We are experiencing a particular moment in our economy, where one who has been able to save money over a period and now has financial resources is benefited by the rise in interest rates. Applications that previously had income linked to Selic, now have had an increase and in the case of many banking products was significant, savings is one such example, which historically had its income in the 0.5% + TR (benchmark rate), and is now about 0.6% interest.
Although the savings account is the safest investment and guaranteed income, the interest rates applied are low and the return will always depend on two factors: the length of time spent in savings and the total value of the savings. There are other forms of investment that are more profitable than savings, and in many specific cases they can be more profitable with less value and less time.
It pays to look at the types and investments that exist to know how to make the most money and take less risk. We select the main forms of investment so that you can analyze each one and choose the one that meets your needs. Check out!
1. How does investment in Fixed Income work?
An alternative for those who want to have better income than the savings account are investments in fixed income buying debentures, CDBs, RDBs, LTNs, etc., which have better return and return on invested capital, in contrast there is a collection of administrative and IR taxes .
Types of fixed income investments
Pre-fixed – are those in which the percentage of income is informed at the time of hiring and will not change.
Postfixed – the yield will be calculated based on some bank index plus the interest determined at the beginning of the contract. The total value of the income will only be possible to know at the end of the application.
Now that you have known this mode of fixed income investments you will know that every time you buy a bond, it will be like a loan to the issuer, which can be the bank, government or company. And, just as in the stock market there are several fixed income securities: debentures, CDBs, LTNs, fixed income investment funds as well, which helps diversify the investment to maximize profit.
2. How to invest in Treasury Direct?
Public bonds are issued by the federal government to finance activities in some areas of activity; health, education and infrastructure. Thus, as in most investments, the purchase of these securities is a form of loan to the issuer of the title, where he agrees to split the company’s profits should they occur.
The purchase of Treasury Securities can happen in 2 ways: the purchase is made through a professional administrator or through direct purchase on the National Treasury website. In both cases, the registration to make the purchase is very simple, there is only need the registration data, copies of the identity document, CPF and register in a brokerage house or bank authorized to operate the Treasury, as custody agent.
In this type of investment the risk is low because the creditor is the government but the investor is liable not to receive the full gains if he withdraws the investment before the expiration date. And just like fixed income income there are two types: pre and post fixed.
We recommend the fixed rate model when interest rates are falling and the fixed rate has its profitability tied to a variable index: Selic (associated with the basic interest rate of the economy) or IPCA (associated to inflation variation) plus a rate interest at the moment of joining the security.
The fact of having an indexer decreases the risks tied to these securities because the investor is protected from inflation or interest variation. If you have questions about these variables, the National Treasury website has all the information about these calculations and helps the investor to choose the appropriate model, according to their profile and available investment value.
Are there any fees charged for the purchase of securities?
Brokerage firms can usually charge 2 types of fees:
This is an annual charge of 0.3% on the value of securities acquired by custody, handling and information. This rate is semi-annual, charged by BM & FBovespa normally on the first business day of January, July or in the event of some custody event.
Since agreed upon at the time of hiring, banks and brokers may charge service fees agreed upon with the investor. It is important to confirm them at the time of purchase.
Income tax declaration
Only the savings account is tax-exempt, treasury bills, as well as the majority of the investments, have IR taxes according to the term of the application.
See the tax incidence for the following deadlines:
- 1 to 180 days: 22.5%
- From 181 to 360 days: 20%
- From 361 to 720 days: 17.5%
- Above 720 days: 15%
The complete list of brokers and associated institutions can be checked on the Treasury’s website. It is also possible to know if the accredited brokerage firms have a real time integrated online environment with the Treasury Direct. Now that you know how to buy Treasury Bonds, did you know that it’s possible to buy stocks from $ 30?
The minimum purchase of Treasury shares is in the amount of R $ 3,000 reais, but there are fractional shares of 0.01, 1% of the value and the maximum is R $ 1 million per month, and there are no limits for sale.
3. How to invest in CDB and RBD?
Within fixed income investments there are other modalities such as CDB (Bank Deposit Certificate) and RBD (Bank Deposit Receipts), but different from the others that capture financial resources for companies or government, this is responsible for subsidizing the credit activities of the own bank they market.
The rules and mechanics are the same as the other forms of investment on redemption before time does not compute yields, there are tax rates and the longer applied the lower the rates and, lastly, these are also low risk investments and there are pre-fixed and post-fixed models.
