06/05/2024 – 7:30
The dream of retiring with R$1 million shines in the eyes of many Brazilians. But how much money do you need to invest to reach 65 years old with this amount?
Firstly, it is important to understand that the amount of contributions and value of investments will vary depending on when the investments begin. Those who start preparing for retirement at age 20, for example, will be able to contribute a smaller amount than those who started at 30 or 40. The value of the contribution will also depend on the investment strategy adopted.
At the request of This is Moneythe investment manager at Hike Capital Ângelo Belitardo Neto created some investment simulations for those looking to save R$1 million by the age of 65.
The specialist calculated scenarios for investments lasting 45, 35 and 25 years. Belitardo also considered two possible tactics to reach old age as a millionaire, according to a more conservative or moderate profile.
Simulation for conservative profile
Investors with a more conservative profile avoid taking risks. Therefore, it is recommended that they seek investments in fixed income, a safer modality than variable income, which covers investments such as Treasury Direct bonds, CDBs and debentures.
Belitardo highlights, however, that looking for fixed income investment funds with specialized management is better than choosing securities on your own.
“A manager can manage the yield curve efficiently, she can earn gains even in times of volatility”, he explains. The “yield curve” is the name given to the calculation of expected yields on public bonds.
“They [os gestores] they have a technological apparatus, programs aimed at the financial market, responsible for measuring economic variables, capable of anticipating movements in interest rate curves and inflation”, says Belitardo. “These managers need to be able to anticipate this movement and make decisions.”
In addition to fixed income funds, Belitardo recommends investing in an “active fixed income” strategy, that is, funds that invest in assets with a little more risk and return within the fixed income itself. In this case, there are incentive debenture funds — debt securities issued by companies — and credit rights investment funds (FIDCs) — which invest in credit securities.
With investments in these two strategies, the analyst estimates that it is possible to achieve a return of 11% per year — the historical average rate of the basic interest rate since the year 2000.
Single contribution required to reach R$1 million at age 65:
- R$9,129.90 at age 20
- R$ 25,923.63 at age 30
- R$73,608.09 at age 40
If the investor manages, in addition to the initial contribution, to make investments of R$500 per month, the goal can be reached even earlier: at 47, 55 and 61 years old, respectively.
Monthly contribution required to reach R$1 million at age 65:
Those who do not have the budget to make a large initial contribution can choose to make monthly contributions of smaller amounts. In these cases, the amount invested each month must be at least:
- R$84.46 from the age of 20, totaling R$1,013.54 per year
- R$ 243.96 from the age of 30, totaling R$ 2,927.49 per year
- R$728.35 from the age of 40, totaling R$8,740.24 per year
Simulation for moderate profile
If the investor has a greater risk appetite, it is possible to combine the two previous strategies with investments in variable income funds or a dividend portfolio.
“Within variable income we have criteria for an efficient allocation that can protect the portfolio, but even so we are not exempt from volatility”, explains Belitardo.
With the support of income from variable income, Belitardo believes it is possible to achieve returns of up to 14% per year.
Single contribution required to reach R$1 million at age 65:
- R$2,749.68 at age 20
- R$ 10,193.66 at age 30
- R$37,790.16 at age 40
If the investor makes the initial contribution and continues with investments of R$500 per month, the goal can be reached at 44, 53 and 60 years of age.
Monthly contribution required to reach R$1 million at age 65:
- R$32.17 from the age of 20, totaling R$386.02 per year
- R$ 120.15 from the age of 30, totaling R$ 1,441.81 in the year
- R$458.20 from the age of 40, totaling R$5,498.40 per year
After all, is R$1 million a good amount to retire on?
Belitardo highlights that the money needed to live a comfortable retirement varies depending on each person’s lifestyle. It is also necessary to take into account that, in old age, spending on health and well-being increases.
For the expert, R$1 million is a good minimum value if it is used correctly over 30 years in old age. “It’s important not to let your money sit idle, so that your money continues to pay off even after retirement,” he says.
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