Most fixed-income funds invest most of their assets in public debt securities. So why not dispense with the intermediation and costs and buy these papers yourself? It is possible through the Tesouro Direto platform.
The main advantage is in costs. While funds charge a management fee of up to 4% per annum, many brokerage firms practice zero fees at Tesouro Direto. The price paid to B3 (the São Paulo Stock Exchange, which is responsible for the custody of the securities) is only 0.3 % per year. This investment is also quite affordable: the minimum to apply is R$30.
An option for public bonds is private bonds issued by banks and financial institutions to raise money and offer credit to their customers.
CDBs offer the so-called daily liquidity, the name given to the possibility of asking for redemption at any time, which makes this investment interesting to make an emergency reserve. One of the most famous is the CBDs, as mentioned above. When investing in CDB, you lend that amount to the company, which commits to paying it with interest within a specified period.
Savings is the first thing that comes to mind for most Brazilians when deciding where to store money safely. It is a direct investment: deposit any amount into an account of this type, and the money will earn interest every 30 days.
On the one hand, most likely, your checking account has a savings account linked to it and allows transfers between the two without fees or costs.
Mutual funds are an effortless and practical way to save. They bring together a series of investors interested in pooling resources to invest in different assets, always under the supervision of a specialized manager.
In other words, they act as an intermediary: you invest an amount, and the fund managers use the money to buy financial assets and earn income. In the case of fixed-income funds, professionals invest in public and private bonds that pay interest.
Bills of Exchange
Generally, less known, Bills of Exchange (LC) are not related to the trading of foreign currencies, contrary to what the name may indicate. They are closer to CBDs.
In other words, an LC works as a loan for a financial institution interested in raising funds. The only significant difference to other fixed-income applications issued by private entities is that the money collected in this modality is intended to grant financing.
US government bills or notes, often referred to as treasuries, are assisted by the complete confidence and credit of the US government to make them one of the safest investments in the world. Long bonds are exempt from state and local taxes and are available in different maturities. Accounts are sold at a discount; they will be worth their total par value when the bill matures. The difference b/w the purchase price and the face value is the interest. For example, you can purchase a $1,000 account for $990; at maturity, it will be worth up to $1000.
On the contrary, Treasury notes are issued with maturities of 2, 3, 5, 7, and 10 years and earn a fixed interest rate every six months. In addition to interest, T notes can be charged at face value at maturity if purchased at a discount. Treasury bills and notes are available with a minimum purchase of $100.
VGBL is recommended for those who use the simplified IR declaration model (whose discount is standard 20% and does not consider deductions).
You cannot deduct investments made in the pension plan throughout the year from Income Tax; when the invested amount is redeemed, you will pay the tax only on the value of the earnings, not the accumulated total.
It is recommended for investors who use the full declaration model because they can deduct the amount invested in the pension plan throughout the year from the tax. However, when you redeem the investment, you will pay tax on the total invested and his income in the period.
LCI and LCA
The Real Estate Letter of Credit (LCI) and the Agribusiness Letter of Credit (LCA) are similar options to the CDB to save money but with a difference. The funds the financial institution raises can only be used in credits in these two sectors of the economy.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.