The acquisition of these shares has the same fixed income procedures, with the presentation of identification documents, CPF and proof of residence for acquisition.
4. How to invest money in mutual funds?
This type of investment comes from the stock market, the investment funds operate in the quota system, where the buyer allocates a cash amount to receive a quantity of proportional shares. Example: If the unit value of the shares have the value of $ 1, and you invest $ 3,000 will automatically have 3,000 shares.
The amount invested in the funds will be part of the equity of a group and by determination of the responsible bodies it is necessary that an administrative manager with certification by the CVM is appointed. Another important information is that as the value increases or decreases it will change the amount of shares of the holder as well.
What are the advantages of this type of investment?
- Lower values - it is possible to start an investment in the fund without being with exorbitant values. You can join a group and buy stock quotas to take a test if you prefer.
- Professional advice – depending on the fund modality chosen, in addition to the securities broker, a CVM certified manager is required. This can help in positive group management for maximum income.
- Aligned Interests – The advantage of belonging to a group and having a qualified manager ensures that people with different experiences share strategies for the good results of the group.
What are the types of funds?
1. Short-term funds
As its name says, this modality is indicated for those who want to invest money for a short time. An advantage of this modality is the indexation to CDI (Certificate of Interbank Deposits), which corresponds to the average daily rate to calculate the cost of money for banks (interest) and Selic (Special System of Settlement and Custody), which is based on the system for which government bonds are required.
Taxation in this modality is differentiated from most investments, in addition to the administration fee, which must be agreed with the broker. The taxes are applied proportionally to the time of the investment.
- For the term of 1 up to 180 days is taxed 22.5% on profit.
- From 181 days onwards it is taxed 20% on profit.
2. Referred Funds
The funds referenced follow the same principles of the short-term modality, with the difference of having a certain validity. The risks in this case are proportionately higher, but in some cases outweigh it. The other rules are exactly the same, except for the taxation that follows the following system:
- Up to 180 days will be charged 22.5% on the profit.
- From 181 days to 360 days will be charged 20% on the profit.
- From 361 days up to 720 days will be charged 17.5% on the profit.
- From 721 days on will be charged 15% on the profit.
3. Fixed income funds
Funds invested in fixed income assets, that you receive a certain amount in a term established and agreed in advance. These funds must follow a basic rule: own 80% of their composition by minimum public securities or assets with low risk.
4. Stock funds
Realizing the name equity funds are investments in shares of companies traded including by the Stock Exchange. In this modality, the IBOV (Stock Exchange Index) is used as a reference and, as in the stock market, stock funds are also investments with a high degree of risk. For this investment, we recommend that the application lasts between 5 and 10 years for maximum profitability.
5. How to invest money in exchange?
In times of economic instability, foreign currencies tend to wobble and overvalue. Foreign exchange investment is also within fixed income modalities, but different from most, it has low risk involved and the time in which it maintains the foreign currency will be important to monetize its investment.
To facilitate, we have selected the main types of foreign exchange investments. Check out the details of each one!
1. Investing in US Dollar
Because of the US economic environment, the appreciation of the US currency is often expected by the financial market. On the other hand, the continuation of the dollar’s rise continues with the imbalances of the domestic scenario.
2. Exchange rate funds
The Foreign Exchange Fund is a type of investment recommended for people who may have a recurrence in buying foreign currency to hold capital or for people with a hedge protection profile, believing that there may be a devaluation of the local currency. The best-known funds are pegged to the dollar to try to control the daily variation.
In order to carry out this type of investment in foreign exchange funds, the first step is to look for an institution (bank or broker accredited in the CVM) that offers this type of service. Always check with your trusted broker or bank manager at the accredited institution for the minimum amount for application, fund administration fees and general investment costs.
Like the other types of investment, this one has a tax collection on the profits obtained, being able to vary between 15% up to 22.5% and the term of the application. It is worth mentioning that investments of this type are used for the exchange protection of those who intend to travel abroad, a course in another country or even the purchase of imported products.
It is a futures market investment negotiated by BM & FBovespa that represents the purchase and sale of foreign currency contracts in the futures market according to the exchange variation. In simplified form, this modality is a bet of the direction of the currency for a certain period.
