for five years. They had to have a rating of b plus or better by Standard and Poor’s Corporation Standard and Poor’s used to publish a guide every month and would list these things so you could actually get the information you needed. You don’t. They don’t do that anymore.
Debra Chantry-Taylor 24:10
So you know, on an individual basis, is that right? So now you’re looking at everything and going.
Steve Selengut 24:14
Well, the S P doesn’t, the S P doesn’t do that on an individual basis. But I don’t look at individual shares anymore. Anyway, I look at funds, and I’m looking at the funds, but the same way, they got to be in business five years, they got to be paying a steady, stable distribution rate, you know, what? What are they invested in? Are they all? Are they, you know, they all in one country? Are they on one, one sector of things, and if so, how many different shares are inside they have, for me, they have to own at least 50 different positions inside. So that’s 50 companies if they’re in their stock market, and at least 50 bonds if they’re if it’s a corporate bond trust. The average. Huge ownership on the ones I own is like two or 300 300 on the income side, 200 on the equity side. So you have to look at the quality issues, and that’s at every quality control you put on reduces the risk a little bit diversification is both. Is also a control mechanism, both in the quality area, to see if the company itself, is this the buggy whip manufacturer that went out of business when we when the auto was discovered, or is it?
Steve Selengut 25:32
And nowadays, you could probably do the same analogy with electric cars, but, you know, but that’s the type of thing you you try to minimise your selection universe to just those that meet particular quality requirements. That’s what I do, diversification. What’s inside this thing? In the closed end funds in particular? How many, like I said, How many companies are inside? How many different bonds? How many different things do they own? So that’s quality diversification. Do they produce? Are they giving me as much income relatively as they are their chief executives? You know, if they can pay those guys millions, they can pay me 5% for my money. You know, I don’t buy anything. I won’t invest in any, any closed end fund in the income area that doesn’t pay at least 6% and I have over 100 of in my over 100 of those meet these requirements in my selection universe, and I have a nearly 100 equities, and they’ve got to pay at least 5% the average today is in the 9% range for the for both of so it’s pretty, pretty good. So that’s and I guess the third thing for risk minimisation is more personal thing, how people can prepare themselves and protect themselves from that crash, like the mini crash we had this past week.
You know, you got to take your profits. That’s what this is all about. You know, don’t worry about the taxes. Don’t worry about anything else. This is, you know, a gift from the investment gods. There was such a thing, you know, it’s just like if your boss came up to you and said, hey, you’ve been so good this year I’m going to give you a $10,000 bonus, you know, oh no. You’re not going to say, Oh no, I can’t do that. I’ll have to pay taxes on it. Well, if my stock is up $10,000 today, it’s the same thing as that bonus. I’m going to take that $10,000 and I pay tax on that, so be it. But I’m not going to sit there and watch that $10,000 disappear like that when planes fly into an office building someplace, you know? I mean, so that’s the type of mentality you Yeah, you have to have the right mentality to do to be in the stock market. You can’t fall in love with anything. You’re only allowed to have one love in life, and it’s not the stocks, you know. So you know. So there’s a lot of things you can do to protect yourself from the risk associated with investing, but you got to learn.
Debra Chantry-Taylor 28:20
So its been like business in some respects. I think when some sometimes, when people go into business for the first time, they are trying everything in their power to kind of minimise tax and almost become obsessed with it. And I always say, actually, if you’re paying tax in your business, that means your business is doing really well. Of course, we want to look for ways to minimise it, but we don’t want to spend a huge amount of time, effort and energy, because actually paying tax means everything is going really well, and that’s not a bad thing.
Steve Selengut 28:47
Absolutely, yeah, I mean, I my, my accountant shakes her head at me, and she says, How’s so you know, you’re, you’re done with this business now, and we’re going to, we’re getting the last payment. You’ll be done with taxes. I said, Yeah, but, um, my coaching business is doing pretty well. Oh, geez, so good.
Debra Chantry-Taylor 29:09
Hey, look, it sounds for maybe for people who aren’t very familiar with this, it sounds like it requires quite a lot of time and effort to do this, but I’m guessing that this becomes easier over time. And once you’ve got your methodology and diversification and you’re looking at the right things, it becomes easier, I guess, does it?
Steve Selengut 29:27
Yes, what she said, It’s That’s exactly right. It starts off saying, Oh, my God, I can’t, you know, I have people tell me. Well, how do you pick one from these? You I give them. I give them, give them my list. I don’t give it to them, but they get my list. Well, how do you select 10 out of here? And I said, you gotta remember the department store illustration. I say to them, they’re all the same. In a sense, they’re all the same. They’re all high quality. They’re all well diversified. They. All go up and down so you can trade them. You know, it doesn’t matter. Just a different just pick different managers, you know, different companies. You got Gabelli, you got Nuveen, you got Pimco, you got BlackRock. You know, pick something from each of them, different sectors, different types of securities.
