On the road to financial freedom, you have to also plan the post. Of course, within the planning after this point begins another road, a new lifestyle, work, dedication to the family, among other things. There are multiple variables in your personal and professional life to tailor your behavior and your TSR.
There is a huge universe between theory and practice regarding the subject of investments, firstly because his life is quite unpredictable in personal and professional matters, second because for Brazil there are no TSR studies (the scientific field of economics and personal finance is Horrible as you all know). Even one of the purposes of this blog is to be able to discuss the subject a little and maybe help somebody.
What would SWR be?
It would be a money withdrawal fee from your portfolio to help pay your bills and that theoretically the total equity would be protected from being eliminated, eroded or extinguished. You do not want to join two million, stop working for 10 years and then have to go back to work to keep up, right? There are many things that influence the TSR and you have to think about each one. First, your portfolio grows exponentially due to COMPOUND INTEREST, so how much later do you “RETIRE” (think about retiring just how to STOP, better for you, this is the first premise.)
Second, your AGE at STOP influences a lot, since If you want to retire extremely (type at age 40) is still 60 years old to survive the equity (I think it prudent to consider 100 years of life, or at least 90 years, remember that medicine advances quietly increasing our expectation Of life and in 40 years we will live much longer.)
Third, your spending pattern will change but you can not control certain factors, in your old age your children will be educated and living outside your home (in thesis), you (?) And the grandchildren (?) – the lucky old men do not support children and grandchildren, but THE MOST OF THE ELDERLY IN BRAZIL HELPS THE FAMILY, WHAT I THINK A SUCCESS. Cousins who sucked up the last cents of my grandparents until basically the day of their death. Thinking about your life, your comfort and your retirement, I think how much more children you have, worse. I am not discussing love and family, I am discussing finances, I can not speak of life in a post, but it is this:
Great NEWS! You can live without children or you can have ONLY ONE CHILD! This is not a crime, nor will you be WORST OR BETTER than anyone else. Reviews? Who has only one child is criticized, who has two is criticized, who has three is criticized, who has four is discriminated, who has five is a suicide, who has six is an irresponsible, who has seven is an inconsequent (and so on will – everyone has guilt in the minds of some people, if you are full of money and without children you are a tremendous selfish bastard – that’s how the average citizen of Brazil thinks, get used to, and tap the fuck)
1 – The more children, the less investment per capita in the education of the children, the more unprepared for the market they will be, the poorer and the less educated they will be.
2- The more children, the more grandchildren – guess who will support the grandchildren of children who are uneducated and who earn little? That’s right, you. No use saying it will not be, IT WILL!
In your old age your biggest expenses will be with health insurance (or die in the SUS), medicines and perhaps caregivers (nursing technicians) and maybe asylum (private). You will already have your own home and may even be smaller than the one your children grew up with (you do not have to be old and live in a bitch after 150m alone or with your wife or a 300m square house with 4/4 – financially You will be at a loss every month, plus if you are a guy who likes to travel it is better to live in the world than buried inside a house or ap.
Consider also living in a more decent country than Brazil after your FF. I know old retirees here who have a home in Orlando or small ap in Miami and even in Cancun to spend at least 6 months a year there (a small ap in Cancun costs 70k dollars). What is fashionable now is going to live in Portugal after being retired. Although I think that Europe will get worse and worse due to the non-return Islamization.
THE MOST IMPORTANT: Do not count on the INSS. It’s pure delusion. In the future, you will not have to sustain or pay so little that it will not even guarantee your beans.
If you’re a military man, do not count on that ridiculous military retirement that will fatally take an ax from any president there in the next 30 years. So let’s summarize a bit, which will influence your TSR.
1 – Total stock size.
2 – Age you plan to stop contributing.
3 – Family (income of wife or husband, amount, and formation of children and grandchildren).
4 – Price of the property that you will live (the greater, the worse for you).
5 – City, state or country to live (how much cheaper and less dangerous better).
6 – Your monthly expenses per se (standard of living) – expensive bike or car? Eat at a restaurant or at home? Healthy or Cheap Habits?
7 – Do you want to leave the property for the family or not? If you do not want to, you can go out and consume the estate slowly. Remember that if you do not have heirs will leave it to the government mafias. The inheritances in Brazil will inevitably be increasingly taxed, one solution is to set up a family holding company (offshore) abroad and only redistribute the quotas after you die.
8 – Will you really stop making money with your knowledge and skills and great equity to invest? Business opportunities always appear, it is a land to make a trade, an ap that somebody wants to sell cheap and you can resell later, etc. etc etc. I find it difficult. It is an extreme choice. I do not see myself stopping 100% of work and not putting 1 real in the pocket, who has learned and likes to make a living his whole life will hardly stop, you can change the area, do something you want and make some money from it, even if it is Just for hobby (for example, live on the beach?) Reforms your house and makes a hostel or hostel, or rent rooms in Airbnb, it does not cost so much and you already live there anyway, any real you enter is profit, just do not operate in Loss that stays calm.
Continuing, the higher your equity in stopping the better for you, remembering that it grows exponentially and that if you postpone your LF for a few more years this can be extremely beneficial because for example, instead of stopping $ 3 million will stop with R $ 6 million, I think this is fundamental. The younger you stop the more things can happen. Do you still have kids to raise? Will more children come? If the woman separates takes half? (Marry in the separation of goods with prenuptial contract, it is fair, and the agreed is not expensive, in case the bride or groom does not accept, calmly look for another groom/bride and be single again because THERE IS ROLL! ).
