I comment on the case of a mother who wants to leave an income of R$20,000 – 12/27/2023 – Market

To build a financial reserve capable of providing your own financial independence and even that of your children, it is not necessary to have a high income. Two factors are necessary, but the second is the most relevant: having a good plan and discipline. Discipline to cut expenses, save and follow the planned plan. In Helena’s case, the only thing missing is the structuring of a plan, as she and her parents had discipline.

When you hear stories like Helena’s, you realize that the habit and awareness of the importance of saving are often passed down through generations.

However, when you don’t have a plan, there are always some doubts. Am I doing everything right? How should I handle the share installment?

I imagine there will be comments from readers saying: but she earns a lot, so it’s easier. I disagree. Financial independence is related to your standard of living, not that of others.

Helena has a living cost of R$20,000, so her financial independence is achieved with this cost and she has to make an effort considering this level. She is not looking for independence with an income of R$50,000. Just as someone whose monthly cost is R$5,000 must target this income to have financial independence, and her effort will be proportional to this.

Proof of this are the last two cases analyzed in this section I comment on your money, that of the engineer who wants to achieve financial independence in ten years and that of the teacher who earns R$13 thousand a month, but has sunk into debt.

Helena is 61 years old, has a 30-year-old daughter and has the habit of saving R$6,000 a month. She expects that this monthly savings will persist for another nine years, when she will stop working.

The construction of his heritage had some help from inheritance, but this help is proof of his parents’ awareness of savings. This awareness was inherited by her and which she hopes her daughter will also adopt.

His financial assets today total almost R$6 million, built over 25 years:

• 67% in federal public bonds referenced to the IPCA (Tesouro IPCA)
• 20% in shares
• 8% in private pension
• 5% on DI funds

Concentrating on securities referenced to the IPCA is what I always recommend. In other words, she has done the right thing.

The inheritance I mentioned is in the share portion, and it is in this part that your doubt lies.

I realize that many individuals who receive shares or properties as an inheritance create a certain attachment to these assets. In a way, it is understanding given the love we have and the effort that the one who left us as an inheritance had. Additionally, the good becomes almost an extension of that loved one.

As Helena must continue saving for another nine years and considering a real interest rate of 4.0% per year during this period, her assets must rise to R$9.3 million at today’s values ​​just before she retires.

With this wealth, a real return would be enough, that is, above inflation of 2.6% per year, and it would be possible to have an income of R$20,000 that could be left to your daughter, after having been used by herself. .

Therefore, all that remains is to resolve one question for Helena, which is: what to do with the shares?

It is observed that Helena is conservative. Proof of this is that all of her savings were built with public bonds. By the way, she could have had much more if she had invested at least partially in CDBs referenced to the IPCA and within the FGC guarantee.

But coming back to stocks, it has a heavy concentration in two companies, which is very unsuitable for any stock portfolio. I will not mention the names of the companies so that this does not constitute a recommendation. But there are two that Brazilians usually buy and they are among the five with the highest weight on the Ibovespa.

There are two attitudes to take given your conservatism:

1) sell everything at once, pay income tax, but guarantee a higher interest rate

or

2) sell little by little, that is, R$20,000 per month, without having to pay income tax, but taking the risk of reinvesting in fixed income securities with lower rates, as they are expected to fall in the coming years.

The solution is based on three premises: which bond to buy, how much interest rates can fall and how much shares can still rise.

Assuming that real interest rates fall by 1.5% over the next five years, the Treasury IPCA2045 currently trading at IPCA + 5.5% per year would fall to IPCA + 4% per year. This would cause the title to appreciate by IPCA + 10.76% per year, approximately, over these five years.

Assuming inflation of 4% per year, it would be equivalent to 15% nominal appreciation.

I think it’s worth the risk to maintain the discipline of selling R$20,000 worth of shares, at least in the next 12 months and avoiding income tax now. The scenario for the stock market allows for a 15% appreciation for shares next year.

However, the same review must be carried out periodically.

Additionally, for this part of the share sale, I suggest that Helena consider the premium that CDBs referenced to the IPCA and guaranteed by the FGC provide.

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