Are you looking for a financial application, but don’t know where to start looking?
In this case, you have arrived at the right article: we will explain what a financial investment is and how to invest wisely.
First, it is important to emphasize the importance of maintaining a financial reserve.
But it is not enough to reach a certain volume of resources and leave the money standing still.
Just as saving part of the budget requires dedication, choosing the best financial investments also requires time, attention, and knowledge.
The good news for the investor is that there are many alternatives to financial investment to help the interested party to achieve their goals.
Here’s a short summary of what you’ll learn in this article:
- How do financial applications work?
- What are the risks of a financial investment
- What are the advantages of investing your money?
Interested? So, continue reading.
What is the financial application?
To explain technically, in financial investment, the interested party buys an asset or security offered by an institution with the objective of obtaining remuneration for the invested resources.
Types of financial investments
There are numerous types of financial investments, with variations in the type of yield, maturity, and liquidity.
Options can be safer, such as, for example, some types of fixed income, or that aim at greater profitability and risk, as in the variable market.
Financial investment options for you to start investing today
Below are some of the main applications for the novice investor to start investing:
Created 15 years ago by the National Treasury in partnership with BM&FBovespa, Tesouro Direto is one of the safest investments on the market.
Who guarantees the remuneration of the bonds is the National Treasury, the government of the country.
One of the great advantages of Tesouro Direto is the low risk for the investor in addition to the ease of application since securities can be purchased for values from R$ 30.
Like the well-known Bank Deposit Certificates (CDBs), Treasury bonds can be fixed-rate, floating-rate, or hybrid.
The fixed-rate Treasury Direct bond is known as Letras do Tesouro Nacional, the LTN, or simply Treasury Prefixed, its current name.
When purchasing it, the buyer already knows at the time of contracting what income he will have on the due date.
In the case of fixed-rate investments, they are recommended for those who will not need to use the resources saved in the short term.
The entire yield agreed upon in the contract will only be paid if the investor takes the investment up to the maturity date. In case of early withdrawal, the interested party may have losses in profitability. In some institutions, however, this early redemption is not even carried out.
Therefore, it is recommended in the investment portfolio to assist in the goals defined by the client for the medium term.
The most well-known floating-rate Treasury Direct bonds are LTF bonds, known today as Treasury Selic.
These bonds remunerate their buyers based on the Selic rate, the basic interest rate for the Brazilian economy.
The value of this rate is periodically defined by the Monetary Policy Committee of the Central Bank of Brazil, popularly known by its acronym Copom.
It is a good application for those looking for low risk and returns linked to the basic engine of fixed income.
Even without knowing the final value of the yield on the bonds, the LTF, like any Treasury Direct bond, guarantees the buyer a more attractive yield when compared to the savings account.
Another attractive point of the Selic Treasury is its high liquidity.
In this case, the liquidity is D+1, that is, the Central Bank of Brazil commits to buying any security before maturity and offers the redemption amount within one business day.
You trade in one day and receive the next business day.
Due to this characteristic, the Selic Treasury bonds are recommended in the composition of an investment portfolio as those resources that can be used in an emergency.
Treasury Selic does not lose yield even if traded before maturity.
This alternative is the least popular among Treasury Direct bonds.
The hybrid option has the return defined by a fixed rate plus an inflation index, the IPCA. It can be quite interesting in the long run, to shield yourself from inflation.
Bank Deposit Certificate – CDB
The Bank Direct Deposit Certificate is among the most popular investment options for the Brazilian public.
With a low-risk guarantee (the same as savings accounts with the FGC) and higher yields than savings accounts, the CDB is a fixed-income investment offered by large banking institutions.
In it, the customer makes a kind of loan to the bank, where he determines the value and sets periods in which he cannot move the money.
During this time, the institution remunerates the amount deposited by the investor with interest.
Unlike traditional savings, which have a fixed return regardless of the chosen banking institution, the CDB has variable remuneration according to the chosen bank.
In this option, as in Tesouro Direto, the client knows exactly how much he will be paid at the time of contracting.
For example, if a rate of 10% per year was agreed upon at the time of purchase, regardless of any change in the country’s economy, the customer guarantees this income from the nominal value applied.
Post-fixed CDB is the most popular type of CDB.
