Financial Planning: what it is and why it matters

Financial planning is the organization of personal finance to create a blanket of protection for the needs of the individual situation and a powerful tool to achieve goals and achieve dreams in the short, medium and long term. One of the main pillars supporting financial planning is discipline. This zeal for financial objectives actions in favor of goals is what will determine the success of this organization.

There is no use in a strategy that is followed for just a week or a month. Here we are talking about years and decades. It is eye on the long term and retirement should focus financial planning services. It all starts with a good diagnosis of the current financial situation and goes through the paths necessary for success. In this evaluation, it is necessary to include current financial situation wages and earnings, stability of this source of income, forecasts of extraordinary revenues in the coming months and years and calculation of weekly, monthly and annual expenses. Then, it’s time to outline the main goals you have in mind for the next 5, 10, 20 and 30 years. Where do you want to be financially and personally within these time bands? What kind of life do you want? How much would you like to earn? With these two scenarios in hand, the current and the future perspective, you have a basis to start financial plan. It is time to discover the best ways to actually reach the future you want. Are you interested in the next steps? Next, we will give more details for your financial plan to be done in the smallest details.

When to use financial planning services

The sooner you start to outline your financial planning, the easier it will be to achieve your goals. So, set aside a few hours of your day today or this week to write down your first ideas. If you haven’t noticed yet, if you don’t consciously outline financial planning services and take action to make it a reality, you will take a path that may not take you where you want to go. Life is always on the move, and you are always on your way to some destination, personal finance. Is this the right course at the moment? There is no way to find out: you need to draw up an adequate financial plan, which takes into account your current financial situation and your goals.

Why financial planning is important

Good financial future planning is important because it shows the routes (savings, personal finance effort, work, investment plan) that you will need to take in order to achieve success . With the Pension Reform , this need to take care of their own future will become increasingly clear to Brazilians. If you use the tips in this article, you will certainly be able to move faster towards your dreams . In this next topic, we’ll show you how investment plan discipline will make a difference in your future.

How discipline impacts financial future planning process

Discipline is essential in financial future planning process. The main reason goes by the name of compound interest . They do magic in investments – and torture those in debt. Imagine if you bought a National Treasury bond for R $ 1,000.00 in 1995 and completely forgot about it for 20 years. With a fixed rate of 10% per year, those R $ 1,000.00 would turn into R $ 6,763.97. With an income linked to Selic, those R $ 1,000.00 would become R $ 28,025.11.Amazed? Welcome to the universe of compound interest! These are the famous “interest on interest”, which occurs when the investment returns enter the valuation account.

It is a different calculation of simple interest, when the nominal valuation is always the same. In the example above, the simple interest of 10% of R $ 1,000.00 would always be R $ 100, that is, in 20 years, the appreciation would be of R $ 2,000.00, in a final result of R $ 3,000.00 . In these examples, we are excluding from the accounts possible rates , the Income Tax (which would be 15%) and inflation (which is now within the target of 4.5%, but which has already fluctuated well above it). These numbers are just to give the dimension that, if you have the discipline to invest a fixed amount every month , whatever it may be, the long-term result will be very interesting. Are you curious to have a real example of how discipline will make a difference in your financial planning process? So, come on.

Example of investment discipline

There are Treasury Direct securities that are pegged to the IPCA (Broad Consumer Price Index), that is, to the country’s official inflation. Do you know why they are interesting for planning process? Because they allow you to have prospects of appreciation that will overcome inflation and still guarantee real interest. One of the securities available at the beginning of April 2017 was the IPCA + 2035 Treasury , maturing in May 2035 and yielding 5.23% per year plus inflation for the period. Let’s say that you invest R $ 20,000.00 in this bond in the next month and, each subsequent month, buy R $ 1,500.00 in bonds with the same yield until that maturity.

In May 2035, 18 years from now, you will have R $ 583,003.18 plus all the inflation for the period. Seems little? This value refers, in fact, to the purchasing power you have today with R $ 583,003.18, since the variation of the IPCA is included in the yield of the security, but not yet priced. The total amount you will have will be much higher . Considering, say, that appreciation of 10% per year (adding average inflation just below 5%), the final result will be R $ 972,590.28. In this case, you would pay 15% Income Tax on income, which is equivalent to a discount of R $ 94,288.54. Final result: R $ 878,301.74 (excluding the custody fee of 0.3% per year). This example is not an investment plan tip – just a demonstration of the strength of compound interest. You should not focus your efforts on just one Treasury Direct. The rule for planning your investments is to diversify and create a portfolio with different assets . Next, we will better understand how to make this strategy.

