Why is it necessary to plan personal finances?
For two reasons: The first is to avoid being reactive to our finances. When this happens our decisions tend to “run backwards”, sometimes being more emotional than rational, which leads us to use our resources inefficiently. By planning we bring proactivity to our finances.
For example, some people tend to have emotional reactions when seeing that the dollar rises or that the economic situation of the country is critical. Unfortunately, for as long as I can remember, our country has worked this way, which should not make us even more reactive, but on the contrary, should encourage us to have a plan. The need to plan does not depend on the context but is acyclical.
The second reason is to prevent our only expected scenario from being the optimistic one. I am optimistic and I believe that it is a quality associated with successful people. But when it comes to planning, if we are only prepared for the best, any slight deviation will alter the entire equation. That’s when we become reactive.
What is it like to apply the Cactus Mode to personal finance?
“Cactus Mode” responds to the analogy of being able to survive in difficult and extreme conditions. Through the efficient use of its resources, the cactus manages to minimize the impact of the environment. What we seek is to replicate this model in personal finance, so that each person can build a self-sufficient financial future.
We usually focus our advice on comprehensiveness and personalization. Cacti come in many different sizes and shapes. Some grow in the desert and others in small pots. But they all use their resources in the most efficient way possible, to survive in the environment that has been handed to them. Like cacti, each person has unique resources, needs and goals, which we will plan to use in the most efficient way possible.
What do you mean by “resources” to plan finances?
Resources does not only refer to how much money the person has to invest, that would not be comprehensive planning. We work with what is saved, the capacity to save, and time. But that is only a part.
The same perspective of seeing money over time is applied to needs and objectives. It is not the same to want to buy a property next year, than in 20 years; nor is it the same goal being 40 or 60 years old. The more time we have for a goal, the less money it requires.
Regarding the needs, let’s give the following example: A couple with a child in kindergarten knows that they have to pay the garden fee every month. But it is rarely taken into account that she has the same commitment for another 15 years. Through planning, this need can be shielded with risk management tools, just as the thorns protect the cactus.
By diversifying savings, we can label each one according to the purpose it pursues, and separate each objective and need, without the occurrence of any of them compromising the rest. The idea is to stop having a single piggy bank where to save savings, since we would be in the presence of multipurpose savings, and this makes it inefficient when it comes to investing. Labeling each pig according to its purpose is to plan when and what each of the savings will be used for. In addition, it allows you to invest in the financial instrument that best suits your objective, and I always say that there is no better investment than the one that meets expectations.
What is the main difficulty to overcome during the process?
I think the main difficulty is putting ideas into practice. Sometimes it happens that a person recognizes the plan as ideal, according to his needs, and never implements it.
Many times important decisions are postponed, and sometimes they are even never made. The issue with financial decisions is that in addition to being important, they are also urgent due to concepts such as opportunity cost, time value of money, and compound interest.
From my point of view: not making decisions is an implicit way of deciding, and often the worst.
What happens after the plan is put into action?
Although some financial needs remain latent, there are other personal context factors that can change over time, such as income, household composition, new goals, among others. We like to accompany each investor along his way, reviewing and adjusting the plan when necessary, so that it adapts to his new reality.
In addition to the personal, we are constantly watching the market and receiving research reports from the best financial institutions. We keep up to date to take advantage of the opportunities that appear in the markets and protect capital.
How is the team made up?
Well, actually we are lucky to work, learn and share with many advisory teams. We grow within the structure of Grupo Abax, our main strategic partner, forming part of the Ser Financiero team.
At Cactus we are a young team of advisors who choose to work together. It is a dynamic and rapidly growing team. We seek to provide practical financial education, prioritizing solutions that are truly applicable according to each profile. We find it very unfair that anyone who does not have knowledge in financial matters does not have access to very convenient and easy-to-implement solutions.
Matthew Vincent He is a suitable Producer Agent in the capital market CNV nº 1463, Bachelor of Administration and postgraduate in Finance.
networks:
Instagram: @finanzasmodocactus @serfinanciero @abaxgrupo
Linkedin: Mateo Vicente
www.modocactus.com
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