A while ago, I started corresponding with JB of AA40, a blog in Brazil on becoming financially independent and retiring early. Also known as FIRE, the movement has lots of followers and a growing list of successful pundits.JB asked me if I would be willing to do an interview with AA40, and after looking at the format of an earlier interview published on AA40, I agreed.
As an expat South African, there are similarities in the investing landscape in Brazil and South Africa that I recognize and appreciate. For example, interest rates are much higher than in the USA, so investing in the stock market instead of depositing your money in a bank is not so self-evident.
Of course, the real issue is how interest rates compare to the rate of inflation. If you earn interest on your investments below the rate of inflation, you're essentially "losing" money (or at least buying power) in the long-run.
In South Africa, the benchmark repo rate is 6.5% and according to this website, savings accounts can earn up to 6.95%, while 5-year fixed term deposits return as much as 12.95%. With a core inflation rate estimated at 4.5% for April 2018, it seems less obvious to be a stock market investor.
I'm not familiar with Brazil's situation, so I have to rely on Google with no local verification. The inflation rate is reported to be 2.86%, while the key Selic rate is pinned at 6.5%. Savings accounts earn up to 5.95%.
In comparison, the current US inflation rate is 2.5%, while savings accounts offer a measly 1.7% and 10-year CD's offer a paltry 3.4%.
To read my interview with AA40, please click on the following link. The interview is in Portuguese and English (scroll to the bottom of the blog page):
Thanks for reading and happy investing!
Thank you so much DivGro for your interview and for posting this about it. We've got lots of comments saying that they will now follow your blog.
ReplyDeleteThe numbers about Brazil above are right, however inflation is going up again. This is always a concern here.
Thanks,
AA40
Hi, AA40 -- thanks for confirming the Brazil numbers. Inflation seems to be a concern everywhere, also here in the USA. At least it is not yet too high. But I know in SA it remains a big issue.
DeleteTake care and all the best in your FIRE journey!
Great Interview.
ReplyDeleteInvesting in dividends stocks is a good strategie.
I live in Brazil and I start follow your Blog.
Thanks so much for visiting and commenting. I hope you find value on my blog!
DeleteAll the best with your investing journey!~
Excellent! I already follow you DivGro and AA40, he’s a big fellow. It’s good to have some words from a South African investor in USA. I guess we are a lot and uncle Trumps appreciate it !
ReplyDeleteI also have a blog that shows my wallet in USA and some ETF in Ireland with some comparisons between Brazilian assets vs USA essets. Me and AA40 talk a lot of about it.
Cheers!!
Hi, BP Milhão -- thanks for visiting and commenting! I appreciate the kind words.
DeleteI like how international my blog has become, with lots of mirror sites all over the world. It is good to get the perspectives of non-USA investors. More experiences are better, in my view!
Take care and I hope you visit again soon!