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How to get financial stability

How to get financial stability
In any investment you need to have a careful management and a strategy to get profitability and stability. It's worthless to just sit back and wait for things to hapen by miracle.
by Josué Ramos   |   comments 0
Wednesday, December 30 2015

Warning: This article aims at helping anyone achieve financial stability in an investment, in sports betting or in any other investment. It's not by any means an incentive for anyone to quit their job or occupation. All these tips are nothing more than a suggestion on how to get financial stability.

Although we believe the theme of financial stability is universal, this article was written with the Brazilian reality in mind. Therefore, all the examples of taxes and financial applications are specific to the Brazilian market.

I frequently hear this comment on Sport Betting: "It's an investment in which you don't have any financial stability at all", so the question that arises is if there's any truth whatsoever to this.

I have always said that to get any financial stability in sports betting it takes money and wisdom. Do you have both? 

Some have money and don't know what to do with it, while others have wisdom but no money. No one is perfect! But let's see how one can get financial stability in sports betting.

Think about it. If you work for a company for 5 years, you have some protection in case of dismissal, FGTS (Fundo de Garantia do Tempo de Serviço). Moreover, you have other benefits, at least in Brazil, so naturally you may think it's safer to work for your company than in sports betting. But what is it that makes you feel safer? Think about, it's obvious. It's all about collecting and interest income. It may not be so obvious at this point, but I'll explain this in detail.

Basically, your boss collects the warranty fund, 8% of your salary, including extra working hours, 13th month, vacation allowance, etc., and deposits it in an account under your name at the Caixa Económica federal. This fund has an annual revenue of 3%, but may suffer adjustments due to upcoming laws, rising to 6% in 2016.

Apart from the FGTS, there are other benefits, such as the already mentioned 13th month, the vacation allowance or a health insurance, anything the system can do to make you feel safe. All of this keeps the system going, but financial stability is much more than this, to be honest. Again, this is not an advice to quit your job, it's only a criticism to how the system works.

Another important question that arises then is: Couldn't you do this for yourself? That is, can you get all these benefits and eventually a few more on your own? Once more let me clarify that this is not an incentive to quit your job, you can and should look at this as extra income.

Let me explain how I currently manage my finances.

When a season ends, a whole year of betting, I calculate how much I have won since the beginning of the season. This is the gross value, which must be divided in several chunks. This can be done for any investment, in fact, that is exactly what I do, since I have other investments besides sports betting.

After calculating the gross value I divide my income in several parts. This is obviously assuming I had a profit. Anyway, that's a must for a professional in this market. I repeat, for a professional, not someone who has just started. Below is a list of the several portions I divide my annual income into.

1. The percentage of money which I keep in bank to keep betting. This may vary according to your profile. I usually keep about 20%, but I used to keep a lot more. This may give you the tools you need to increase your annual income, so don't take too much in the beginning.

2. I keep 15% of what's left to invest, the equivalent to a warranty fund or a retirement fund. The advantage of doing this is that I can get a higher profitability in other investments than I would get in traditional retirement funds.

This step is ingenious, because depending on how much money you have available, you can apply it in a whole range of low risk financial applications, which may even be tax free. Talk with your accountant about the advantages and disadvantages of different applications.
Remember that FGTS gives you an annual income of about 3%, so it's not hard to find a low risk application that can give you a better profitability.

What have I done over the years? I invested in exchange and had great results, getting 40% a year. This money will one day my golden retirement or will help my family. Anyway, I think about the future and getting stability, so why think I'm on the right track with this method.

Remember that this money is to be used in years to come, so keep investing it. Choosing the right financial application for you, according to the risks you are willing and able to take. In my case I'm already able to invest in higher risk applications.

Another important advice is not to withdraw any money from a bookmaker before you know exactly what to do with it. Besides, you should only take exactly what you need.

3. Now comes another important step, for which you need to know your tax situation. Those who use MEI in any type of service in Brazil are relieved of taxes up to 60 mil reais. Here's the tip for those of you who use MEI and invest on sports betting. Some of you who work for a company may already pay IR, so you need to check your situation with your accountant.

I usually ask my accountant to tell me how much I have to pay and take the amount I need from my profit. It's not that complicated.

4. The 4th step is the easiest but also the scariest: divide the remaining amount in 14 chunks. This amounts to 12 months of salary, plus the 13th month and the vacation allowance.

So I divide my income by 14 and usually make withdrawals every 3 months, a period which I have adjusted to my needs. I deposit this money in a bank account or in a reliable bookmaker.

This 14 chunk division helps me control my expenses, since I tend to spend as much money as I earn. Therefore, the 2 extra salaries are important to face any extras or emergencies.

To further clarify this let me give you an example. Let's say I have an income of 100 thousand, dividing this by 14 I get:

(100.000 / 14 = 7.142,85)

This corresponds to 14 salaries of 7.142,85.

5. The final step is a key one, to pay the INSS and other insurances. When the idea of stability came to my mind, the first that occurred to me was a life insurance. I did some research and found a good one at my bank. This is extra security for my family, which I find is very important.

Another important insurance is that of your car. If you have an expensive car that isn't totally paid for yet, this is a must, in other cases it's more of a financial option.

Here's something you should consider: a car shouldn't be an investment but a means to help you move about. Therefore, you shouldn't spend more than 25% of your annual income on it. However, this requires evolution. For example, if you make 100 thousand a year and bought a 25 thousand car, you are already on the limit of what you should spend. But the car is already paid for, so in the next year you have another 25 thousand available, plus you can sell the car and buy a better new one. But in Brazil people usually get into debt for years to pay for a car that loses value the minute it leaves the dealership. Now I find that to be plain stupidity!

A health insurance is also something you should consider, particularly if you have kids.

Another safety measure would be to leave documents, passwords, etc., to allow someone you trust the ability to access your assets in case something happens to you. You don't have to give the documents to someone, you can keep them in a vault, for example. If you have a lawyer you can leave a will and make these documents available to him. Sooner or later we are all going to die, that's for sure, so it's smart to make sure that your hard earned money is not left in the hands of bookmakers, while your family gets nothing.

To sum up, you should realise that this annual financial management will give you the safety of a salary, which if you think about it not even a regular job in a company can give you. I have friends who live off incomes from financial applications, but that means having money to invest and some stability, you can't just leave your job and go after something like that. At least in the beginning you should look at this as extra money and keep your job. I have studied this thoroughly and I found that the most profitable investments are long term ones. If you find good ones you may have money available to buy a house or a car in a few years. Some of these applications give you some freedom to access the money, in periods of 1 or 3 years, which is quite good.

I hope I have explained all of this well enough for you to see how profitable it can be. Surely it implies investing time and money, I'm not saying otherwise. This is obviously not an easy market to work in and it surely isn't for everyone, but if you work hard and have discipline you can go far. I don't wish to create false hopes, nor kill your dreams. It is indeed possible to make a lot of money in sports betting, should you keep focused and have emotional control.

Make plans and set goals, not daily goals but long term ones. Set the means you need to see them through with no pressure. Move slowly but steadily, with caution.

Remember: if it was easy everyone would succeed and merit would be a meaningless word. Don't underestimate yourself and don't quit.

I hope you have found this article useful. Good bets everyone!