In the mini contracts each contract has a stipulated amount of US $ 10,000, equivalent to 20% of an entire dollar contract, popularly known as ‘big dollar’, equivalent to US $ 50,000 dollars. However, many brokerages work with value leverage where the investor does not need to have $ 10,000.
The income tax for this investment is 15% of the gains when paid in 2 days or 20% for the purchases settled on the same date. And another important detail is that the main risk of this investment may be due to a possible exchange rate variation.
6. How to invest money in the stock exchange
Surely you may have heard of the hectic stock market, famous in the movies that portray the routine on Wall Street. What many people have no idea, is that the stock market is one of the most important instruments of the modern economy. And it is through the stock exchange that big companies sell their shares to monetize their business and raise funds to subsidize their growth.
At the other end are the shareholders, who bought percentage shares of this company and who will gain from the growth of this company.
What is an action?
A company consists of a set of shares on one side, on the other are the owners of these shares. In technical terms the stock is the smallest share of an organization’s capital. In this case, all that own shares of the company are partners, but the companies do not sell all the shares, a significant percentage is with the majority shareholders.
Types of actions
Ordinary (ON) – the holder has the right to vote at an assembly on corporate matters.
Preferential (PN) – the holder does not have the right to vote, but has a preference to receive the dividends.
The profit sharing will occur according to company guidelines, it is important to know this information before acquiring the quotas. Some companies offer the monthly and other quarterly division. However PN holders often have larger receipts and shares of this type are bought and sold easily.
How to invest money in stock exchange?
In Brazil, the purchase and sale of shares takes place on the São Paulo Stock Exchange (BM & FBovespa) through brokers authorized by the Securities and Exchange Commission (CVM).
What does it take to open an account with a broker?
As well as opening a bank account, it is necessary to fill in a cadastral form, sign the service term, copy and original of the CPF, identity document and proof of residence (less than 180 days).
How to buy stocks?
There are no minimum values for membership, this will be determined by each brokerage firm and the current price of the shares purchased. In addition, administrative costs should be considered in relation to the amount invested. For small values, the form of adhesion should be considered through a group.
To facilitate understanding we select the 3 ways to buy stocks:
1. Investment funds
Each fund is composed of a group of people managing the quotas that is led by a CVM-certified manager who will coordinate purchases and sales. When joining the fund you should be in accordance with the statute with the investment policies.
2. Investment Club
Clubs, as its name suggests, are less formal, usually composed of family members or friends, and can have 3 to a maximum of 50 participants. Different from the Investment Funds does not require a manager with CVM certification, only one responsible for managing the purchase and sales actions.
In this mode you will be solely responsible for the purchase and sale of shares through your brokerage, which usually provides access to an administrative platform to manage the account, consult administrative costs, buy and sell shares over the internet, but you will not be able to buy and sell the funds because only one manager is able to do this).
Stock Market Risks and Risks
All rates may vary according to the brokerage firm contracted, except for the fee charged by BM & FBovespa. The other rates are detailed below:
- Management fee – calculated annually in proportion to the amount invested in the fund or investment according to the period in which the operations were held by the investor.
- Brokerage fee – charged once every new purchase or sale order
- Performance fee – charged when the fund outperforms expected profitability
- Custody fee – charged monthly for stock maintenance
To end the stock issue, we emphasize that this is a considerable risk investment, which justifies the expressive interest income and on the other side, two negative factors: no guarantee of return of what was invested and liquidity problems that make selling difficult of the stock at any given time of year.
To choose this type of investment should be analyzed with caution. Take the opportunity to visit the Investor Portal and the doubts can be solved by the CVM Citizen Service or the Brazilian Association of Financial and Capital Market Entities (Anbima) also offers, through the portal “How to invest?”
Throughout this article we show you how to invest money in the main types of financial market investments. We hope that our tips have helped you to understand a little better about each of the items presented in these modalities. The next steps are for you to look for information on the websites of the bodies we recommend here.
The actual learning will occur with the practice of each modality so that you can learn to mitigate the risks involved. Always be aware of the degree of risk of each type of investment, for that see the website of Anbima (Brazilian Association of Financial and Capital Market Entities). We also recommend that you choose professional assistance from a bank manager, broker or financial adviser so that they can assist you in identifying your investor standard and point out recommended investments within your profile and the value available for the application.
We hope this guide has been helpful for you to have a better idea about the main types of investments and the first steps to invest. Contact us at Big Daddy or leave a comment so that we can help you even more!