You diversify. And you’ve got diversified, diversified portfolios, and that’s how you do it. Don’t fret over the small stuff, you know. I mean, just you know, feel comfortable. Know what know you’re diversifying. You already know about the quality. You know you you’ve got the measurements what you you know, these things have been selected by me, and those are the measures I place on them. So go ahead, you know, go and then you’ll get used to it, and it’ll be a matter, you know, I don’t think twice about buying something I just sold a week ago. You know, still, still good. You know, it’s and, like, exactly, like you said, it just in a matter, in a matter of month, months. I mean, I have, I have clients who put me on a retainer so that they can speak to me every month for a year, after three or four months, I just don’t hear from them again, you know, maybe they send me an email. What do you think, you know, and is this something we should worry about, you know, and stuff like that.
Debra Chantry-Taylor 31:22
Practice makes perfect, right? I suppose, just with everything in life, the more that you do it, the more that you continue with consistency, the more you’ll get the results.
Steve Selengut 31:30
And investing is really very logical and and practical and all that. It’s just if you let your emotions get involved, then you’ve got a problem. So I saved my I saved my emotions for the rest of my life, and keep keep them out of it. When I’m in sitting in front of my computer making investment decisions.
Debra Chantry-Taylor 31:53
Makes perfect sense, okay, so you’ve written a book that will actually help people, and I’m kind of assuming that even though obviously you’re based in America, all the things you’re talking about American every every country has got similar types of bonds, similar types of closed end funds might be called something slightly different, but they’re still going to be there. So those principles apply across it. You’ve talked about some of the tips you already have in terms of diversification and looking at it from a standard and pause perspective and other bits and pieces. What are the sort of the three top tips you would say to people who are listening, who might think, okay, either I’ve never invested before and I want to take a look at it, or I hadn’t really thought of it in this way, and I want to sort of reap re approach the way that I actually look after my investments. What do you say those top three tips are from you, Steve.
Steve Selengut 32:38
And does that include or not include the book?
Debra Chantry-Taylor 32:41
Well, I think the book should be the first thing, right? Because I’m getting the same huge amount of gold in there. Yeah.
Steve Selengut 32:47
Yeah, It’ll, it’ll tell you pretty much all you need to know to get started and to do it yourself, if you’ve have, if you have the time. And of course, you can always talk to your financial advisor, and if you hit him over the head enough, he might actually do it this way, okay, but you might have troubles finding one also.
But that would be the first thing to do, is to do that and think about and then. And there’s two other things that I would say that you you should do, particularly if you’ve already invested, you’ve got a portfolio, or you’ve got an inheritance, or you’ve got a parents that you want to make sure they know what they’re doing. You know, is to start looking at things from that income perspective, instead from instead of from market value perspective. Yeah, you know, sure, Charlie, the market’s up, and my portfolio is now worth 40% more than it was last year. But how much spending money would I have if I, if I decide to quit my job today, you know? How could I? Could I get by? You know? So so get a focus make and make your professionals start to focus on income for you and the United States, there’s this thing they called a 4% rule, that when you are in retirement, you’ll be able, you you’ll you’ll probably spend 4% of your of your portfolio each year. You know, whether the market’s up or down, it’s 4% of course, it’s kind of hard once we have an up year, the 4% on that is bigger than the down year. They might not be so happy, but anyway, but why would you have a 4% rule and then design a portfolio that only pays about 1% or 2% of income? Why not design a portfolio that makes at least 4% maybe more, then the person doesn’t have to worry if the market’s up or down, and has the same amount of money coming in, a growing amount of money coming in.
So that’s the thing. Start getting an income perspective. And then the second most important thing is when. You’re an investor, and this is the emotion and the love and all that stuff. Set a profit target for everything you own, you know, and a reasonable profit target not 25% you know. I use in my closed end funds. I use 5% if it gets above 5% unless everything is up 5% I’m going to talk. I’m going to take my profits, end of story. No questions asked. I’m just going to do it. When I was doing regular stocks, I was my target was 10%.
Debra Chantry-Taylor 35:37
But still, I love, I love the philosophy. It’s a very, very different way of thinking about it. Yeah, it means that you’re actually consistently thinking about the revenue rather than just the the value of the assets.
Steve Selengut 35:47
And there’s an, you know, there’s another part of that if you really want to understand what’s going on on the macro scale. And it’s a little bit of a conspiracy theory type thing, but not really. It’s really very true in the real world of financial advising, the financial advisors get paid based on the market value of the portfolios they manage this type of security and most income securities don’t grow in market value like the stocks do. So it’s even if you get a model portfolio geared to your age of 58 or 63 or whoever you are, it’s going to be a model portfolio that doesn’t produce any income. So understand where they’re coming from and talk to, talk to, talk to them about talk to them about income.
