Proven Strategies for Financial Independence

 Welcome to the podcast, Steve. I'm so excited to chat with you today to help listeners gain an understanding about retirement, spending money, all of the things. But before we dive into that, tell us a little bit about yourself and what sparks your passion. What sparks my passion? I, I really have grown up in an investment orientated community, you know, when I, when I was young, my dad had a business, he was a real estate developer, builder, and other things he and he had he had a very big emphasis on having multiple streams of income. So if, if it wasn't a good time. For building houses, no demand, at least he had the rents from the ones previous and he had and he had interest coming in and mortgage payments from the people he had sold things to. And he had other businesses like insurance and a lumberyard even for builders and stuff. So he had a vertically integrated Operation I, I learned what it was after I went to college and took a couple courses, but his emphasis was always, I think, I mean, even when I was a kid, when I was working part time jobs or jobs in between semesters and college and so on, he always. Took a piece of it and said he was putting it away and investing it for me. Then all of a sudden at age 25, I got it all back. So I've always been an investor. I've always been income focused and I've always really gotten a kick out of The trading mentality where I, when I first got portfolio, I looked at all the charts and saw how a company like IBM or, or Exxon Esso at the time, go up and down and up and down and up and down. And I came up with the idea, you know, and they're all dividend payers. They are all big board companies. And I said, you know, what if. Every time one of them went down, you bought it and then you know, it went up 10%, you sold it and did it again. And I finally found where the actually the stockbroker that I put my. Well, I actually had stock certificates. Have you ever seen a stock certificate? No, I have not. No, no. Your generation never seen. We used to get stock certificates from the companies. Do that, you know, so anyway I'd studied, all this movement and I figured, you know, if I buy shell oil today and it goes up 10%, why, and I see the chart, it's done that 100 times before and every time it's gone back down again, and then it's gone up again. And each time it's a higher low and higher high. I'm just going to put a target on every one of these things and when it gets there, I'm going to sell it, do it over again. In the space of six or seven years, I was working, I was commuting in New York from North Jersey working for a life insurance company. And. Within five, within when I was 25 and seven or eight years, I was making five times my salary trading and from the dividends and the the income I was receiving when I was taking profits. So I said, well, I don't need these suits anymore. And I, and I don't, I certainly don't need to get on that bus every morning and go to the city. So I told my wife that I was leaving it and starting a new business. Unfortunately, she was employed and making a good income herself. And she's as, as a paralegal. So I started, I found two guys, two of my friends, they said they'd give me money. I can manage for them because I showed him my results over the years and how I'd grown my portfolio to a significant level. And, oh yeah, we were interested in that. And it, Was that simple? The first two clients were very easy. The next few, not so, not so much. Cause you had to, you had to show people your track record and do this and do that. And push the clock forward another 44 years. And in 2023, I had 110 million of other people's money under management and I was. Making a significant amount of money on that and I had a portfolio that was telling me, Hey, I'm making you more money than you're making managing other people's money. Time to sell and that's what we did. That's my story. You know, I've always been in the financial world. And I've been supervised by all the appropriate entities and I've always felt really, really good about looking at somebody's portfolio and saying to them, you know I can help you make more money than that. And not with taking on additional risks, not with any fly by night, speculative type things, just with good quality securities that generate more income than those that you have now. I sold the business and now I'm a, now I'm an income coach. I call myself an income independence coach. What does income independence mean? Income, when you can sit back and say, I really don't care if the market crashes. If there's a big correction, I don't care if interest rates go up, it will not have a negative impact on the income that my portfolio is producing for me. And now I can go a little further than that and say, in fact, if either of those things happen, it'll help me grow my income and grow my working capital. Even faster, so that when I hear about the market going up and down, I'm not, I don't have an agenda either way. I don't, I know that if it goes up, I'm going to have profits to take. I know if it goes down, I'm going to have opportunities to buy things cheaper and that's, that's what it's all about, really, and to build an income portfolio, on top of that, you're focused on the income you're generating, you recognize that there are two distinct streams of income that you can develop. The one is called base income. That's what you're going to get. The market just stayed the same for 20 years. The income produced would be the same because dividends and distributions are the same, you know, theoretically. And so if nothing happened, you had your base income. In many circumstances, the market gives you the opportunity to capitalize on the gains that it produces. Most people don't do that. Most people want, Oh man, I'm rich. And then, you know, a year and a half later when the market, Oh no, I'm not rich anymore. Whereas an income focused investor has taken those profits, turned it into more capital, producing more income, and now he's got an opportunity to do it all over again. I like that. So as a coach, you pivoted, you're not managing, you're not an advisor. As a coach, what does that look like? What does that look like for somebody to work with you? I look at I look at three things. I you know, first they have, they have to know a little about me, about my strategy, my strategy is totally different from mostly that they know of. Not many, no, no professionals that I know of are focused on generating income for