Opinion – From Grain to Grain: This is the simplest way to plan your financial independence with fixed income

This week, the National Treasury ended the excuse of thousands of Brazilians for not achieving financial independence. When we think about financial independence, three basic questions arise. The absence of these answers in a simple way prevented, until this week, many from starting their retirement planning.

The three basic questions are:
Is it really possible to achieve financial independence?
Is it possible to get passive income with fixed income?
How much do I have to apply and how much will I earn per month?

I could even say: I didn’t tell you I could!

In the last few chapters, I showed how it was even possible to have higher yields than government bonds with private fixed income. I also illustrated how to do all the calculations.

However, delivering the calculation ready and in a title that faithfully guarantees the result goes beyond my words. The National Treasury is to be congratulated on this initiative.

Let’s get back to the questions.

Yes, with Treasury Income+ you can simply calculate how much you will receive in retirement, how much you will need to invest to reach it and all this by investing in federal government bonds which is the safest investment in the country.

The Treasury Direct (TD) platform does all the calculation for us as to which is the ideal title and what our savings effort should be. To do this, just answer the four questions shown in the figure below.

As an example, I considered an individual aged 40, without any savings so far, who wants to retire at an age close to 65 and who wants to have an income of R$ 10,000 when he retires.

As in the figure below, the platform indicates the amount of securities to be invested per month and the approximate amount to be disbursed.

In this example, the investor would need to purchase 1.85 bonds monthly. Today, that amount represents approximately R$791.84.

However, it is important to pay attention to the following information. As the bond price rises with inflation and accrued interest, the amount to be invested also rises by the year 2050.

As of 2050, investors would receive an income of R$10,000 a month for the next 20 years at today’s prices.

It became simple to live on income with the security of fixed income, right?

Another way to simulate yourself is to calculate what amount you would need to invest today, in a single payment, in this security so that from 2050 you will start living on income.

To do this, simply multiply the total number of securities he points out as necessary to accumulate by the unit price of the security.

In the figure above, the number of titles is 596.19. Each title from this retirement date of 2050 costs R$ 428.02. Thus, it would be enough to invest R$ 255.18 thousand today (= 428.02 * 596.19) and you will be guaranteed an income of R$ 10 thousand at today’s values ​​in retirement.

But, there is a way to improve even more this whole opportunity.

The composition in a portfolio of government bonds, private bonds with FGC and private bonds exempt from IR can further leverage your income possibilities or reduce your savings effort.

Let’s go on this journey to financial independence?

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

Talk directly to me via email.

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Book: The Journey to Financial Independence

summary

Introduction

Understand how you will achieve your financial independence
Living on an income is the last step on the journey to financial independence
These are the biggest questions about the journey to independence

Part 1 Construction of the plan

Chapter 1 The first step in building the blueprint for financial independence
Chapter 2 How do you define the rate of return in your plan for independence?
Chapter 3 Find out what equity you need to achieve your financial independence
Chapter 4 On your journey to independence, don’t overlook the importance of this factor
Chapter 5 Understand the two ways I applied to increase my saving capacity
Chapter 6 If You Double This Factor, Your Equity Can Multiply Much More
Chapter 7 Connecting the dots to build your plan

Part 2 Assembling the portfolio to lead you to financial independence

Chapter 8 Before making any investment, define these two factors
Fixed Income

Chapter 9 You should not build an income portfolio if you want to reach equity to live on income
Chapter 10 Avoid these two common fixed income investor mistakes
Chapter 11 In fixed income, does it pay to invest in private credit in relation to public credit?
Chapter 12 Discover how to win the private fixed income premium, but with low risk
Chapter 13 This is the simplest way to plan your financial independence with fixed income