I am writing this question because I want to know what are the best options for using my spare money. Hence, let me first describe my situation:

  • Who am I? I am a 24 years old no child single male.
  • Where do I live? As stated in the question, in Brazil.
  • What do I do? I am a Ph.D. student in computer science.
  • From where do I get my salary? From a Ph.D. scholarship.
  • How much can I save per month? US$ 300,00, but in reais, the Brazilian coin, not in dollars.
  • How much do I have saved? Something around US$ 550,00, not in dollars, but in reais.
  • What are my goals? 1) Finish my Ph.D., which I intend to do in 4 years. 2) Live my life as a work from home person. And 3) move to another country after finishing my Ph.D.
  • Why am I writing this thread? 1) Because I want to know what to do to deal with the Brazilian inflation, from months to now I could see the prices of basic commodities go really high, and this is letting me a little bit frustrated since I do not expect this to get any way better. And 2) I want to know what can I do to make my savings "worthy" when I go to another country, since inflation will affect the value of my money from a global perspective, should I buy dollars? bitcoins? I do not know.
  • Do I have high expectations? Not really, indeed, I do not have any expectation of becoming a filthy rich, or even a just rich, person. I just would like to know what can I do with my savings in order to tackle an even worst possible future inflation, and what can I do to make my savings "worthy" when moving to another country.
  • How much time am I willing to spend managing my savings? One hour a day. Note that I am not one of those people inspired by "easy money" advertisements, or even inspired by the trading market culture. I do not picture myself in a room full of monitors with plotted graphs.
  • What is my knowledge of investments? Almost 0, everything I know is based on youtube videos. However, I am totally willing to learn ;-).

I think that these descriptions are enough to exactly state what I am looking for. Basically, I am looking for the answers to two questions:

  1. What can I do with my savings to tackle future inflation? and,
  2. What can I do to make my savings "worthy" when moving to another country?

Very thank you for your time and consideration, and if anyone has any questions or has identified any errors in the text, please let me know.

2 Answers 2


Usually at times when inflation rate is high, the interest rates are high too (as it's the real interest rate that affects the supply and demand of money). So investing in a money market fund could very well protect you against inflation. However, do note most jurisdictions tax all returns no matter whether they are over inflation or not. So if your money market fund investment has increased to 10x its original value nominally, and inflation has reduced the value of money by 8x, you might find that at 30% taxation rate you'll have to pay 0.3 * 9 = 2.7 units of tax so your money market fund after taxes has returned only 7.3x, less than the value of money has decreased (8x).

However, I'm not certain about the current situation in Brazil. It could very well be the case that the cause of inflation is artificially low imposed interest rates. If this is the case, then money market fund won't protect you.

Usually the best portfolio for any given situation is a mixture of the risk-free portfolio (money-market fund investments, government bond fund investments) and the market portfolio of stocks (well-diversified global index fund). How much stocks you want is determined by your tolerance of risk and the expected duration of the investment. If you are saving long-term and won't get scared by the value of your investment falling 40% (but rather become excited by the new investment opportunities at reduced prices), then I'd say 100% stocks and 0% bonds/money-market investments is the way to go. However, usually I'd advise setting up a small emergency fund and applying the 100% stocks / 0% bonds rule only for money in excess of the emergency fund.

You didn't say any information about your tolerance of risk and/or your expected investment duration. Unfortunately, without those critical pieces of information, nobody can tell what's the optimal way to invest. However, some signs (countering inflation as opposed to providing useful return) suggest that you might be more interested in money-market fund investments and government bond investments.

If the case is that Brazilian interest rates are high, then invest 100% in Brazilian interest-bearing instruments (usually the rule of thumb is to do risk free investments in your local currency but high inflation and low interest rates could make that unadvisable). If the inflation is caused by artificially low interest rates, then I'd say pick a well-diversified portfolio of interest-bearing instruments in the most important foreign currencies like Euro, US dollar, British pound, Canadian dollar, Australian dollar, Japanese yen, etc.

Note that as yield is measured in local currency, even if you invest in a US dollar bond fund that yields in dollars very little, if yield is measured in local currency then you may have to pay a lot of taxes when making a withdrawal from the fund even though you didn't have any measurable return above inflation. The problem is the same regardless of the currency of the fund. It's only caused by local inflation, weakening of the value of the local currency.

I'd also say that if you choose to do any Eurozone investments, do them as money market fund investments and buy no government bonds at all. The reason is that the long interest rates are ridiculously low, predicting very low interest rates for the next 30 years which is far from certain (usually interest rates revert to the mean someday instead of staying negative for 30 years).

Also a reminder about money market funds: they should only invest in short-maturity financial securities like certificates of deposit. They should not invest in variable-rate long-maturity securities or commercial papers. Variable-rate long-maturity securities and commercial papers are common ways of artificially increasing returns very slightly at very great cost of risk. You'll only notice this risk when the market crashes. A real money market fund won't touch these uncertain investments at all.


As a Brazilian I understand your concerns.

To protect against inflation you only have two main strategies:

  • You can invest in fixed income that fluctuates with inflation (e.g IPCA)
  • You can invest in assets that do not follow the real (R$)

First one is the more safe approach as you have a guarantee appreciation above the inflation. Usually you can buy brazilian bonds (https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm#0) that appreciates based on inflation + a premiun (in portuguese: Tesouro IPCA). You can also buy this kind of bond from banks. Some examples are LCI and CDB.

The cons of this approach is that this does not protect you from Real going down in value and you need to wait for the maturity of the bond. Some banks will offer you the possibility to sell the bond earlier but it will not be at the contracted rate. Brazilian bonds are even easier to sell earlier and they can even appreciate above the contracted tax depending on the current tax being offered.

Second approach is to invest outside of Brazil. You can do that with several tools available in most of brazilian banks and investment companies. A easy one would be to buy ACWI11 which is an ETF exchanged in the brazilian exchange stock (b3) that buy stocks from ACWI. This ticket is a broad market index fund which invest in the total world market. If you want to buy SP500 you can invest in IVVB11. You can also open an account outside of Brazil and invest from there. It is a bit more complicated and you need to send money to other country.

You have a lot of options with each option. I just gave some examples so you can do your own research.

  • Very thank you for your answer. Can you tell me if the second approach will rely on the same problem stated by the @juhist? That is the jurisdiction taxes. Sep 29, 2021 at 11:49
  • 1
    You need to do your own research. Tax varies wildy depending on the financial tool you are using. If you are buying ETFs (ACWI11, IVVB11) all you need to do is pay 15% on the profit (capital gain) you make when selling as tax income. If you are buying BDR, you might also have to pay extra tax on the dividends on top of 15% of profits (capital gain) when selling. If you decided to buy stock funds it is also 15% of profits.
    – Bene
    Sep 29, 2021 at 16:20

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