Debra Chantry-Taylor 36:48
Yeah, absolutely perfect. Hey, look, see, that’s been really helpful. Um, I must admit, this may certainly challenge me in terms of my thinking, and it’s certainly maybe I’m 54, in a couple of weeks time, so I’ve got a little bit of time on my side still, but I’m going to have a look at what we actually invest in, how we invest in it. So thank you for that. Really appreciate it.
Steve Selengut 37:06
Take a look at that income number.
Debra Chantry-Taylor 37:07
Um, go, yes. I’m going to, so, um, just for this, for the further listeners here, well, I just want to sort of reiterate, so we’ve got the Retirement Money Secrets, and we’ll put a link to that book in in the podcast notes. You know, think about, yes, the income rather than the value of the assets. And I sort of have a formula for the way that you actually choose the way that you invest as well. So it’s not a an ad hoc type basis, but it’s really you’ve got take the emotion out of it. Your emotions should be safe for other things, not for your investments.
Steve Selengut 37:36
Exactly.
Debra Chantry-Taylor 37:37
Perfect. Hey, look, Steve, thank you so much. I really appreciate your time. It’s been a pleasure to talk to you, and I’m also really thrilled that we have a somebody from the USA who’s actually been to New Zealand that makes my heart think.
Steve Selengut 37:49
I actually even want to when, when we’re when you shut off. I just want to tell you about one, one of my experiences there that I still remember vividly.
Debra Chantry-Taylor 38:01
Why don’t we share that now? Do you mind sharing it with Elizabeth?
Steve Selengut 38:04
I don’t know if you’ve ever done this, and I’m not sure exactly. I think it was in this, the low, the South, southern island. We went to this place, and it was way up in the mountains. It was a beautiful drive up a mountain road, you know? And it was great. We got to this place, and it was a, sort of the head of a river, and there was a, there was like a bridge across the river, and if you wanted to, you could actually jump, bungee jump. Yep, bungee jump. I so that’s what it was. But we got into these huge black rafts with big engines on them. And we were, we had life jackets on, and we were all buckled up, and we were actually, I think we were going up, still going up river, in the into things, and it was like this, and this in between rocks and stuff. And it was breathtaking. It was so beautiful. It was so exciting. And then when we got back at this other place, there’s a helicopter waiting there. So they put us in, I guess it wasn’t in more than one helicopter, because there were at least two boats. So we got into the helicopter, and then we drove, we flew in the helicopter, I you know, all the way back to wherever it was that we had originated from before the bus ride, you know. So we didn’t go back to the busses. We went all the way home, so to speak.
Debra Chantry-Taylor 39:26
It was just you fly over glaciers on the way, or over the mountains.
Steve Selengut 39:29
We probably did, you know? It was over mountains. I don’t remember that specifically, because I was just hanging on, you know. But I don’t like heights, but it was exhilarating. The whole experience, is very different. It’s and New Zealand and Australia. I found equally fun, wonderful. But the Pete, the people and the land, are totally different. They’re just really no. A real, you know, similarity. It’s kind of interesting.
Debra Chantry-Taylor 40:03
We do get lumped together because we’re close together. We’re actually very, very different. And I, I actually have three passports. So I have a British passport, I have an Australian pass by, my New Zealand passport, and I’ve lived in all three countries. And so every single one is very, very different. And yes, Australia and New Zealand that we get lumped together just because we’re close, but we are very, very different as well.
Steve Selengut 40:21
I never, I never make that mistake anymore. Excellent. And I do tell I’m really pleased. I do tell people they should go visit. It’s really great there. Thank you.
Debra Chantry-Taylor 40:30
I appreciate that. Make my heart sing. I’m a kiwi these days, and I do love our country. So thank you for that. And again, thank you very much for your time. It’s been absolutely pleasure. Maybe we’ll see you again one day down here in Little old New Zealand.
Steve Selengut 40:40
That’s fine. I wouldn’t doubt that we get back there again. Long as close to health, the health stays where it is, you know, knock on wood.
Debra Chantry-Taylor 40:48
Perfect again. Thank you so much, Steve. We’ll talk to you again soon.
Steve Selengut 40:52
You’re welcome. Great talking to you.
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Debra Chantry-Taylor
Certified EOS Implementer | Entrepreneurial Leadership & Business Coach | Business Owner
#betterbusinessbetterlife #entrepreneur #leadership #eosimplementer #professionaleosimplementer #entrepreneurialbusinesscoach
Certified EOS Implementer New Zealand
Certified EOS Implementer Australia
Certified EOS Implementer UK
Certified EOS Implementer NZ