their clients. They want, they get paid on AUM. Their bosses get paid on AUM. They want them to grow the amount under management and, the income it doesn't work that way with an income based portfolio, you know, so what I look at and what I talk to people about is, we'll look at your portfolios and we'll look at the quality of what you own, we'll look at how well diversified you are, we'll look at the income you're producing and we'll see if you've been taking your profits or not. And by looking at a portfolio, those things are all pretty easy to judge with the experience I've had in both the stock market, the bond market, and, and now what we call the closed end fund market. It's a fund different from ETFs and mutual funds, which we can get into later. So I look at what they have. I asked them to come with any questions they have of me after reading a book or what my background is. Most people will come to. An investment person and at least have an idea who he is and what he does. You know, they've watched some podcasts or they've read the book or they've read the book reviews, they've done something to check me out before they're going to give me, you know, a couple hundred bucks to look at the portfolio. So they have questions. So we have a portfolio review. I answer all their questions. And then if they're convinced that they want to transition from a 3 percent income portfolio, which is probably a little more than most people are making. To an eight, nine, 10 percent area, you know then we come up with a plan, you know, we're going to do this, this, this, and this. And if you get all that done, we'll talk again, and then we'll do that, that, that, and that, and then you'll be on your own doing it yourself. And so that's, how it goes. I like that. Who would be an ideal client for you? I, I really think that, well, I got, I got started investing for income when I was 25. I don't think it's a bad idea. I mean, young people should certainly have more of a, an exposure in the stock market. Because that's where real growth is going to be more likely to occur faster. However, they have to understand that they have to take their profits in order to secure that. So they need to be taught, they need to have targets and then they can reinvest. But as people get older or wealthier, you know, once you reach a certain plateau, you know, I don't know how many millions that is. When I was young, a million was, Probably that plateau. You didn't need much more than that in the 70s. You know, today, I don't think people think of a million dollars as enough to retire on, you know, not if you want to see the world, certainly, you know, so, but once you get to that point. That's where you say, wait a minute, wait a minute. I don't have to play this risk game anymore. I don't have to try to pick the next Microsoft because, you know, I've got plenty of income and I don't have to do that. I've got this. So it could be almost anybody. The majority of my clients are over 50. I mean, I've had a couple, I haven't had many all in their thirties for sure, lower, but I, yeah, but in their forties, yeah, I've had, I've had a bunch, there are a lot of people out there who are really pretty good financial condition, even in their forties. That's good to hear. Yeah. So my listeners are mainly, we do have a few young ones. They're mainly over 40 and I know there's probably a spread of some of them I have saved quite a bit and others are, I play to the game. So do you have any advice for them? Oh yeah. I was just going to spit it out there while you were talking. I was ready to go. I think the first thing they should do. And this is any of them whether they're, they have a professional helping them or not, and not saying anything bad about anyone. It's, it's a direction and it's a mindset. If they look at their portfolio and it's not generating more than 3 or 4%, they should start scratching their heads because at that age, they've already heard about the 4 percent rule. The 4 percent rule is a very, very good rule. How the financial community helps you do it or, or get there is really kind of not quite right. You're expected to sell securities. To take your 4%. And I don't know if the 4 percent includes their fee or not, but it should. Okay. So if your portfolio is generating less than 3 percent and you're paying 1. 5 percent to a financial advisor you know, 3 percent of what you're what you're taking from your portfolio has to be produced by selling stuff. So, that's why they say 4%, you've got a 20 year lifetime expectation, it's like an annuity. They're making you an annuity. When you get to 85, which I'm getting there, which once you get to 85, your portfolio would just be about gone. You know, that's the principle. And you know, in the bad years, if he, in order to get 4%, you got to sell it even more. In the good years, you don't have to, you still have to sell, but you're not, you may not be taking losses of capital to do it. So it all evens out in the end and you're going to make it. I mean, everybody's heard of dividend stock investing, right? There, there have to be. More than 100 individual stocks that pay more than 4%. There are such things as REITs, BDC, BDC's Business Development Corps, Master Limited Partnerships. There are even ETFs and mutual funds that pay much more than 4%. And then of course there are closed end funds. Which are the best in my estimation, because their sole purpose in life is to produce income for their shareholders. And the reason for that is their trust vehicles. And they have to pay 95 percent of their net income to their shareholders. So, you can't expect them to grow. They're not gonna, you know, you're not gonna pick a winner and it's gonna go and multiply three or four hundred times. That's not going to happen, but it's going to pay you. And right now, the ones that are purely income securities, bonds, mortgages, stuff like that are paying an average of 10%. And the equity ones, the stock ones in the stock market are paying 9%. So, so that, that's the difference. They're not going to grow in price so much. They'll go up or down depending on the expected direction of interest rates. And a little bit of the stock market. So, you know, so that's what I'd say to them. If you are not making at least 4 percent in actual in your pocket or potentially in your pocket dividends, you need to look at what you're doing and tell your guy, your lady to Start making more income for you. You can buy them a copy of my book. After all, he gets all done. Who pooling this