How to be financially independent starting at age 20 – 08/30/2023 – Market

The 20s mark an important period in life, when young people are starting their professional lives. Many still live with their parents, have fewer financial commitments and have the freedom to plan and envision their future.

Although income is lower, at this age people have time on their side, and can calmly think about how they want to be in the future, without it demanding a great financial effort in the present. For those who start saving from an early age, the amount that needs to be saved every month to fill the retirement mattress is much less than what is needed for those who start in more advanced age groups.

And, if the conditions allow the young person to set aside a good percentage of his income for the future, he can reach his financial independence with a higher income, if he accumulates a reserve for more years. Or else, he may reach the desired amount sooner, compared to those who do not have this availability of savings.

Furthermore, at this stage of life, everything becomes an investment for the future, such as courses and specializations, which will allow young people to have a more successful professional life. That is, even for those who still cannot save money, there are other ways to invest in yourself and prepare for the future.

SETTING GOALS AND PLANNING

From the moment the young person manages to save, it is time to set goals and plan how to achieve them. Financial planner Daiane Mohr, from Warren Investimentos, points out that, depending on the person’s plans, they won’t need to save so much money monthly, being able to choose whether to expose themselves to risky assets (* see glossary at the bottom of this text) or not.

Mohr says that she has already had clients whose life goals and age allowed her to assemble a pension investment portfolio with only fixed income securities

. Without planning, one could unnecessarily expose oneself to market risks.

“Most people who save money for the future don’t know how much they need to get where they want to be. And people usually boycott planning,” says Mohr.

The specialist exemplifies this boycott with the cases of people who decide to change their initial plans and buy a property from one hour to another, redeeming all the money invested. Then they end up having to start saving for retirement from scratch.

“Possibly this happened due to lack of planning,” says Mohr. “You have to separate ‘the money’ from an early age. You have to know what medium and long-term money is. If you mix it up, it will go wrong”, he adds.

After defining plans and objectives, a second step is to choose the best investments.

An advantage of young people of this age is the possibility, regardless of their investment profile, of exposing themselves to more risk, that is, of putting a greater percentage of their resources in investments known as variable income.

which are more risky, but offer higher returns than fixed-income government bonds

.

It is a freedom that a person over 50, for example, does not have. With less time to accumulate her reserve, she needs to be more conservative so as not to run the risk of losing her accumulated assets throughout her life.

Fixed income analyst André Alírio, from Nova Futura Investimentos, mentions growth companies, such as those in the technology sector, as good alternatives for the 20-year-olds. After all, these companies have the chance of seeing great leaps in development, bringing interesting returns to the investor, even with a lower amount invested.

“These are companies with high growth potential on the Stock Exchange, but which already have established fundamentals. These are shares that are not yet generating a large flow of dividends, but have the potential to do so”, comments Alírio.

“So, for example, out of five companies that you are investing in, if one of them becomes Facebook or Spotify, it would already compensate for the whole invested set. It is an investment that should not be discarded and it can perform very well in the future”, he adds. .

Financial educator Thiago Godoy, from Rico Investimentos, also mentions shares of consolidated companies with good fundamentals as alternatives for investment in variable income. One example is securities linked to commodities. As Brazil is a major exporter of raw materials, despite fluctuations in the situation, these shares tend to appreciate in the long term.

According to Godoy, contrary to common sense, the Stock Exchange should also be considered a long-term investment, as long as the person receives the right guidance for it, and does not use financial operations as a way to earn a lot of money in a short time.

“Looking at the US market, the average American invests in stocks as a pension fund. They invest in the S&P 500 index

and in more solid companies and sectors, thinking about retirement”, comments the expert. “The market fluctuates a lot, but we see that, in the medium and long term, the tendency is for a diversified stock portfolio to have an interesting return” , complete. A diversified portfolio is one with shares of companies from different segments, where one offsets the risk of another. For example, an exporter of commodities, whose prices follow the dollar, will have its shares affected by the exchange rate, but an energy company with prices regulated by the government will not suffer this impact. A construction company or a retailer is usually negatively affected by high interest rates, but the same does not occur with a bank, which can even benefit from higher rates. An important point raised by Alírio, from Nova Futura, is the investment in financial education. If the 20-year-old manages to set aside time and money to study the financial market, he will have more freedom to choose which assets to invest in, within his profile and his goals for the future, spending less on financial advice.

RECOMMENDED PORTFOLIOS

A

Sheet conducted a survey with three brokerage firms on recommended investments for retirement in the 20-year-old range. investor profile

adopted was moderate. It is noteworthy that these investment portfolios

these are just guidelines, but it is always important to consult an expert, who will put together a plan that exactly fits your profile and personal goals for the future.

AGE GROUP PROS AND CONS Benefits:

More time to save; less financial responsibilities; freedom to have greater exposure to risk Disadvantages:

Unconsolidated professional life; lower income * GLOSSARY

Risk assets: Riskier financial investments.

Investment portfolio: Set of all financial investments of a person.

Fixed income: These are applications that have pre-defined income criteria, that is, what are the ways of correcting the title invested, the time limit for the money to be invested and the minimum that needs to be applied.

Fixed income government bonds:

These are issues made by the Union through the National Treasury to raise funds. The government, therefore, has a debt with the holders of these securities, which are remunerated according to pre-established criteria. Variable income:

These are investments with less predictability and, therefore, are considered more risky. They are more subject to market fluctuations, such as interest rates, exchange rates and commodity prices. On the other hand, precisely because they are more risky, they are investments with expectations of higher returns. S&P 500:

Acronym for Standard & Poor’s 500, it is an index of the New York Stock Exchange, which brings together the 500 largest companies in the US stock market. investor profiles