Set your goals and dreams

It is important to define your goals and dreams to understand how to reach the future you aspire to. What are your plan for five, 10, 20 and 30 years from now? Want to increase the family? Do more international travel? Buying a bigger house? Change cars more often? Moving to another city? Raise your standard of living in general? In these calculations, it is important to enter all your costs, the basic ones, that you have every month, and the desirable ones, those that you would like to have.

For example, in basic costs , the rent (when applicable), property tax, car expenses, food, education, health, household expenses, among others, would be included. At desirable costs , they could enter two vacation trips a year, change cars more frequently, renovate the apartment or move to a bigger house, etc. In these projection scenarios, it is also interesting to envision financial objectives goal , such as the monthly amount you would like to earn or all the elements that make up the lifestyle you would like to lead. Did these ambitions bring a number to your mind? For example, R $ 7,000.00 or R $ 10,000.00 per month. How much would you need today to guarantee this monthly income?

An interesting exercise is to take a Treasury bond linked to inflation, to guarantee the permanence of purchasing power over the years. To have an income of R $ 10,000.00 per month, with practically zero risk tolerance and purchasing power maintained with the variation of the IPCA , you would need to invest R $ 2.4 million at this time. Also learn Accounting and its important terms?

Were you scared?

You don’t need to have that value right now, at hand. But you take several steps at this point to ensure that 20 years from now you will have the conditions you want.

Make a financial control

Making an adequate financial control is the first step towards a future of goals and dreams realized. For this diagnosis, it is important to use spreadsheets or applications and spend a lot of time gathering all the information about family expenses and income. If you use a spreadsheet, dedicate a tab to all the expenses you have today, separating any eventual expenses.

In another space, gather all income , fixed and eventual.

If there are debts in your life, don’t forget to list them, no matter how small. Here it is important to have a general picture of your finances. It is normal for surprises to occur at this time. Those who do not adequately control finances end up finding very peculiar financial situation. You can see, at the end of the month, that the supermarket bill exceeds R $ 1,000.00, for example. Or that the newspaper subscription consumes R $ 900.00 in one year. Now, do you know how much is left at the end of the month? It’s time to take financial decision how much you want to save. To do this, you must choose priorities and cut out anything that is superfluous, preferably in negotiation with your spouse , if you have one. In this cost reduction, you can start slowly , setting a cut rate of 10% in monthly expenses, for example. Gradually, you will reach the monthly amount you want to allocate to investments.

Choose the investment strategy you will adopt

A good investment strategy must aim for the long term. This is the first point that you need to be aware of. Since you are planning your future, you can some risk tolerance in the short term , as long as you are investing in assets that offer security in the future. To define exactly where your money goes, you need to consider some aspects , such as security, costs, inflation, diversification and variable income. We will talk in more detail about them now.


A large part of its reserves must be destined to fixed income , which guarantees expected returns at the time of application, especially in a country with one of the highest interest rates in the world. In this type of investment, carefully analyze options for CDB (Bank Deposit Certificate), LCI (Real Estate plan Credit Bill), LCA (Agribusiness Credit Bill), Tesouro Direto (public debt securities).


When analyzing and calculating your earnings, you must take into account all application costs. In fixed income, income tax may be charged, from 22.5% to 15%, depending on the time of the investment. In equity funds , remember the management and performance fee, in addition to the 15% income tax. In multimarket funds , in addition to fees, there is also a quota-collector, a semiannual advance of the Income Tax. Analyze your investor profile! Depending on your risk appetite, some of the above are not recommended.


In addition to the costs of each application, you need to take into account a very important factor in the economy: inflation. It erodes purchasing power and can compete on equal terms with bad investments, such as savings (which lost the battle in 2015, for example). So, when considering your long-term options, look carefully at securities linked to indicators such as the IPCA (official inflation), Selic (basic interest rate of the economy) and CDI (index used by banks, which closely follows the Selic).


As you have seen, financial planning depends on organization. It seems obvious, but it is net worth reinforcing the mantra: you need to know where you are and where you want to go to find the path to be followed. Often, the investor is unaware of his true financial situation before starting to research applications. But their availability of budgeting money has a huge impact on their investment possibilities. The main impact refers to liquidity. It is recommended that you find out how much you spend monthly to set aside five or six months of money budgeting to be used in applications that are easily convertible into cash.Just don’t take savings into account, OK? There are many other investments with risk as low as the passbook that pay much better than it. A CDB with monthly maturity, for example, may pay a fee close to the CDI. To apply for one, therefore, you can invest even that money that you will need in 40 days, for example. A Treasury Direct note that accompanies the Selic can also be sold at any time, if you need to, with a low risk tolerance of devaluation.Another possibility is a DI fund, which invests mainly in Treasury bonds and has high liquidity, for that amount that you have for a short time. In addition to using the most liquid investments for a portion of your equity, you will outline, in your financial planning budgeting, a diversified strategy to compose your portfolio with higher yield investments, with the other portion of your reserves.

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