In this conversation, Matt Chambers interviews Steve Selengut, an investment management veteran, about achieving income independence in retirement. Selengut shares his method of using closed-end funds to generate consistent income and avoid drawing down on the principal.
He explains the six principles of investing, which include quality, diversification, income production, profit taking, market cycle investment management, and income reinvestment. Selengut also discusses the advantages of closed-end funds, such as instant diversification and higher yields compared to other investment options.
They discuss the importance of generating monthly income through closed-end funds and the power of compounding interest. He emphasizes the need to reinvest a portion of the income to continue growing it and using the rest for living expenses.
They highlight the lack of knowledge about compound interest among many people and the potential for even small investments to grow into significant wealth over time. Steve also explains the active management approach he takes with his own portfolio, but notes that it is not necessary for everyone.
They discuss the role of closed-end funds in providing income and the importance of selecting reputable financial institutions to manage them. He addresses the misconception that set-it-and-forget-it strategies are ideal and emphasizes the need for income-focused investing. They also cover the availability of safer closed-end funds and other investment options for those with limited knowledge of investing.
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