The RIGHT way to choose the BEST FIXED INCOME SECURITY (no fuss!)

Summary

In this video, Bruna explains how to choose the best fixed-income investment for your personal situation. She covers various options like CDBs, LCIs, LCAs, and hybrid bonds, emphasizing the importance of considering factors such as liquidity, maturity, issuer risk, and the investment's purpose, not just the return. She also introduces a spreadsheet tool to help compare different investment options, taking into account the current Selic rate, inflation, and taxes. The video highlights the importance of long-term planning and proper risk analysis before making investment decisions.

Takeaways

• 😀 When choosing fixed-income investments, it's important to consider various factors beyond just profitability, such as maturity, liquidity, and the issuer's risk.
• 😀 Fixed-income titles include CDBs, LCIs, LCAs, and inflation-linked bonds. The key is understanding whether they are pre-fixed, post-fixed, or hybrid.
• 😀 Pre-fixed CDBs offer a set interest rate (e.g., 15% annually), providing predictable returns if held to maturity.
• 😀 Post-fixed investments are tied to interest rates like the CDI or Selic, and their returns vary with market conditions.
• 😀 Hybrid investments are linked to inflation (IPCA) and provide real returns above inflation, making them ideal for medium- to long-term investments.
• 😀 A common mistake is focusing solely on returns when selecting fixed-income investments. It's essential to assess the full picture, including liquidity and risk.
• 😀 Liquidity is crucial: some investments allow daily withdrawals, while others lock funds until maturity. Know your investment's liquidity before committing.
• 😀 Be cautious of early redemptions, as some titles, like pre-fixed and inflation-linked bonds, might incur losses due to market fluctuations (mark-to-market).
• 😀 Always evaluate the issuer's credit risk. Government-backed securities are less risky than those from private institutions, which may offer higher returns but come with increased risk.
• 😀 The tax treatment of investments varies. For example, LCIs and LCAs are exempt from income tax, while other fixed-income titles are not.
• 😀 Use financial tools like the Bancodata website to evaluate the financial health and credit ratings of institutions offering fixed-income products.

Q & A

What factors should be considered when choosing a fixed income investment?

When choosing a fixed income investment, factors to consider include the type of title (CDB, LCI, LCA), the maturity date, liquidity, risk of the issuer, whether the investment is short-term or long-term, and the purpose of the investment (emergency fund, medium-term goals, etc.).

What are the differences between pre-fixed and post-fixed income titles?

Pre-fixed titles offer a fixed return, allowing you to know exactly how much you will earn over the investment period. Post-fixed titles, on the other hand, are tied to an index like the CDI or SELIC rate, meaning their returns fluctuate based on changes in the interest rate.

What is the main advantage of LCI and LCA in fixed income investments?

The main advantage of LCI (Letter of Credit for Agribusiness) and LCA (Letter of Credit for Agribusiness or Real Estate) is that they are exempt from income tax, which can make them more attractive for investors seeking tax efficiency.

Why is it important to consider the maturity and liquidity of an investment?

The maturity and liquidity of an investment are crucial because they determine whether you can access your money when needed. Some investments, like those with liquidity daily, allow you to access funds at any time, while others may only allow you to withdraw at maturity.

How can the 'mark-to-market' effect impact fixed income investments?

The 'mark-to-market' effect can lead to losses if an investor needs to redeem a fixed income investment before maturity, as its value may fluctuate based on market conditions. This is especially true for certain government bonds like Treasury Prefix and Treasury IPCA.

What is the importance of knowing the issuer's risk when investing in fixed income?

Knowing the issuer's risk is crucial because it determines the security of the investment. If the issuer is a solid institution or government, the risk is lower, but if the issuer is a private institution with a weaker financial situation, the investment may carry higher risks.

What should investors consider when choosing a fixed income investment for an emergency fund?

For an emergency fund, investors should prioritize investments that offer high liquidity and are tied to post-fixed instruments that track interest rates like the SELIC. This ensures easy access to funds and safety while maintaining a real return.

How does inflation affect the choice of fixed income investments?

Inflation impacts fixed income investments because, for long-term investments, it's crucial to choose instruments that provide returns above inflation. Hybrid investments, like CDBs indexed to inflation (e.g., IPCA+), help preserve the purchasing power of your money.

What role does the Selic rate play in fixed income investments?

The SELIC rate plays a key role as it sets the benchmark interest rate for the Brazilian economy. Fixed income investments like CDBs, LCIs, and LCAs are often tied to it, and its movements directly influence the returns you can expect from these investments.

Why should investors be cautious about long-term pre-fixed investments?

Investors should be cautious with long-term pre-fixed investments because if inflation rises during the investment period, the real return (after inflation) will be lower. It’s important to strike a balance and avoid locking in returns that may underperform due to inflation.