What does CDI Investment mean? Find out now!

Is it correct to call it a CDI rate or investment? That's what you'll learn in this article.

In the financial world, there is a term that is widely used: CDI Investment. In fact, anyone who wants to start investing needs to know what this means in practice.

But contrary to what many people think, it is not possible to invest in the CDI (Interbank Deposit Certificate). However, it is important to know that your interest rate has an impact on the returns on your investments.

In this article, you will learn exactly what this concept means in practice. Keep reading.

What is CDI?

The CDI (Interbank Deposit Certificate) is a short-term security issued by banks to capture or invest excess resources.

In a way, he's a bit like the CDB (Bank Deposit Certificate), since both are used by financial institutions with the aim of obtaining resources.

However, there is a big difference between them. The CDI is not offered to individual investors. As the name suggests, it is used for institutions to borrow funds from each other.

Its deadline is just one business day.

How does CDI Investment work?

As you already know, although the CDI is directly involved in the financial market, it is not exactly a type of investment.

This security issued by banks with the aim of raising capital also helps to maintain daily cash flow. In some cases, the number of withdrawals may exceed the number of deposits, causing the institution's balance to become negative.

If this happens, a given bank can take out a loan with another institution and thus end the day with a positive cash flow. Therefore, the CDI is issued.

Furthermore, the CDI helps the bank to fulfill all its commitments, thus protecting current account holders.

How important is the CDI for the financial system?

For banks, the CDI helps to support banking options.

For investors, it serves as a reference for investment returns, both in fixed income and variable income.

With the CDI, it is possible to understand how much an investment yielded in the past and what the chances of appreciation are in the future.

In fact, it serves as a parameter not only for certain investments, but for the entire economy.

In addition to determining which investments are most advantageous, the CDI is even used in debt contracts.

Therefore, we can say that it is a very important tool for maintaining balance in the financial system.

What is the relationship between CDI, Selic rate and DI?

If you have already heard about CDI investment, you have certainly also come across another very common term in the market: Selic rate.

Selic is the basic interest rate in the economy. It is a monetary policy instrument used by the Central Bank (BC) to keep inflation under control.

Every 45 days, on average, the Monetary Policy Committee (COPOM) holds a meeting to establish the target for the Selic rate.

And since the Selic rate is defined to create a balance point in the national economy, it is common for it and the DI rate to be close. This is because loans between financial institutions made through the CDI also use the Selic rate as a reference.

And that's why even though the two rates are not exactly the same, they both follow the same trend.

Why does the CDI affect investments?

The CDI rate is the main reference for the profitability of various fixed income investments.

This means that when the CDI falls, investments linked to this indicator tend to bring lower returns. Likewise, if the CDI rises, the returns also become more advantageous.

In fact, even investment types that are not linked to the CDI are also indirectly impacted by the variation in the rate.

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What investments are linked to the CDI?

There are several investments whose remuneration is linked to the CDI rate.

Among the main ones, we can mention:

1. LCI and LCA

LCI (Real Estate Credit Letters) and LCA (Agribusiness Credit Letters) They are fixed income securities issued by financial institutions to raise financial resources and make loans available to these two sectors of the economy.

The main advantage of this type of investment is the exemption from Income Tax. In addition, LCIs and LCAs are protected by Credit Guarantee Fund (FGC).

Post-fixed letters of credit, linked to the CDI, are more common.

2. LC

LC is the acronym for Letter of Exchange. This type of investment works in a similar way to LCIs and LCAs.

One of the differences between LC and LCIs and LCAs is that LCs are not exempt from income tax. On the other hand, the income is usually higher.

Despite the name, the LC has no relation to the dollar exchange rate.

The disadvantage is that the LC is not as common as the CDB, for example. In addition, this type of investment has low liquidity, since it can only be redeemed at maturity.

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3. Debentures

Debentures are credit securities traded on the capital market.

Basically, they work as a loan so that companies can carry out financial plans.

Several debentures are post-fixed and remunerate investors through a percentage of the CDI.

Yield, fees and minimum investment vary by company.

Take advantage and also read 👉 Debentures: find out what they are and how to invest step by step

4. CBD

CDBs are among the most common fixed income securities on the market.

In fact, practically all financial institutions issue CDBs to their customers.

And the Post-fixed CDB, is directly linked to the CDI. After all, your return is given as a percentage of this rate.

Therefore, when looking for this type of fixed income investment, it is very common to come across CDBs that yield 100% of the CDI.

In other words, if the CDI is at 6.5% per year, the investment in this CDB will pay the total rate: 6.5% in the 12-month period.

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Conclusion

As you have seen, the CDI is the basis for fixed income investments.

Having this knowledge is important to make good choices and, thus, obtain good returns, both in the short and long term.