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Comparison Shows How the Wrong Investment Choice Reduces Your Earnings Even With Apparently Small Amounts. Treasury Selic Delivers Superior Yield with Safety.
Many Brazilians continue to invest their money in investments that seem safe and traditional. However, when comparing the real return of these investments with equally safe alternatives, the losses they represent become evident.
We’ll show, with simple numbers, how much the investor loses by choosing the savings account, poor CDBs, and LCIs or LCAs with low profitability.
Savings Account: The Classic That No Longer Pays Off
The savings account remains one of the most used investments in Brazil. However, its profitability is far from being competitive.
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Today, the savings account yields about 8% per year. Meanwhile, the Treasury Selic — which is just as safe — yields around 101% of the CDI. With the CDI hovering around 13.15% per year, Treasury Selic approaches approximately 13.3% per year in gross returns.
Even after income tax deductions, the investor still receives about 11.3% net in Treasury Selic, compared to 8% from the savings account. In other words, there is a difference of 3.3 percentage points per year.
If someone invests R$ 10,000 for a year:
- In the savings account: the final balance would be R$ 10,800.
- In Treasury Selic: the net balance would be R$ 11,130.
In just one year, that’s R$ 330 more with the same level of safety and very similar liquidity. Over five years, the difference accumulates and can exceed R$ 2,000, simply for not having switched from the savings account to Treasury Selic.
CDB at 101% of CDI: Higher Risk, Equal or Lower Yield
Certificates of Deposit (CDBs) are issued by banks and usually promise returns tied to the CDI. Many offer 100% or 101% of the CDI. The problem is that, unlike Treasury Selic, the CDB carries credit risk from the issuing institution.
Considering again the CDI of 13.15% per year, a CDB at 101% of CDI would yield 13.28% gross. After income tax deductions, the net return would be practically the same as that of Treasury Selic.
In other words: the investor accepts a higher risk — the bank may face financial problems — but does not receive any relevant premium for it. The return is equal or even a little lower, depending on redemption conditions and costs.
For this reason, investing in a CDB that pays up to 101% of the CDI doesn’t make sense. If the goal is to earn the same, it’s better to opt for Treasury Selic, which does not depend on the financial health of any bank.
LCA and LCI Below 78% of CDI: Exemption Doesn’t Save Low Yield
LCIs (Real Estate Credit Letters) and LCAs (Agricultural Credit Letters) offer exemption from income tax. This may seem advantageous, but only if the gross yield is sufficiently high.
Since Treasury Selic is taxed, it’s possible to do a simple calculation. At the highest income tax rate of 22.5%, the net yield of Treasury Selic becomes equivalent to about 78% of the CDI.
Thus, any LCA or LCI paying less than 78% of the CDI is already losing out to Treasury Selic. And worse: with higher risk, as they are private securities.
For example, an LCI paying 75% of the CDI would yield approximately 9.86% per year. Meanwhile, Treasury Selic, even with tax, would yield close to 11.3%. Again, the difference may seem small at first glance, but over the years it becomes a significant loss.
The Invisible Cost of Choosing Wrong
The big trap of these poor investments is the invisible cost. The investor doesn’t see the money leaving the account, but loses earnings month after month.
Savings accounts, low-yield CDBs, and LCIs or LCAs with a small percentage of the CDI are choices that seem safe, but take money out of the investor’s pocket over time.
The simple comparison shows: Treasury Selic today serves as a basic benchmark. Any investment that does not yield more than it, considering income tax, should be discarded.
What Would Be Good Minimum Levels?
Based on current numbers, it is possible to establish limits below which the investment is not worthwhile:
- CDBs are only worth it starting from 106% of CDI.
- LCIs or LCAs start to become interesting above 90% of CDI.
Below these values, Treasury Selic offers better returns and total safety.
The Decision Is Simple
In practice, the investor needs a clear rule: if the product is less profitable and less safe, it is not worth it. There’s no point in seeking alternatives just for being “different” if Treasury Selic offers more, with zero risk of default.
The big secret of a good investor is not to choose the trendy product, but rather not to accept earning less than they could with the same risk.
Important Notice: This text does not constitute an investment recommendation. The information presented is purely informative and educational in nature. Before making any financial decision, evaluate your investor profile, consult qualified professionals, and consider the risks involved.
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