and talking about leverage and return a capital and all these other things, just point out in the long run, I'm getting 9 percent or 10 percent on my money, and it's going to cover your 4%. And I want you to think about doing it that way. So that's, the first thing I think anybody in your age group should be doing. How much am I making now? Why am I not making more income? Now let's talk about your book before we run out of time. So Retirement Money Secrets is your latest book. This is your second book. Yeah. Tell us about it. Why should somebody read it? This book talks about basically six principles of investing. We, I mentioned them a little bit, you know, quality, how to determine what the quality is and making yourself a set of selection rules that you're not going to violate. Even if somebody gives you, Hey, this one's really a good one. You know, that's not good enough. Quality requirements, everything you own has to pay some kind of income. Be higher. Diversification, nothing you own should ever be more than 5 percent of your portfolio. I have a rather large portfolio. I don't have anything that's as much as 2 percent of my portfolio. I go to sleep at night and I say, well, if any of these securities go to any one of these securities go to zero, I might even not, not even notice it in my account balance the next day. The fourth thing and the most important thing that most people totally fail to do because they tend to fall in love with the real nice ones that produce a high profit level. They don't take their profits and then when they start going down, it's not going back up. It's going back up. So taking profits is number four. That's the risk. Those are the four great risk minimizers. The two other things we deal with are The fact that there is a market cycle, not only a market cycle, but sectors have cycles, interest rates, the economy and everything else. And that's not just an upward machine. You know, the stock market is a market and it's going to go up and down. That's what markets do. Somebody offers one price. Somebody said, no, no, I don't want to pay that. I don't want to give you this. All right, I'll take it. And depending on which way that supply and demand is going, that's takes the prices. They don't just go straight up. So you have to have an approach that allows you to take advantage of that knowledge. You, you can figure out, it's easy to know where you are in the market cycle. I mean, it's easy to know right now, we're within this much of the highest level the stock market has ever been. But we're still this much away from the lowest of interest rates have ever been, you know, so interest rate sensitive prices are down still from their five year highs while the stock market prices are very close to the five year highs. Good time to take profits here. Good time to buy here. That type of thing. So you know, where you are, you don't know what's going to happen next, unfortunately, and nobody knows what's going to happen next. And no matter how much technical tech you look at, or listen to, hear, nobody knows what's going to happen next. The final one. The sixth thing that is really covered in there is it's a mindset of getting yourself to focus on the income generated by your assets, as opposed to their market value. And it's just like you would do with your job, you know, how long are you going to let your boss pat you on your back? You know, Oh, you're doing a great job. You want him to say, here's. a 25, 000 bonus because you're doing so good. It's the income that pays the bills, not the market value of your securities. I look at, securities since I own so many different ones in this closed end fund universes that I've created. All these things have met my quality standards and they pay big, nice income and all that. But I look at them like they're the merchandise in a department store. In a department store, you set prices, you have a markup on your inventory. The last thing you want to see is the value of your inventory rising. That means you don't have any sales, you're not making any money. So I look at my portfolio in exactly the same way. Every one of these things has a purpose. Even though it's, it's got one purpose, it's paying me a lot of money. In dividends, it's second purpose. It's potentially that I can make profits on it by selling it in my store. So somebody wants to pay my markup, which is 5%. I'll take it. I'll buy something else, put it back in the shelf. And I do that over and over and over with the same merchandise, just like a store. And I think if you can take that approach and looking at your portfolio and thinking of it in that manner, it'll make it a lot easier for you to focus on income and to appreciate the market cycle, because it's the market cycle that gives you those profit opportunities. And the opportunity to replace your inventory at a lower level. I like that view of looking at it with the ups and downs, ebbs and flows, right? That's the way life is. That's the way the market is and learning to ride it. Before we finish up what is one action step listeners could do today to start making progress, advancements with their portfolio? I think, we've gotten into the first thing to do is take a look at it. Do you have any positions that are bigger than 5 percent of the total wealth you have? Do you have a lot of unrealized profits? How much of that is profit that you haven't taken? And if the market continues to go down, like, it has the last 3 days. Let's say it does that for the next 50 days. All that profit's gonna disappear, you know, so thing, look at things like that. Good advice. All right, Steve, where can people connect with you? Where can they get your book? And yeah, learn more. The the book is available at Amazon and all the other places, too, from draft to digital to Barnes and Noble, everything. And it's in all four varieties, ebook, paperback, hardcover and audio book. Available Amazon. We've sold over 4, 000 copies. If you count the audio book, get ready. It has all my contact information in it. The name, the name of my website is the income coach. net perfect. We'll have all the links down in the show notes. So listeners, go check that out. Especially if you're wanting to get an income coach to support you. Especially if you're worried about maybe working with a financial advisor or you're questioning maybe what's going on. Give him a reach out and connect with him. Thank you Steve for being here and sharing your thoughts. My pleasure. My pleasure. And listeners, we'll see you next week.