Since 2021, I have been documenting my financial journey. This year, I am beginning to document my experience managing my relative’s finances. The following letter was written to my sister to explain how I will handle this new responsibility.
I hope this article adds value to your life.
July 16, 2024
Dear Sister,
Thank you for entrusting me with the management of your savings. While I cannot guarantee specific results in advance, I will handle your hard-earned capital with the same care and diligence I apply to my own.
This document serves as the foundation of our partnership. The following section outlines our portfolio goals and principles, asset allocation, and an outlook for the near future.
Portfolio Goals And Principles
The main goals of the portfolio can be summarized into two points: 1) preserving capital and 2) achieving annual capital growth that exceeds inflation. Why these goals? Because every month, you have two options: 1) spend your money on goods and services, or 2) save it for the future. My responsibility is to ensure that whenever you choose to save your money, its purchasing power will be preserved at the very least.
In life, there are many paths to achieve the same goal. Whatever path I choose, I will adhere to these principles: security, simplicity, common sense, and low maintenance. I am confident that these principles will help us achieve our goals and make it easy for you to take over the portfolio when I am no longer managing it.
Portfolio Asset Allocation
The portfolio will primarily include assets from the following categories:
Cash and Term Deposits: The portfolio will maintain an adequate level of cash and equivalents, not as an attempt to predict a market crash but to ensure sufficient liquidity to face any unforeseen challenges.
Bonds and Equity Funds (with tax benefits): These investments aim to secure tax benefits, resulting in an annual tax reduction of 20% of the allocated capital. While some argue that this money might have compounded at a higher rate in a global equity index, the certainty of this tax break is a key consideration.
FTSE All-World ETF: The majority of the portfolio will be allocated to the FTSE All-World ETF, representing nearly 95% of global public companies.
Stock picking Investments: There could be investments in securities of certain companies that have the potential to outperform the FTSE All-World ETF. This type of investment will not happen very often.
The following table presents the first selected assets by category.
| Asset | Category | Notes |
| Vanguard FTSE All-World UCITS ETF (Acc) | FTSE All-World ETF | ISIN – IE00BK5BQT80 Symbol – VWCE.F Link – vanguard |
| PPR Golden SGF ETF | Bonds and Equity Funds (with tax benefits) | Fund composed of ETFs Link – golden sgf etf |
Conclusion
Sister, the beginning of our journey started today. It will be long, I expect, with positive and negative moments, but in the end, I believe it will be a success. I cannot guarantee any results in advance, but I will give my best.
Enjoy the journey.
Palhagões 