Find out how to have an income of R$5,000 per month for the next 60 years – 04/15/2024 – From Grão to Grão

When thinking about living off income, investors always think of the most difficult and risky alternatives. Know that today there is a way to guarantee an income adjusted for inflation for a very long term. Maybe you think, just buy a property. If you thought about it, again, you fell into the trap I mentioned above of the most difficult and risky.

With higher interest rates, Brazilian fixed income appears almost unbeatable compared to alternatives. In addition to having excellent returns, fixed income also has lower risk. Remember, the risk in alternatives with better potential returns can result in not earning income and even incurring costs, for example, in real estate as I will explain below.

Consider that you want to have an income of R$5,000 per month adjusted by the IPCA for 60 years.

Maybe you imagine a portfolio of dividend-paying stocks. This is an alternative. However, of the companies that you today consider to be good dividend payers, how many existed more than 30 years ago? How many of these companies do you think will continue to exist in 40 years?

Yes, a company that pays dividends today may no longer exist in 10 years or simply stop paying dividends. This means that it will be necessary to constantly monitor this portfolio and exchange assets over time.

I don’t need to talk about the inherent risk of stock management. If experienced professionals with teams lose, imagine you alone. Well, if stocks are too risky, how about real estate.

If you want to live off real estate income and considering a rental rate of 0.35% per month, you will have to invest at least R$1.4 million. There are several problems here. First is diversification. With that amount, you might only buy one apartment. You can buy smaller apartments, but they won’t exceed 5. Another is the assumption that you will be able to pass on the IPCA forever. It will be?

Also, it will be difficult to keep all the apartments rented constantly. In other words, an apartment without rent is the cost of condominium, taxes and maintenance. Furthermore, within 30 years, they will already be very old and will need renovations. Therefore, more expenses. The question is: what will they be like in 50 years? Will they still be able to provide the same income adjusted for inflation?

To put an end to all these uncertainties and difficulties, today, there is a simple way for you to guarantee an income of R$5,000 per month adjusted for inflation and in a fixed income investment. In other words, with less risk.

The table below shows how you can earn this income by purchasing just four federal public bonds.

Title	Number of titles to buy	Price/title	Value to invest
Educa+2026	70.51	3354.14	R$ 236,500.41
Income+2030	282.04	1809.75	BRL 510,421.89
Income+2050	282.04	561.17	R$ 158,272.39
Income+2065	282.04	232.99	R$ 65,712.50
		Total	R$ 970,907.19

The total investment to have this income is only R$971 thousand. Therefore, an investment smaller than that of real estate and much more reliable to receive than income from stock dividends and property rental.

If you invest in this portfolio of four public bonds, from 2026 you will receive an income of R$5,000 that will last until 2084. In other words, if you are 38 years old and think about retiring at 40, you would have this Guaranteed income until you reach 98 years old.

Buying the securities above, there is some overlap in receiving income. In the year 2030 and in the years 2065 to 2069, you will receive double the income of R$5,000 per month.

This additional amount will not be a problem. I’m sure you’ll be able to use your imagination and find ways to best use it.

I’ll give you some suggestions: you can simply spend more in these years, set up a pension plan to leave an inheritance, donate, help your family, or even save to cover the risk of eventually living over 98 years.

This is possibly not the way that will provide the best retirement income, but it is the simplest way to guarantee a calm, stable and reliable income for the rest of your life.

Michael Viriato is an investment advisor and founding partner of Investor’s House.

Speak directly to me via email.

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