This modality has the remuneration rate usually linked to the value of the CDI, the Interbank Deposit Certificate, which is an interest rate that has a value close to the Selic, the basic interest rate of the Brazilian economy.
For example, if a CDB pays 110% of the CDI, when it is 10%, the annual remuneration will be 11%.
The floating CDB can have daily liquidity, which allows redemption at any period, or at maturity, in which it allows withdrawal only after the period initially determined.
This mode is less common.
The hybrid CDB also has the yield associated with an inflation index.
There is a fixed rate added to the inflation index, normally the IPCA, an index used by the government to measure official inflation.
LCI and LCA
The Letra de Crédito Imobiliário, the LCI , and the Letra de Crédito do Agronegócio, the LCA, are fixed income securities created to support real estate and agribusiness credit in Brazil.
Similar to the CDB, both the LCI and the LCA are issued by banks with the objective of raising funds to allocate to loans, which will be offered both for the real estate sector and for agribusiness.
Both applications have very similar characteristics for the investor and are exempt from Income Tax for individuals.
They also offer pre-fixed and post-fixed yields.
LCIs and LCAs have the same FGC guarantee as CDBs and savings.
Leaving traditional fixed-income investments, the Structured Operations Certificate, the COE, can be an alternative for the investor.
The COE was regulated by the Central Bank in 2013 and by the CVM in 2015, and involves fixed and variable income. It is a title that can take different forms of acting.
From a single investment it is possible to gain access to new markets with the advantage of low costs.
There are two ways to apply: with protected capital (guaranteed to return the initial value) or with capital at risk (without the guarantee).
The creation of a COE depends on a bank or a brokerage, which issues this security with a maturity (variable), a minimum value for the investment, an index and the defined profit and loss scenario, with or without protected initial capital.
COEs are subject to Income Tax, but are not charged administration , performance or custody fees.
COEs are not guaranteed by the FGC.
An investment fund is a vehicle for financial investments.
That is, you do not invest directly in a security, but make a contribution to a fund, which converts the value into a share and invests in different fixed and variable income options .
In simple words, an investment fund gathers the amounts destined by several people and hires a manager who, from the application of this money in financial market modalities, seeks a higher remuneration .
Each investor owns one or more parts of the fund, called quotas , which follow a series of rules to obtain remuneration.
In general, it is a very practical way of investing savings, since qualified professionals will be taking care of the administration and seeking the best form of profitability.
The professional manager will seek the best investment opportunities, but always respecting the regulations of the fund in question. Therefore, it is very important to read this document before applying to avoid any surprises.
In Anbima’s classification, there are four types of Investment Funds: Fixed Income Funds, Equity Funds, Multimarket Funds and Exchange Funds.
This modality allows investment in securities issued by public or private entities, linked to the variation of fixed or floating rates or price indices.
It has the obligation to invest at least 80% of the funds in dollars, euros or in assets that represent the variation of these currencies, such as public or private bonds.
Its main risk factor is the variation of the foreign currency or the foreign exchange coupon.
In this modality, resources are invested in shares of companies traded on the Stock Exchange.
Learn more about equity funds in this text here.
The multimarket investment fund alternative offers the possibility of investing in several markets at the same time, such as interest rates, foreign exchange and shares.
Remember: investment funds are not guaranteed by the FGC.
Private Pension Plans are also among the Fixed Income options, ideal for investors who want a higher long-term return compared to savings accounts.
There are two types of Private Pension: the Free Benefit Generator Plan (PGBL) and the Free Benefit Generator Life (VGBL).
Both are different from other fixed income investments by combining the benefits of a financial investment with some tax advantages guaranteed by law for long-term investments.
Simply put, the PGBL is best suited for those who have taxable income and declare their Income Tax on the full form, as it allows contributions to be deducted up to 12% of gross annual income.
In this type, the tax is levied on the total accumulated in the plan.
The VGBL is indicated for those who declare income tax in the simplified form or who have already reached 12% in a PGBL plan.
In this type of application, the tax falls on the profits and not on the principal applied.
They are recommended for long-term investments , as they are highly taxed and do not have daily liquidity.
Despite being an interesting possibility for long-term investments, pension funds are not guaranteed by the FGC.
Diversify your investments
Investment diversification is always the best option to combine security and profitability with an investment portfolio.
By diversifying, it is possible to build yields and terms that suit short, medium and long-term personal goals , with daily and non-daily liquidity.
