The muse of blog relaxing on her apt in NY. I realized that even with all the millions she should have, the apt is still very simple.

Well, come on, the previous post was very philosophical and with a little hand in hand. As Brazil is horrible in the financial advice I found two different websites and with two calculators that complement each other, you can go there and play at ease with your numbers, adapting to your reality. First use the million dollar calculator to see the total amount that you will get, then deduct 15% that will be the tax (in case it is Treasury Direct).

The second calculator is the TSR itself. One good thing is that you can merge your investments in the long term half in dollars and a half in real, and have an income in the two currencies.

Namely, in the last 20 years, the return in the percentage of the two exchanges (BOVESPA and NYSE) – the return of the index **was basically 6% above inflation** (nice to know that right?), But the SP500 had that return the last 200 years on average annualized **6.6%** above inflation. As the bovespa is much younger and much smaller can not know.

**To buy shares in Brazil find it much easier BEAT THE CONTENTS IBOVESPA, ** that for those who make a Buy and Hold without much eye candy is relatively easy, because here has little good company and the index full of garbage in, so no use buying ETF BOVA11 in Brazil, is much worse, and does not pay dividends for you to reinvest.

Hitting the SP500? Well, 4% of professional managers do this, **IN USA. **Understand that the US market is 50% of the world in volume of shares, there are more than 10,000 companies and almost 5 IPOS per day, PER DAY! Making a stock pick here can be exciting and such, but your result will probably be equal to the average, equal to the ETF VOO or the VTI, the two largest. If you buy an ETF VOO or VTI it will stay in the market average, that 80% of the funds also stay, and paying very little custody and fee (only 0.05% pa ETF rate.)

Following, we first calculate the total value (things are in dollars but let’s pretend they will be in reais because it gives the same in math, to write a thousand in dollar use a comma so 1.000 – if you put 1,000 it will understand that it is only 1 ):

First go to this site: Calculator million

Http://www.bankrate.com/calculators/savings/save-million-calculator.aspx

Then go to this site: Calculator SWR

Https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/RetirementNestEggCalc.jsf

I will put 3 different scenarios here to illustrate the calculator million:

Example 1:

In example 1 above you get contributing to the 30 years of age (it is only, for example, what matters is the total that is 20 years) and ends at age 50. At the end of 20 years, investing R $ 3,000 per month and gaining 6% above inflation (NYSE or IBOVESPA average or even treasury IPCA + bonds) you will have R $ 1,935,973. It will still be discounted 15% if you buy from TD so there if it is in stock will not get this discount, okay?

This is all by reinvesting all the dividends. Particularly I do not like this scenario for LF. In this case, it would be preferable to postpone IF for a further 5 years because the total amount is low. Arbitrarily I set my META as R $ 3 million reais in today’s amounts (JULY / 2016) for the LF. So it’s well below the goal.

Example 2:

Here above in example 2, is a person who can expect more, and only has to contribute $ 2 thousand per month, is a quiet average for those who have a public tender of a higher level, small entrepreneurs and merchants and even professionals, or any liberal Person who earns over $ 5k and knows how to live below the standard can give 2K YES! Then, it contributed for 35 years, R $ 2 thousand monthly and at 65 years old has 5.5 million assets (in fact it would have already reached the R $ 3 million that is my goal well before that, see that it is not impossible as they speak).

**See here the factor TIME AND COMPOUND INTEREST HAS BEEN KING !! So you do not need to be looking for CDB 120% CDI or IPCA + 10% bonds that are all very risky and mature ahead of time, making you turn your equity. Do not invent, FI for me is DIRECT Treasure. END.**

Example 3:

Here is a person who has made a calculation for 25 years with a contribution of $ 2500 a month. At age 55 she got $ 2.6 million which is excellent. Almost close to my goal. She could get there faster if she put in a little more money or waited another four years, but she could understand.

**Example 4 (EXTREME Early Retirement) – MY GOAL.**

**PERSONALLY, I WANT TO ACHIEVE MY FF AT 40. I started investing at age 27, so I have a HORIZON OF CONTRIBUTIONS OF JUST 13 YEARS. **See how my compound interest and my time is short my **APORTE’ll have to be superhuman, why work so hard and short little (that idea of the Matrix to enjoy that I am no longer even there, honestly what I SHORT SAME is to see The dividends coming in and my estate growing, it really brings me happiness, without excuses, without bluntness.**

That would be more or less what my goal would be, reaching almost R $ 3 million in 13 years. The maximum that the calculator of this site can reach is $ 10 thousand monthly of contribution, and I can contribute more than this, so I am comfortable within my goal, there is a month that I get to contribute R $ 15k, so MATHEMATICALLY is perfectly doable My goal, has its risks and something may go wrong in my life, but for now I’m keeping the course. Gaining 6% above annualized inflation, my plan is 60% shares, 20% RF (TD – IPCA + 2024) and 20% diversified FIIs. This is in my Brazilian portfolio.

I also have a theoretical portfolio worldwide that I have already selected the assets and to the extent that I am buying I am posting here. The worldwide is 80% stocks, 15% REITS and 5% BONDS from emerging markets and developed countries as well.

Then you can enter the site and see its reality. If you do not contribute much calculate to age 65 the final age, which in your case will be an aid to the FF in normal retirement without being extreme. In fact, this is what I think is healthier and wiser to do. Click on the link above and do, then comment here with me.

