When we think about saving money, the first thing that comes to mind is savings. It’s simple, everyone knows it, and it seems safe. But is it the best option? Fixed income offers several alternatives that promise more returns. In this article, we will compare savings and fixed income, so you can decide where to put your money.
Main Conclusions
- Savings are easy to use and tax-free, but they yield little, especially when inflation is high.
- Fixed income offers various options, such as CDBs and Treasury Direct, which can yield more than savings.
- The Selic rate directly influences the yield of savings, while fixed income can have more predictable returns.
- The security of savings comes from the FGC, but many fixed income securities are also safe.
- Choosing between savings and fixed income depends on your investor profile and financial goals.
What is Savings and How Does It Work?
Savings, one of the most traditional ways to save money in Brazil, is an account offered by banks that allows the deposit of amounts with the promise of monthly returns. It is known for its safety and simplicity, being ideal for those looking for an uncomplicated form of investment.
History of Savings in Brazil
Savings emerged in 1872, being one of the first forms of bank investment in the country. Over the years, it has consolidated as a popular option among Brazilians, mainly due to its ease of access and tax exemption on earnings.
Advantages of Savings
- Immediate Liquidity: You can withdraw the money whenever you want, without complications.
- Income Tax Exemption: Savings earnings are not taxed, which is a big attraction.
- FGC Protection: The Credit Guarantee Fund protects up to R$ 250,000 per CPF and institution, ensuring security in case of bank failure.
Limitations of Savings
Despite its advantages, savings have their limitations. The yield is tied to the Selic rate and the Referential Rate (TR), which often do not exceed inflation, resulting in a loss of purchasing power over time. In addition, the money only yields on the “anniversary” of the deposit, that is, every 30 days.
Choosing between savings and other investment options can be challenging, especially when seeking profitability and security. Intelligent financial decisions begin with knowledge, and understanding the nuances of savings is the first step to more informed decisions.
Understanding Fixed Income
Fixed income is a type of investment that offers predictability in returns, being generally safer. Basically, it’s like lending money to banks, companies, or the government, and then getting it back with interest.
Types of Fixed Income Investments
There are several options within fixed income, each with its own characteristics:
- Treasury Direct Securities: Issued by the government and considered the safest.
- CDBs (Bank Deposit Certificates): Issued by banks, they offer returns in exchange for lending to the bank.
- LCIs and LCAs (Real Estate and Agribusiness Credit Letters): Exempt from Income Tax for individuals.
- Debentures: Securities issued by companies, they can offer higher returns but with more risk.
Advantages of Fixed Income
- Security: Many securities have the protection of the FGC (Credit Guarantee Fund).
- Predictability: The investor knows how much they will receive at the end of the term.
- Diversity of Options: Allows choosing between different terms and returns.
Risks Associated with Fixed Income
Although safer, fixed income is not without risks:
- Credit Risk: Possibility of the issuer not honoring the payment.
- Liquidity Risk: Difficulty in selling the security before maturity without losing money.
- Market Risk: Changes in interest rates can affect the value of securities.
Fixed income is a popular choice for those seeking security and predictability, but it is important to understand the different types of investments and their risks before making a decision.
Profitability Comparison: Savings vs Fixed Income
Impact of the Selic Rate on Savings
The profitability of savings is directly tied to the Selic rate, the basic interest rate of the Brazilian economy. When the Selic is above 8.5% per year, savings yield 0.5% per month plus the Referential Rate (TR). However, if the Selic is equal to or below 8.5%, the yield drops to 70% of the Selic plus the TR. Therefore, in high-interest scenarios, other fixed income options may be more attractive.
Profitability of Fixed Income Securities
Fixed income securities, such as Treasury Direct and CDBs, generally offer returns superior to savings, especially in periods of high Selic. The profitability can be pre-fixed, post-fixed, or hybrid, allowing the investor to choose according to their market expectations. For example, a CDB that pays 100% of the CDI can yield significantly more than savings, depending on the economic scenario.
How Inflation Affects Investments
Inflation is a crucial factor in the real profitability of investments. When inflation exceeds the yield of savings, the investor’s purchasing power is eroded. In contrast, many fixed income securities, such as the IPCA+ Treasury, offer protection against inflation, ensuring a real return by adding a fixed rate to the price index variation.
Evaluating real profitability, considering inflation, is essential to protect purchasing power and make smarter investment choices.
Investment Security: Savings and Fixed Income
FGC Protection in Savings
Savings are seen as a safe haven by many Brazilians. This is largely due to the protection offered by the Credit Guarantee Fund (FGC). The FGC guarantees up to R$ 250,000 per CPF and financial institution, with a total limit of R$ 1 million renewable every four years. This security makes savings a popular choice, even when profitability is not the highest.
Security of Public Securities
When we talk about fixed income securities, security is also a strong point. Securities such as Treasury Direct are guaranteed by the federal government itself, making them extremely safe. In addition, they generally offer higher profitability than savings, without giving up security.
Risks of Investments Without FGC
Not all fixed income investments have FGC protection. In some cases, such as debentures or certain receivables certificates, the risk is higher. However, these investments usually offer more attractive returns to compensate for the additional risk. It is crucial that the investor evaluates their risk profile before investing in products without FGC guarantee.
