In this episode of The Prestigious Initiative Podcast, host Chris Beane sits down with Steve Selengut, a seasoned investment manager with over four decades of experience. Steve shares his insights on achieving income independence, the pitfalls of traditional retirement strategies, and the principles outlined in his book, Retirement Money Secrets. Listeners will gain valuable knowledge on generating consistent income, minimizing financial risks, and making informed investment decisions. Tune in to learn how to secure your financial future with expert advice from The Income Coach himself.
Why Income Independence Beats Market Growth: Investing Wisdom from Steve Selengut
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In this episode of The Prestigious Initiative, I sat down with Steve Selengut, a seasoned investment manager with over 40 years of experience and author of Retirement Money Secrets. Steve has spent decades guiding people toward income independence rather than chasing market growth—and his practical wisdom is needed now more than ever.
Here are the key takeaways from our deeply insightful conversation.
What is Income Independence?
Early in our discussion, Steve explained that most people only look at the market value of their portfolios, not the income it produces. He said:
“That income number becomes very important when you want to change jobs, retire, or fund a business.”
He pointed out how the average portfolio today barely yields 3%, and after management fees, investors are often left with little income to use. His approach consistently produces close to 10% without even counting capital gains. This isn’t speculation; it’s strategy.
Steve’s Investment Philosophy: Lessons from His Father
Steve grew up watching his father run an integrated business that included real estate, insurance, and even mortgage financing for homebuyers. His father ingrained in him:
“It’s income that floats the boat.”
This mindset shaped Steve’s investment approach from day one. He started by buying dividend-paying stocks exclusively, focusing on income generation rather than speculative growth.
The Power of Buying Quality Companies at a Discount
Steve shared how he built his wealth by buying dividend-paying stocks that were down at least 20% from their 52-week highs, setting a 10% profit target, and repeating the process endlessly. He explained:
“We bought them when they were down, sold at a 10% profit, and did it over and over again.”
By applying this disciplined strategy, within nine years he was making four to five times his employment salary and left corporate life to build his investment management business, eventually selling it for an offer he “couldn’t refuse.”
Is This Strategy Still Relevant Today?
I asked Steve if these principles work in modern markets. His answer was clear:
✅ Yes—and it’s easier than ever.
Unlike in the 70s and 80s, when buying or selling required calling brokers and submitting tickets, investors today can trade in seconds with apps like Fidelity or Schwab. But the core principle remains:
“Lower prices are opportunities, not problems.”
Portfolio Management Time: How Much Do You Need?
Steve explained that managing an income-focused portfolio can take as little as two hours a week once you’re up to speed. Some days he places trades from his phone while traveling. His emphasis:
âś…Â Be consistent, not obsessive.
The Mindset Shift: Seeing Your Portfolio as a Store
Steve’s analogy for investing was powerful:
“Your portfolio is like a department store. You own a lot of inventory. When prices go up, you sell. When prices go down, you buy more inventory at a discount.”
This emotionless, business-focused approach allows investors to avoid panic during market crashes and instead see them as buying opportunities.
Can AI Replace Human Investment Strategy?
We discussed AI’s role in investing. While Steve believes AI could automate parts of his system, he remains convinced that:
“The AI between your ears is enough.”
He cautioned that automated systems need checks and balances to prevent overtrading during rapid market movements.
The Four Keys to Risk Minimization
Steve shared his four risk minimizers, applicable to any investor:
Quality – Invest only in profitable, dependable companies. Avoid IPOs, options, and speculative plays without proven income.
Diversification – Spread investments widely across sectors. Steve goes further than most, owning hundreds of positions to benefit from any market growth.
Income Production – Prioritize investments that generate income. Steve looks for 5%+ yields on equities and 6%+ on income securities, with many closed-end funds averaging 9-10% today.
Profit Taking – Don’t hold forever. Take profits systematically to reinvest in other opportunities, compounding your returns while minimizing losses during downturns.
Why Closed-End Funds (CEFs) Are His Vehicle of Choice
Steve passionately explained why Closed-End Funds (CEFs) are his preferred tool:
âś…Â Designed for income, not market growth
✅ Pay monthly dividends even when underlying assets pay semi-annually
âś… Trade like stocks, allowing supply-demand price advantages
âś… Managed professionally without forced selling during downturns (unlike mutual funds)
âś… Include diversified holdings such as real estate, corporate debt, and municipal bonds
He emphasized:
“With CEFs, you can be invested in everything with a focus on income rather than speculation.”
The Retirement Money Secrets Book: Why He Wrote It
At 78 years old, Steve decided to write Retirement Money Secrets because he wanted to pass down his system to others:
“I wanted to get this information out there. Income is what keeps people afloat, not market value.”
His book outlines not only his risk minimization framework but also the market and interest rate cycles that determine optimal buying and selling strategies.
The Problem with the 4% Withdrawal Rule
We discussed the traditional 4% withdrawal rule often recommended for retirees. Steve explained why it’s flawed:
✅ It’s designed to deplete your capital to zero over 25 years
âś… Requires selling assets, which risks running out of money
✅ Doesn’t utilize income-producing investments that could fund withdrawals without eroding capital
He emphasized:
“There are safe investments paying more than 4%. Advisors just don’t recommend them because they’re not sexy enough.”
Advice for Young Investors
For listeners just starting out, Steve offered direct guidance:
Get educated – Understand what stocks and bonds actually are before investing.
Avoid unnecessary risk early – Focus on building a solid income foundation.
Start with safe vehicles like CEFs – Diversify broadly rather than chasing hot stocks.
He summed it up powerfully:
“Cash flow is the essence of my approach. Income is part of cash flow. Without it, you’re gambling, not investing.”
Advice for Retirees
For retirees wanting to increase income, Steve recommends:
âś… Evaluating your current portfolio for income generation
âś… Shifting from growth-only investments to diversified income-producing assets
âś… Learning the basics of corporate finance and cash flow to understand why these shifts matter
Final Takeaways from Steve Selengut
âś…Â Focus on income, not just market value
✅ Quality, diversification, income production, and profit-taking are the four pillars of risk minimization
✅ Closed-End Funds offer unique advantages for income investors
✅ Market cycles are predictable in structure, not in timing – anticipate and act accordingly
✅ Education is non-negotiable – understand what you invest in before putting money at risk
Closing Thoughts
My conversation with Steve Selengut challenged many traditional investing assumptions. He reminded me—and I hope reminds you—that income independence is the true measure of financial freedom.
As Steve says:
“If your income covers your needs regardless of market conditions, you’re free. It’s not about predicting markets. It’s about understanding cycles, taking profits, and never running out of income.”
If you want to learn more, grab Steve’s book Retirement Money Secrets and explore his resources on closed-end funds and income investing to build a life of security, freedom, and purpose.
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