Fixed Income

Fixed Income are investments where it is possible to know (or at least try to predict) the profitability in the future, based on the period of investment and the rate applied. As the name implies, you earn a fixed return over a given period, however, there may be fluctuations in rates as time goes by, and may change bond yields, for example, the variation in the CDI. Fluctuations in rates indexed to inflation or even the Selic rate can change the profitability of some bonds, such as NTN-B, for example.


There are two types in fixed income:


Pre-fixed: where the investor knows in advance the profitability (nominal) of any bond at the start date.
Post-fixed (float rates): where the investor will only know the profitability on the date of maturity of the bond, varying according to fluctuations in interest rates which the securities are linked.


Generally, fixed income investments are associated with security and carelessness due to the fact that you do not lose money by applying fixed income. However, this is not entirely true. Like any other investment, it is possible to have losses, including the total amount invested. Imagine that you buy a debenture of a company and it does not honor the payments and declares bankruptcy. If it does not have enough assets to sell and pay off your creditors, there are high chances of you do not recover your money.


Another example is if you buy a public pre-fixed bonde - LTN, for example - and during the period of invetment the Selic rate starts to rise. In this case, you start losing money because your bond will net less than if you make a new application. However, if you load the bond until its maturity date, it will yield the contracted rate.


Although these cases are real, invest in fixed income means less risk than equities, and it is indicated for people who do not tolerate much risk, but want to have profits investing money in any way and incrementally.


Here in Ynvestimentos you will learn about the different types of fixed income investments available in Brazil. Diversify investments, apply with safety and security, avoid fees and charges and seek the best returns are difficult tasks to ordinary investors, but are crucial to minimize the risk and maximize the return on bonds. Check out the following main types of fixed income investments in Brazil:



cri

Certificates of Real Estate Receivables – CRER

Certificates of Real Estate Receivables – CRER 1. What is it? Certificates of real estate receivables (or CRI, in Portuguese) are a fixed income bond based on real estate credits. They are duly registered...

vgbl

VGBL X PGBL (US IRAs)

VGBL X PGBL (US IRAs) 1. What is it? Both PGBL and VGBL are the equivalent to US IRAs (Individual Retirament Accounts) in the Brazilian market. Both are retirement plans that allows a person...

notas-promissorias

Promissory Notes

Promissory Notes 1. What is it? Promissory notes, also known as commercial papers, are short term private notes issued by companies in order to reinforce its cash flow, by paying out inventories or paying...

letras-de-cambio

Bill of Exchange

1. What is it? A Bill of Exchange (BOE) is a negotiable instrument commonly used by financing companies (credit or investment funds) in order to raise capital in the market and lending to their...

titulos-publicos

Treasury Bonds

Treasury Bonds 1. What is it? A government or treasury bond is a bond issued by a national government, which can be either pre or post-rated, and intends to raise funds required for cover...

letras-hipotecarias

Mortgage-backed Security

1. What is it? Mortgage-backed Securities (MBS) or simply Mortgage Bonds are fixed income bonds issued by financial institutions authorized to make mortgage loans. They are issued based on mortgages from real estate property....

debenture

Bonds

1. What is it? Debenture (also known as Bond) is a private and fixed rate bond, whose primary objective is to raise new resources (borrow money) either to finance companies’ investment projects or to extend...

operacoes-compromissadas

Buyback Transactions

Buyback Transactions 1. What is it? Buyback Transactions or Repo Operations are those where the seller has the commitment to buy back the bonds they “lent” to the buyer in a future transaction with...

lca

Agricultural Credit Bill – ACB

1. What is it? The Agricultural Credit Bill is a credit bond issued by private or public financial institutions (banks) and its main objective is to widen the horizon of resources available for agricultural...

cdb

Bank Deposit Certificate – BDC

1. What is it? In Portuguese CDB stands for Bank Deposit Certificate and RDB stands for Receipt for Bank Deposit. They are both issued by banks registered with the Central de Custódia de Títulos...