Even if you marry, marry someone who earns money and does not want to live on your own, you do not have to earn MUCH or as much as YOU, you only have to pay your own bills, walk with your own legs, be frugal and also contribute and have Your own SEPARATE investment account of yours and set up your own equity, there is no mystery, this is not difficult nor humanly impossible, remember that marrying is a voluntary decision of yours, you take blow if you want, the fault will never be the person Even if she’s crazy or a scammer, it’s your fault for choosing the wrong one. Obviously, if you make a lot more, it’s only fair that you pay the top bills of the house or all, you have to have common sense.
If you have children invest with quality, good school, 100% English, good exchange of 1 year or more, who knows High School and college abroad. I think the best investment in training your child will preserve your retirement because he with a good job, training and income will probably marry someone like him and will not give you expenses when you are an adult, let alone ask you to pay His grandson’s school, or his house rent (I SEE THAT DIRECT) – IS TOTALLY RIDICULOUS – a lack of absurd respect, exploiting an old man. That way the investment in education in the child is also a PROTECTION FOR YOURSELF.
After the LF you can move to a cheaper property and travel more, reinvest the difference in values and increase your assets even more, or you can go to live in another country (Thailand is very cheap, Vietnam too), start thinking out of the box. A long neck in a restaurant in Thailand costs 40 cents a dollar, here it comes for 8 cents. If you do not want to change your country you can go to a much cheaper city that can be in the interior (your expenses will fall absurd), in a small town on the beach or in the country, with 5k monthly you can live as a king, and The price of real estate and land is totally cheap, as is the rent.
Another thing that greatly influences the TSR is your willingness to leave others your assets, the less you want to leave you can spend more, the more you need to spend less. Imagine that your children are all rich? What beauty, huh? You can manage everything by planning to go bankrupt at the age of 90. Your standard of living will also influence, I do not think that after LF we have to boast, on the contrary, live low profile, with discretion and without objects and expensive things is better yet, you are less targeted by the bandit and the rotten part family and friends, fails to attract envy, it does not need to say who lives income, say you buy and sell goods over the internet which is already quiet, you do not have to bear on social networks (yes is allowed social networks without ostentation).
There is a study called Trinity. In it, the researchers came to the conclusion that 4% annual withdrawal of their patrimony can survive until they die quietly with the preserved patrimony, THAT IN THE USA, of course, a decent country with more stable politics and economy. I think a lot of trips want to bring this die to Brazil. The study portfolio was 50% in stock and 50% in RF.
Basically understand that real assets protect you more from inflation, stocks, real estate fund, REITS, and real estate. As a share has a very unstable dividend flow and no programming, to have your dividend income it is prudent to have at least 20 companies in Brazil (I am 28 and still varies a lot), it is also prudent at a later age to allocate a little More in FII because they have a higher DY now averaging 10% per year, and because they are real estate, basically theoretically, in the long run, they are protected by inflation. In real estate and from that part I know a little, rents usually follow inflation, who has a rented AP for 25 years earns more or less the same thing per month, regardless of inflation, if the ap is well located and rented always better for you.
My grandfather was a poor bricklayer but he built with his own hands some 9 houses glued together, made a small village, and rented all of them, lived with that income supplement for at least 40 years, but always working as a mason in Today’s values for rent of these houses have always been about 200-250 reais monthly, each. In a very middle to a bad neighborhood that has become very commercial over the years.
You may think it’s up to you but 9 × 200 real cleaners for a couple of old people gives 1800 reais a month, they were simple people but they always had what to eat and bills paid with just that. I do not know the value of each house itself, but surely nobody would pay $ 40,000 for them because they are already very old. So see what real estate is real income-generating. If you can buy a land and build it will come out better and cheaper for you than buying a house or building site to rent (the builder earns almost 50% on each property). So physical, small and cheap real estate can be a good complement to real income.
Fixed income for me is a mystery how they would perform in the long run. It’s the least I like and least believe. In order to generate fictitious income, what I find LESS WORSE is the NTNB with a semiannual coupon for the longer term that it gives, it is currently the IPCA 2050 that will give you a 5.5% per year coupon and will correct the main pie for the IPCA. Even so, you will only see the color of the money twice a year and not monthly, you will have to reinvest the money in something else to go slowly.
Two things: You will have to rely on the IPCA (which is the GOVERNMENT THAT SAYS IT), you will have to rely on the GOVERNMENT (imagine who trusted Venezuelan or Argentinean bonds huh?) – A lot of things increase MUCH MORE than the IPCA Health plan increases 20% in a year and the IPCA is 9%, Meat increases 50% in the year and the IPCA increases 10%, gasoline increases 35% and IPCA 10% and so on … beautiful, right? You can rely on fixed income ALSO but I think it wiser to have a little stock, Fiis and real estate to diversify your sources of income.
Last but not least, you need to invest abroad to protect yourself in hard currency, receive hard currency income, protect yourself from the REAL meltdown and facilitate your future immigration if any. Think about the long term if you will invest here for 30 years to reach the LF, why not separate 10% of the volume invested in putting out there? Is it risky? Everything is. Even the real that has DELEGATED 40% in the last 2 years against the dollar. Diversifying in hard currency is not an investor’s signature that you want to sample, IT IS AN IMMEDIATE NEED to protect your portfolio, you can diversify in USD, STERLING, SWAN, HONG KONG DOLLAR, SINGAPORE or all of this together.
There is no magic number for the TSR. 4%, 5%, 10%, the worse the worse for you, the lower the better, the important thing is to be diversified among several assets, within each asset class and also in foreign currency. Of course, if you are a fatalist and want even a number I think 4-5% for Brazil is good, or else HALF OF INFLATION, to reinvest the other half. Earned 10% a year? Spend 5 and reinvest 5. I think if you spend more than half of the inflation each year it will get complicated. The ideal is to spend only the REAL gains, that is, what is ABOVE THE INFLATION. This will change every year but you can follow to know.