Imagine that the world is your neighborhood, that in your neighborhood there are 100 stores/companies accepting members to invest. Now imagine that you have limited yourself to always investing in 2 stores. Only these two stores only work and accept REAL (R $) and are subject to Brazilian government weather, excessive regulations, bureaucracy, CLT, bribes, environmental licenses, insecurity, robbery, robbery, blows of employees and managers.
These two companies do not grow into other neighborhoods, they do not have a dollar, euro, pound sterling, Swiss franc, and so on. In a scenario WELL OPTIMISTIC, these two companies will not break, will give some profit and will be able to thrive only slightly in the same place. And you stopped investing in 98 other companies that can grow into other neighborhoods, can invest more, develop hundreds of new products, hire the best brains in the world, buy startups of geniuses all the time, are not so affected by corruption, violence, Bureaucracy and among other things.
These two companies that you limited yourself to investing in are THE WHOLE BRAZILIAN MARKET and the investor is you, who get stuck in this bubble of REAL and HIGH and CONSTANT INFLATION watching the rest of the world thrive and improve in life and income. Worse still, you’ll be happy to earn 3.5% of real interest (in a Direct Treasury, for example) on a currency that depreciates by almost 10% per year, which is REAL.
So let’s talk a little bit about this here, about your limitation on investing only in Brazil and Reais (they are two investments in one, remember?). You will lose to invest and get rich in things like Apple, Google, IBM, Microsoft, Cisco, Facebook, Uber, Ali Baba, Nestle, Novartis, AB Inbev, Disney, Amazon among others that have grown A LOT! MUCH MORE THAN ANY EXISTENCE OF BOVESPA OR DIRECT TREASURE.
Imagine losing the next Apple, imagine losing the next Google? Did you? Not to mention that only by the currency PODRE that is the Real we are poorer 36% in relation to the rest of the world in relation to the last 24 months. We spent more than 1% per month poorer than other inhabitants of the world just because we have our assets and income in reais.
For example, if you wanted to buy 500 thousand dollars and invest in the EB-5 visa to get US citizenship at $ 2.40 as it was in November 2014, you would have to invest 1.2 million reais. Today the dollar is at 3.26, multiplied by 500k would give 1.630 million reais to buy the same seen 35.8% more expensive than at that time. And you could hardly find something that yields 40% in two years to invest here in Brazil in that interval.
This topic of investments abroad will be very recurrent here on my blog. In a way, I would like the next 5 years to be some kind of reference in this area here in Brazil as it is the blog of Investor International and Dividendos.org Living that are here in my links menu. Throughout the blog, I explain the advantages and disadvantages of investing abroad, why, what and how to invest, in addition to other things like taxation, income tax, and inheritance.
In addition to explaining a bit of the part of Finance itself, concepts such as Efficient Frontier, Value of Money in Time, Risk x Return, Assembly of Global Portfolios, Monetary Balance and Currency Diversification. It’s a subject I’ve been studying a lot, reading books and taking courses and I already have some things to write here. The idea is to preserve, increase, protect and diversify its wealth taking into account the risk x benefit, expected return, diminishing portfolio volatility and receiving dividends.
First, let’s examine the size of global markets:
Try clicking on the photo to enlarge. Try to understand and interpret the photo and still imagine what happens based on that data.
These are the percentages of the weight of markets in the world. The US accounts for half of all financial assets listed in global markets with nearly 50% market value. Japan and England are in second place with 8% each. Germany, France, Australia, and Switzerland have only 3% of the market each (although they are rich, old and well-established economies).
Our poor Brazil has only 2% of the global market, we are almost ridiculous so to speak. As I already said in the previous post we have 500,000 individuals investing here in bovespa, this gives 0.25% of the Brazilian population buying stocks and real estate funds, and I fear that most do this through expensive and useless funds, which include fixed income And e-quotations.
Brazil is a corrupt country, this is nothing new to anyone. And while citizens suffer from corruption being stolen, businesses are also stolen by the government every day, becoming less competitive and hardly becoming global companies. This PREVENTS GROWTH of companies and our economy, and of course, our investments.
See you focus your heritage, your work life and ONLY investments in Brazil and is a REAL RISK HUGE and with a lot of volatility and RETURNS DOUBTFUL. If you think you are not, look at the situation of the upper and middle class in Argentina that MUCH MISTERED in the 90’s and also in the past. See how much the middle class and even the RICH of Venezuela have PITCHED in the last 10 years and how much the currency there, the Bolivar, simply DERRETEU, and with it, Venezuelan government bonds and other Venezuelan financial assets. Both were prosperous and cool countries to live, until a crazy and stupid president came up and screwed up with everyone. And knowing the mentality and the behavior of the Brazilian people as I know it from NEAR, I do not doubt anything to put a populist of the same suit of these in the next 10-20 years and thus FUDEREM WITH THE COUNTRY and consequently with you. You see, I’m not COMPLAINING from Brazil. I’m trying to teach you a little about RISK CONTROL.
What is risk control?
It is simply the possibility of LOSING EVERYTHING. This is the minimum risk control limit on any investment. And seeing the REAL melt, or government confiscations or exaggerated tax increases that drive companies to break can represent the loss of everything you have invested.
Your risk control is only adequate if you think you CAN LOSE ANY ASSETS AND EVEN BE QUIET.
Example: Will you invest in AMBEV? Beauty. Will you put $ 50K there? Great. Now think, what if you could break and explode tomorrow? Will these 50,000 break me? If the answer is yes, you should not buy all this from ambev. I used ambev as an example, think about it for any debenture, property, stock, fixed income, business franchise, small business or any other type of investment. If you ever lose or fail to do their risk control, YOU MAY BE RUINED FOREVER! REMEMBER THIS !!!!
Now think of your control of RISK with company BRASIL (that you PF or PJ is a partner in 50% basically).
If Brazil breaks, explodes and melts in the next 15 years, like all the capital you invested inside it, will you stay calm? If the answer is NO, it is why you are not doing your risk control properly and SHOULD SIM invest abroad in other assets, countries, and currencies.
For MY PERSONAL CASE, my answer is the above. I AM NOT QUIET with all my assets in Brazil and REAIS. (R$)
And so I am looking to invest abroad and I want to share every step of this journey that is close to starting here with you. I’m on the way to opening my account at BB AMERICAS in the USA to invest all over the world from there. And the good thing is that it is a journey of a lifetime, it is a happy and no return journey.
See that no one has an obligation to invest abroad, it is just one more thing, to protect you from your own ignorance and your false sense of intelligence, confidence, and power that YOU happen to think you have read some financial books and To invest and read and to know some things from here.
Diversification in other countries, currencies, and markets is rather a wise and prudent attitude.
You are much more ignorant and dumb than you think, so I do not think it’s worth it to bet that much on yourself when it comes to investing and ignoring the whole universe of global finance.
Think about it with serenity, with a long-term and responsible vision.