What are the differences between fixed-rate and floating-rate securities?

The differences between fixed-rate and floating-rate securities are fundamental for any investor who wants to make strategic decisions aligned with their financial profile.

Understanding these distinctions goes beyond simply knowing which yields more.

In short, it is about understanding how each type of security reacts to economic conditions and what risks and advantages they present over time.

Continue reading this article and find out everything about it:

What are prefixed and post-fixed securities?

Prefixed securities are those in which the rate of return is defined at the time of application.

This means that the investor knows exactly how much he will receive when the bond matures, regardless of economic fluctuations that occur during the period.

For example, if a bond offers 8% per year, that will be the guaranteed return after the stipulated term, as long as the bond is held until maturity.

In this sense, this predictability is one of the greatest advantages of fixed-rate securities, as it offers security against unexpected variations in the market.

Post-fixed securities have their profitability linked to an economic indicator, such as the Selic rate, the CDI or the IPCA (inflation index).

In short, this means that the return on investment varies according to the movement of these indexes.

For example, a post-fixed security linked to the IPCA + 3% guarantees that the investor will receive the inflation for the period plus a fixed rate of 3%.

In this way, the return is not known at the time of investment, but follows the economy, protecting the capital against inflation and changes in interest rates.

Main differences between fixed-rate and floating-rate securities

The clearest distinction between these two types of securities is in the predictability of profitability.

While the prefixed rate offers a fixed and known rate, the post-fixed rate depends on the variation of an economic index, making its yield uncertain until maturity.

This characteristic directly impacts the investor’s risk profile and financial planning.

Furthermore, the risk associated with each type of security differs.

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Prefixed bonds are more suitable for investors who accept a higher degree of risk.

An unexpected rise in the interest rate could cause the value of the bond to fall on the secondary market if the investor needs to sell it before maturity.

On the other hand, post-fixed bonds are considered safer, as they follow indexes that reflect the economy, protecting capital against inflation and sudden fluctuations.

Furthermore, another relevant point is the ideal term for each investment.

Fixed-income securities are usually recommended for short to medium-term goals, as the investor knows the return and can plan better.

Post-fixed rates, especially those linked to inflation, are more suitable for long terms, as they guarantee the preservation of purchasing power over time.

Practical examples to understand the differences

Imagine that John invests R$ 10,000 in a fixed-rate security that offers 9% per year for three years.

He knows that at the end of this period he will receive R$ 13,059.71, regardless of economic conditions.

If he needs to sell the bond before the deadline, he may suffer losses or gains, depending on the interest rate prevailing in the market.

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On the other hand, Maria invests the same amount in a post-fixed security linked to the IPCA + 4% per year.

If annual inflation is 3%, your income will be approximately 7% that year.

If inflation rises to 6%, your income will also increase, protecting your purchasing power.

However, if inflation falls, the return will be lower, showing the variability of the investment.

Relevant statistics on the popularity of titles

According to recent data from the Brazilian financial market, around 65% of fixed income investors opt for post-fixed securities.

Mainly due to the protection against inflation and the security provided by the link to economic indices.

In turn, fixed-rate securities represent around 30% of investments, being preferred by investors seeking predictability and fixed returns.

For example, we can compare fixed-rate and floating-rate securities to two types of rental contracts.

The fixed-term contract would be like a fixed monthly rent, where the tenant knows exactly how much he will pay throughout the entire period, regardless of inflation or the real estate market.

The post-fixed contract would be like a rent adjusted annually by the inflation index.

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In this sense, the value can rise or fall depending on the economy, protecting the owner against losses, but bringing uncertainty to the tenant.

Comparison table of differences between fixed-rate and floating-rate securities

Aspect	Prefixed Titles	Post-Fixed Securities
Profitability	Fixed rate set at start	Profitability varies according to economic index
Predictability	High – return known in advance	Low – return only known at maturity
Risk	Greater risk in case of advance sale	Lower risk, as it follows the economy
Suitable for	Short and medium term	Medium and long term
Inflation protection	Does not protect	Protects, especially if linked to the IPCA
Index example	Not applicable	Selic, CDI, IPCA
Investor profile	More daring	More conservative

Is it worth giving up the security of a fixed income to try to keep up with the economy and protect yourself from inflation?

Frequently Asked Questions

1. Can I lose money investing in fixed-income securities?
Yes, if you need to sell the bond before maturity, the value may be lower than what was invested due to mark-to-market, especially if interest rates rise during the period.7.

2. Do post-fixed bonds guarantee protection against inflation?
Post-fixed bonds linked to the IPCA or other inflation indexes protect the investor's purchasing power, as their yield follows price variations6.

3. Which security to choose in a high interest rate scenario?
In a high interest rate scenario, fixed-rate securities may be less advantageous, as their market value falls. Floating-rate securities tend to follow the rise, offering greater protection.

4. What are hybrid securities?
These are securities that combine characteristics of prefixed and post-fixed securities, offering a fixed rate plus a variation in an economic index, such as the IPCA + a prefixed rate.

5. What is the ideal term for each type of title?
Pre-fixed rates are recommended for the short and medium term, while post-fixed rates are more recommended for the medium and long term, especially for protection against inflation.

Understanding the differences between fixed-rate and floating-rate securities is essential to building a solid investment portfolio aligned with your financial goals.

In short, evaluating the economic scenario, the investment term and your risk profile are decisive steps in choosing the best option and ensuring that your money works in your favor.

After all, investing well means knowing how to balance security and profitability in an intelligent way.