Opinion – From Grão to Grão: You can also reach R$ 1 million with fixed income only

The goal of reaching a fortune of R$ 1 million seems far from most people, but achieving it is simpler than you might think. There is only one factor to define and two habits to adopt.

With the rise in interest rates this year, this target became feasible to be reached and within a shorter period. Even better is that it can be overcome by investing more conservatively, that is, only in fixed income.

Short-term bond interest rates have risen this year to 9.25% per annum. Next year, they should continue to rise. The market expects the Selic to be at 11.5% per annum by mid-2022.

After four years, short-term interest rates should return to a level above 10%. Since 2017, the CDI has been below this mark.

So if you haven’t started saving yet, now’s the time. And if you’ve already been saving, this is the time to step on the accelerator and increase your monthly contributions.

The factor you need to define is exactly this: monthly contributions.

Find out below in how many years you can reach your goal of being a millionaire in the table below. The table shows how many years it should take you to reach R$ 1 million, considering what monthly contribution you can keep and an interest rate on investments.

At the beginning of next year, the monthly CDI should be 0.8%. But by mid-2022, the monthly CDI could reach 1%.

Conservatively, I suggest assuming the rate of 0.7% per month in the calculation, as this already considers a possible drop in interest rates in the future.

You can reach R$1 million in just 14 years, if you invest R$3,000 a month in investments that pay the CDI.

At this point, some may say, “but I can’t save”.

While the process is simple, it’s not easy. It will take some sacrifice, but I guarantee that when you reach your goal, you will understand that it was worth it. Thus comes the first necessary habit, that of frugality, that is, living on less.

You must make your goal a priority and reduce expenses to save.

You may not be able to save as you pay a very high rent. But it is not buying a property and hanging on to a loan that solves the rent problem. With a loan, instead of creating a fortune for yourself, you hand it over to the bank.

You may have a car with a high maintenance cost. Rethink the need for this vehicle.

At this time of higher interest rates, it is not the time to buy or have high-value goods that do not pay, but to sell them and earn interest on the resources.

Remember what I wrote yesterday, to build a fortune, you cannot focus on wealth.

The second necessary habit is discipline. The path to forming your fortune is not a quick one.

Therefore, you will need discipline to persist saving on expenses and investing monthly.

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