There are numerous factors that affect stocks and bonds and a diversified portfolio allows protection in case of external factors.
For the investor, this is the alternative to deal with the unpredictability linked to the economic and political scenarios.
Before starting to diversify, it is important to have a slice of resources for the very short term, a kind of defense mechanism against unforeseen events.
The nickname for this portion of your investments is liquidity cushion, a support base for you to lean on at any time.
In this cushion, easily redeemable applications enter, such as DI funds, Direct Treasury securities (preferably the Selic Treasury, which does not suffer from the volatility of other public securities), CDBs with daily liquidity.
The ideal is to allocate the equivalent of six times the cost of living to this type of investment, to ensure that any unforeseen event is resolved without problems.
A layoff, for example, can be quite disastrous if there is no such mechanism.
In such a situation, many people resort to high-interest loans that end up harming the family’s financial situation for many, many years.
So, it is after this liquidity cushion that you will aim for your highest gains and longer terms.
And that’s where diversification becomes even more important: in the long run, you don’t know how the economy will behave.
To protect yourself from inflation, for example, you can protect yourself with IPCA-linked bonds (from the Direct Treasury itself or from the private market).
To protect yourself in any scenario, you can invest in a long-term bond linked to the CDI, which closely monitors the Selic rate.
And to seek more expressive gains in certain situations, you can invest in fixed-rate bonds.
Why is saving not interesting?
Savings are not interesting due to their income, which leaves much to be desired.
When we talk about savings accounts, we are talking about a traditional investment alternative, which has been on the minds of a large part of the Brazilian population for a long time.
Far from being among the most profitable options on the market, savings were a guarantee of protection for economies in the period of hyperinflation.
When the Selic rate is, for example, 8.5% or less per year, the savings account pays investors 70% of the Selic rate plus the TR.
When the Selic rate is above 8.5% per year, the passbook pays 0.5% plus the TR, which does not make much difference in the final calculation.
In any scenario, the investments mentioned above are worth considering.
Savings is by far the least profitable alternative among financial investments. In 2017, the return on savings, without considering the inflation discount, was 6.93%.
Discounting inflation, the remuneration was 3.88% according to Economica. In 2016, real performance, discounting inflation, was 1.9%.
As a comparison, the Treasury Selic bond, from Tesouro Direto, pays the full yield of the Selic Rate and its yield is higher than savings, despite the payment of Income Tax and the bond custody fee.
This is a security that serves as a direct substitute for savings, as it can be sold at any time, without loss of value.
Invest with BTG Pactual digital
At BTG Pactual digital, you have numerous fixed and variable income financial investments. In addition, you have a team of specialized professionals who can guide you in your first investments.
See how easy it is to register:
Open an account
Just fill in the details and send a photo of your ID, proof of residence, and a selfie. Then wait for the confirmation email.
Discover your investor profile
After answering a very simple and short questionnaire, you will discover what your investor profile is, information that will help you ensure that stocks are a good destination for your savings.
Transfer the money
Transfer money from your bank account to your digital BTG Pactual account.
Consult an advisor
At BTG Pactual digital, you have the help of an investment advisor. As soon as you register and have your profile in hand, you can consult it and it will help you to better define your first steps in investments by showing you all the products that fit your profile.
Track your investments
After making your first investments, you will be able to daily monitor your positions in funds and applications and their returns on the BTG Pactual digital website and on the smartphone application.
Get access to reports
Each month, you will have access to a complete and personalized report with all the numbers that will show you how well your money is being treated and how much it is increasing in value, including comparisons to market indicators and other applications.
The first step has been taken: you are going after knowledge about finance and investments.
That’s what will make the difference when it comes to checking your statement a few years from now.
In finance and investing, a wrong move can bring your effort down, but a move in the right direction can take you to a more comfortable and peaceful life.
Therefore, it is not enough to view the financial investment as something distant or as just fixed-income security, but as an investment journey that you need to face to go further.
This journey must start here, with the search for knowledge, and move on to its first applications, far from savings.
At that time, create your liquidity cushion and then look for options for medium terms, from two years, and even longer, from four years.
It is in the long run that you will be able to multiply your money and see your money grow with the power of compound interest.
For this, it is important to have a solid and reliable financial institution such as BTG Pactual Digital, which will be able to offer you excellent alternatives for fixed and variable income.
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