Monday, July 2, 2007


This blog has a goal, a million dollars; however you may have a different goal. What is your goal, money-wise?

It is very important to know what is your goal and how long can you afford to wait before you reach it, because you need to have that in mind when deciding which investment strategy to adopt. For example: If your goal expires in 5 years, it will not be good to have a HTM (Hold Till Maturity) bond which matures in 10 years.

Another plausible reason to have a goal is to calculate, approximately, how much you need to save per month to reach it. In my post about my teenager dream I have presented some possible saving goals but it is up to you to decide how much is your savings goal, and to make sure that is a realistic one.

It is a mistake to try to save a lot of money per month, compared to the money you make, because it’s not possible to accomplish, in most cases. Banks that offer mortgages in Brazil, for example, do not allow you to agree to pay more than 25% of what you make monthly. That threshold may be slightly conservative because it depends on your spending structure, which will vary drastically if you compare the spending structure of a university student who lives with his parents with a 30-year-old person who is steadily employed, married and has kids.

If you are unsure, start with 25% of what you make and have strong discipline about it. The more you save in the beginning, the more compounded interest you will receive throughout the lifetime of your investment.


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