Have you ever felt like this investor? Understand what to do – 07/19/2023 – From Grain to Grain

I tend to receive and answer, whenever possible, e-mails with questions from investors. Some of them are simple and I respond right away. Others call my attention due to their frequency and, therefore, I bring them to this space to clarify.

I transcribe part of the email I received this week so as not to identify the person. She authorized me to publish.

“What happened is that I ran out of my small reserve of BRL 100,000 during the pandemic. I managed to get back to having the same monthly income and now I’m starting to have the emergency reserve again. I’m 40 years old, but I’m desperate to think about How long will it take to have that amount again and I ask you: Investing a lot of money is easy, tell me if we can make a little money turn into a lot without it taking a life, please.”

The pandemic has brought dire financial consequences for many business owners and workers. It was a period when many had to use the reserves they built up during a lifetime to support the lack of income.

An analogy for what happened are the floods that wash away real estate and goods from individuals who took a lifetime to acquire. How to get it all back? How long would it take?

You know how these people manage to get their lives and possessions back. They work twice as hard, that is, more intensely, because what was lost is fundamental.

In investments, too, it will not be different. The only secret to anticipate the time to reach the previous level is to save more.

The vast majority of individuals are behind a magic formula that multiplies money.

Do not look for these formulas, as you will end up finding several. However, they don’t work. There are several in the market: explosive gains, phoenix strategy, volcano, effective day trade, quiet trade, leverage method and others. I made up all these names, but I bet if you look in any search engine, you’ll find one with this same name.

In the end, they are all promises with a single certain result. The only sure result you’ll get is a loss of your focus. Because when you see that one doesn’t work, you’ll look for another and another, thus following aimlessly.

If you are starting or starting over, your focus should be mainly on two attitudes. These two attitudes are the key for you to accumulate more and in less time.

The two attitudes are:
1 – Try to raise your monthly income by working more and in a scalable way; It is
2 – Reduce your monthly costs in order to have a greater reserve for investments.

No investment formula will quickly and safely lead you to your goal.

It sounds simple speaking, but it is extremely difficult. Every fortune was only easy to build after looking back. It’s never easy when we look ahead.

The statement that investing with little is more difficult than with a lot is not true. It’s the opposite.

An investor with R$50,000 can invest 100% of his portfolio in CDBs with the highest market rate, taking advantage of the guarantee of the Fundo Garantidor de Crédito. Therefore, you can have investments without any risk and with a high return.

An investor who has R$ 10 million does not have the same advantage. Not only is he unable to invest 100% of his portfolio backed by the FGC, he is also unable to invest even 2% of his portfolio in the CDB with the highest return on the market. He has to settle for a lower return on government bonds, or take a higher risk on corporate bonds.

In terms of variable income, it is also no different and liquidity weighs against the large investor.

Therefore, focus on the two attitudes to increase your savings capacity and build a plan to understand the path to your goal.

Then do like a marathon runner, run in the right direction and don’t worry about the finish line. She’s up front and if you keep the pace strong and focused, you’ll see that it lasted less than you imagined.

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

Talk directly to me via email.

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