Choosing between savings and fixed income depends on your risk appetite and financial goals. While savings offer simplicity and security, fixed income can provide better returns, as long as you are willing to understand the nuances of each product. Deciding which is best for you is an important step towards achieving your financial goals.
How to Choose Between Savings and Fixed Income?
Investor Profile Analysis
Choosing between savings and fixed income starts with understanding your investor profile. If you are conservative, you may prefer the security of savings or fixed income securities with FGC guarantees. A more aggressive investor may seek alternatives with greater return potential, even if it means taking on more risks. Knowing how you handle risks is crucial to making a decision aligned with your expectations.
Financial Goals and Terms
Your financial goals and the time you intend to keep the investment are also determining factors. Savings offer immediate liquidity, ideal for those who need quick access to money. On the other hand, fixed income securities can offer more attractive returns but generally require longer redemption terms. Evaluate what you want to achieve and in how much time, to align your investment choices.
Investment Diversification
Diversifying is always a good strategy. Don’t put all your eggs in one basket. With savings, the profitability is the same in any bank, but fixed income offers a range of options with different terms and returns. Consider mixing the security of savings with the possibility of higher gains in other fixed income investments. This can balance your portfolio and enhance your gains over time.
Choosing between savings and fixed income is not a one-time decision. It’s about understanding your needs, goals, and risk tolerance, and then choosing the right combination for you.
Fiscal Aspects: Savings vs Fixed Income
Tax Exemption in Savings
Savings are famous for their simplicity and security, but also for an important fiscal detail: earnings are exempt from Income Tax. This makes it an attractive option for those who want to avoid the tax bite. Even when gains are small, this exemption can make savings seem more advantageous, especially for those starting to invest.
Taxation on Fixed Income Securities
Fixed income investments, such as CDBs and Treasury securities, are not so lucky. They are subject to Income Tax, which varies according to the application time. The regressive IR table is applied, starting at 22.5% for applications up to 180 days, and falling to 15% for applications over 720 days. This difference can significantly impact the net profitability of the investment.
| Application Time | IR Rate |
|---|---|
| Up to 180 days | 22.5% |
| From 181 to 360 days | 20% |
| From 361 to 720 days | 17.5% |
| Over 720 days | 15% |
Fiscal Impact on Profitability
The fiscal impact is a crucial factor when deciding where to put your money. While savings offer the peace of mind of having no IR, fixed income securities can offer higher gross returns, which can be reduced by taxation. It is important to calculate the net profitability of each option to understand which one really brings more benefits in the long run.
Choosing between savings and fixed income often comes down to understanding how taxes affect your earnings. The exemption in savings is simple, but fixed income securities can offset this disadvantage with more attractive gross returns. Evaluate what makes more sense for your profile and financial goals.
Liquidity and Flexibility: Savings and Fixed Income
Immediate Liquidity of Savings
Savings are famous for their immediate liquidity. This means you can withdraw your money at any time without losing yield, as long as you respect the “anniversary” of the deposit. It’s like having a safe you can open at any time, but with one detail: if you withdraw before completing a month, you see no gain. This makes savings a practical option for those who need quick access to money.
Redemption Terms in Fixed Income
In fixed income, the story changes a bit. There are several types of investments with daily liquidity, such as the Selic Treasury, which allow redemption at any time. But many securities have specific terms. If you need the money before maturity, you may end up losing part of the earnings or even paying fines. It is ideal for those who can wait and want a more predictable return.
Flexibility of Choice in Fixed Income
Fixed income offers a range of options, from CDBs to debentures, each with its own yield and term rules. This flexibility allows you to choose what best fits your financial goals. Want something for the short term? Got it. For the long term? Also. This diversity is great for those who want to customize their investments, but it requires a little more planning and knowledge about the market.
Choosing between savings and fixed income depends on how much liquidity you need and how long you are willing to wait to see your money grow. For those seeking security and simplicity, savings are the natural choice. But if the idea is to maximize gains, fixed income can be more attractive, as long as you are aware of the terms and redemption conditions.
Conclusion
Choosing between savings and fixed income may seem complicated, but it’s all about understanding what you really need. If you seek simplicity and don’t want to worry about taxes, savings can be a good option. But if you’re after better returns and don’t mind dealing with a bit more complexity, fixed income offers several alternatives that can fit your profile. Remember to consider your investor profile and financial goals before making a decision. In the end, the important thing is to make your money work for you, safely and efficiently.
Frequently Asked Questions
Are savings tax-free?
Yes, savings are exempt from Income Tax, which makes them an attractive option for many investors.
What is fixed income?
Fixed income is a category of investments where it is possible to predict the return, such as public securities and CDBs.
Are savings a type of fixed income?
Yes, savings are considered a form of fixed income investment, although they usually offer lower profitability.
How does the Selic rate affect savings?
The profitability of savings depends on the Selic rate. If the Selic is above 8.5% per year, savings yield 0.5% per month plus the TR.
What are the advantages of fixed income?
Fixed income offers predictability of return and security, being ideal for conservative investors.
Which is safer: savings or fixed income?
Both are safe, but fixed income can offer greater security depending on the type of security, such as public securities.
