Among the different types of fixed income investment, the LCI (Imobiliary Letter of Credit) and the LCA (Agribusiness Letter of Credit) stand out for being exempt from Income Tax, attracting the attention of investors.
Understand how they work, the difference between the two investments and how to invest:
What are LCI and LCA?
The Real Estate Letters of Credit (LCI) and Agribusiness Letters of Credit (LCA) are fixed income securities issued with the objective of raising funds for the respective sectors. The bonds are issued by banks and investment brokers to finance the operation of these two sectors.
By acquiring this title, the buyer is lending money to the bank so that it finances the production, marketing and industrialization of agricultural inputs and real estate contracts that rely on fiduciary alienation or mortgages as guarantees, explains Francis Wagner, CEO of the Inda Fixa application.
For the loan, the investor receives an interest rate at the maturity of the security, in addition to the amount invested. A characteristic of the LCI and LCA is the exemption from Income Tax.
Is it safe to invest in LCI and LCA?
Both LCI and LCA are low-risk assets. They are protected by the FGC (Credit Guarantee Fund). The agency guarantees that amounts of up to BRL 250,000 per institution are returned to investors in cases of bank failure. The protection ceiling is R$ 1 million per CPF.
What are the types of LCI and LCA?
LCI and LCA performance follow three correction patterns:
- Prefixed: they have a fixed interest rate, defined in the application, which allows the investor to know how much he will receive at maturity. Example: 10% per year
- Post-fixed: yield linked to some economic index, such as Selic, DI or IPCA, with variation over time. Example: 100% of CDI
- Hybrid: combines the fixed rate with an economic index to compensate for the variation of the floating rate. Example: CDI + 3% per year
Why are LCI and LCA exempt from Income Tax?
Letters of Credit are considered assets encouraged by the government for financing strategic sectors and, therefore, are exempt from Income Tax. Despite this, the amounts must be reported to the Federal Revenue in the annual statement, a rule that applies to the rest of the investment portfolio.
“The real estate and agribusiness sectors are essential for the good development of the economy. If there was no such exemption, issuing banks would have to raise their rates to make them more attractive to investors and, on the other hand, increase the rates charged from the sectors, which would have a direct impact on their activity”, highlights Wagner.
CDB, LCI or LCA: which is the best investment?
The main feature of most CDBs is their daily liquidity, which allows the withdrawal of amounts at any time. For those who are building an emergency reserve, for example, this may be the best option, as the investor may need this savings to cover some urgency.
For those who are thinking about the medium or long term, Letters of Credit may be a better option, as they deliver a higher yield than traditional private bonds. However, it is essential to put the performance of the products at the tip of the pencil to decide which is the best alternative.
“It is always important that you apply yourself thinking about achieving goals, whether short, medium or long term, such as travel, acquisition of goods, vacations or even retirement. This makes it easier to find investments more suited to your needs”, guides the specialist.
How to invest in LCI and LCA?
Letters of Credit are available at banks and investment brokers authorized to issue these securities. These institutions define the product’s rules, such as the minimum investment amount, the maturity date and the yield rate.
To apply, the investor needs to have a CPF in good standing, an account —which can be opened through the application— and the amount available. LCIs and LCAs are listed on the bank’s home broker with other fixed income investment options. During the operation, it is necessary to choose the option that best fits the objectives, considering the amount, liquidity and interest.
In securities with maturity, at the end of the period, the amount is returned to the account, plus interest. For products with daily liquidity, redemption is done manually, whenever the investor wants, respecting the 90-day grace period imposed by law.
Can I lose money with LCI or LCA?
Any investment that has an expiration date must respect this deadline, experts say. This is because, when there is an option to redeem the value before, it undergoes a kind of markdown to be sold on the secondary market, which can impact the expected yield.
Therefore, before choosing an LCI or an LCA, it is important to consider when the money will be used to avoid losses. In cases where the amount is part of the emergency reserve, it is better to opt for assets that have immediate liquidity, as is the case with interest-bearing accounts and some CDBs.
Source: CNN Brasil