Now we go to the second part and the most interesting of the post, is the calculation of the TSR, the calculation of the probability of survival of your Portfolio according to your TSR. I found this tool on the site **Vanguard is the MANAGER TO ADMIRE IN THE WORLD. **And I’m going to do a post one day just about it, anyone who’s curious can give a Google and learn all about it and its founder John Bogle.

First, let’s look at example 1:

A) assume that you will die at 90 years or 100 years – your decision. I turned 90 years old for me. **So from the age of 40 to 90, 50 years of income are living (oh wonder, huh?) And how difficult, you’re thinking that I’m making fun of you?**

This example 1 is linked to example 1 of the calculator up there, had to put 1,950,000 because the calculator did not put the value there. The first line of the question goes something like this: “How old do you want your portfolio to survive?” I put 40 years because 50 + 40 = 90. I put 80% shares and 20% RF (The more Fixed Income you put the WORST CHANCES ), And I consider real estate funds as stocks for that example, I know that is not correct, but consider as fixed income I think it’s much worse, sorry the website has no option to put REITS in that field, actually think that real estate fund will perform in the long Term in an intermediate result between shares and fixed income. Probability **83% PORTFOLIO SURVIVAL with an SWR of 4.1% (80 000 per year or R $ 6,666.66 per month) not bad. **The more you raise the worse SWR will be the survival rate, OBVIOUS! Then calculate everything with the 4% rate just as a theoretical exercise. This is a fairly high probability (more than 5,000 scenarios are SIMULATED in this Vanguard calculation!). Now that you’ve understood the dynamics of the TSR thing (cool right?) Let’s take an example.

Example 2:

Well, this one was really good, the guy actually retired at age 65 with 5.5 million in equity, with a 4% SWR can withdraw 220 thousand a year from the portfolio – R$ 18300 per month (you can live and right) for another 35 years (to die for 100 years here) – **Probability of 88% of portfolio survival until he died 100 years. **SENSATIONAL, contributing only 2 thousand for 35 years. I think this example here is the most REAL for many people who may be reading the blog here. A real guide to follow. The stock / RF ratio is always 80/20. **Remember that the best thing to protect you, in the long run, are stocks.**

Let’s go to example 3, which I also found very cool, after all, you’ll be 55 and you’ll still be able to TRAVEL a LOT and LISTEN TO LIFE VERY LIFE! It is a bigger contribution $ 2500 for 25 years, something more difficult for many people, but it’s worth:

Here I put living up to the age of 95, with only 40 years of portfolio income. It’s going to give you R$ 105,000 a year, or R$ 8750 a month, not so high or so low, but you will not be able to spoil it very much. You will live with an 88% chance of your portfolio surviving for 40 years by taking it out on a monthly basis. A de facto retirement at age 55, dignified and fair after 25 years of resignations to contribute R $ 2500 per month.

Now let’s go to my theoretical example 4, which is my personal life:

Here I retire at age 40, to live to 90 years (50 years of retirement – half a century) with the same 80% in shares and 20% in RF, taking 4% pa gives 120 thousand a year, or R $ 10 thousand per month, with a portfolio survival rate estimated at 88% I think wise to put anything greater than 80% because otherwise **WILL THAT !! ?? Huh? ** An excellent value, considering that I have settled home, own car and will also continue to work but with the much reduced workload, **it would be my SEMI FF, perhaps.**

Now to FINALIZE THE POST I am going to put my real data, adding R$ 10 thousand + R$ 5 thousand of contribution in two different calculators to give the R $ 15 thousand that is closer to my reality and I will also consider that I already have 700 thousand reais invested It’s almost what I really have. Also remembering that it is almost certain I hit the IBOV always (I always hit) until then, so my pay is going to be slightly higher than 6% pa above the annualized inflation, it will be three graphs. First of the calculator of the million to total R $ 15.000 of contribution already having the 700k invested:

Now! I do not know if I added it wrong, but you can correct me if I am, adding the 700k I already have, plus a contribution of 15k monthly at 6.0% REAIS above inflation will give R $ 5.5 million (adding the total amounts Of the two figures above) in 9 years, when I’m 40 years old. Not bad, huh? Now let’s put in the SWR calculation at 4% for 50 years (until I turn 90):

When I put 4% SWR gave 82% survival of the portfolio, I did not like it, it decreased to 3.6% and the survival rate of the Portfolio was 87%. **See it’s 50 years of retreats! This is MIDDLE EAST! **To give R $ 200.ooo, oo annual or R$ 16,600 monthly. I found an excellent value, to live a high middle-class standard in any capital of Brazil gives tranquility. Considering that I’m still going to work a little is good. And yet I can beat the historical IBOV by buying only good companies (which anyone with a minimum of common sense and fundamentalist analysis can do as well, I’m just like anyone else). This 3.6 % of my SWR matched more or less exactly with the annual yield of a well-diversified portfolio. Liked it. Just spend all the dividends and that’s it.

PS: In the case of systemic crisis and low returns of the stock market, the plan was pro bag right?

That is why it is good to contribute as much as you can, distribute in REITS, Fixed Income and stocks. Maybe even a little real estate or build for rent and also make a reservation on strong currency income (Shares, REITS, and bonds abroad).

Did you use the calculators, too? It is very cool. Try it. It would be nice if you mentioned here what you gave in your simulations.

I hope you have understood the SWR concept well.

Big hug,

Frugal.