How much does a CDB 120% from CDI yield?

Is it possible to find CDB 120% from CDI on the market? Understand how this investment works and what its profitability is

CDI's CDB 120% bonds and other fixed income investments are attracting investors' attention.

After all, with the increase in the Selic rate in recent months, fixed income investments have become more attractive.

However, before making any investment, it is very important that you know exactly what your investor profile is and set financial goals.

Furthermore, it is also important to know the main characteristics of the application, such as profitability rate, liquidity, maturity date and minimum investment value.

To learn more about the subject, read on.

What is CBD?

The Bank Deposit Certificate (CDB) is a fixed income investment issued by banks.

Therefore, who invests in a CDB, you are lending your money to a financial institution in exchange for a fee.

There are three types of CBDs available on the market:

- Fixed-rate securities: The profitability rate of post-fixed securities is linked to a percentage of a specific reference rate, such as the CDI, for example. It is the most common type of security on the market.

- Fixed-rate securities: When investing in a fixed-rate security, at the time of purchase, you already know exactly how much your money will yield during the period.

• Hybrid securities: In this case, the profitability is made up of two parts – one fixed and one variable. In other words, hybrid CDBs pay a fixed rate plus the variation of an inflation index, such as the IPCA.

What is CDI?

Interbank Deposit Certificate (CDI) is an interest rate used in loans between banks.

In other words, it is the name of the loan that banks make between themselves, to close the business day with a positive balance, that is, a positive cash balance.

However, this does not always happen, as the number of deposits, for example, may have been lower than the number of withdrawals made on the day.

To avoid ending the day with a negative balance, banks make loans. And the money borrowed comes from other banks, which obviously receive interest on the transaction, which is calculated using the CDI rate.

The Central Bank requires banks to close the day with a positive balance.

It is important to remember that the CDI is not offered directly to investors. 

However, the daily fluctuation of this rate interferes with the profitability of fixed income assets linked to the CDI.

How does the CDI affect your investments?

As you already know, the CDI is issued and traded only between banks.

But this rate represents one of the main reference indexes for some fixed income investments.

This is because several investments are linked to this indicator, while others use it as a benchmark.

When the CDI rate rises, investments linked to this indicator yield more.

Furthermore, the CDI rate is correlated with Selic, which is the basic interest rate in our economy.

What is the difference between CDB and CDI?

CDB, as you can see, is a type of fixed income investment.

The CDI, on the other hand, is not an investment, but rather a reference index for the financial market.

Therefore, it is not possible to invest directly in a CDI.

How much does a CDB 120% from CDI yield?

Now you know what CDI is and how this rate affects the return on your investments.

The CDI closely follows the Selic rate, which is relevant not only for the world of investments, but also for understanding the economic scenario in Brazil.

When an application promises a return of 100% of the CDI, it means that that investment will have the same return as the CDI during the period in which it remains applied.

In other words, if the CDB pays 120% of the CDI, it means that its profitability is 20% above the CDI rate.

Currently, the DI rate, which represents the 100% of the CDI, yields 13.15% per year.

This means that if the investment offers 120% of the CDI, you must consider the total DI rate plus 20% of it.

It is important to remember that, as with other fixed income securities, CDB taxation follows the regressive Income Tax table. This, obviously, affects the profitability of your investments.

See the rates according to the application deadline:

· Up to 6 months — 22.5%;

· From 6 months to 12 months — 20%;

· From 12 months to 2 years — 17.5%;

· Over 2 years — 15%.

Furthermore, in very short-term investments (periods of less than 30 days), the CDB may also be subject to IOF (Tax on Financial Transactions).

The tax starts with a rate of 96% on the CDB profit, gradually reducing over time, until reaching 0%, which occurs after 30 days.

What to consider before investing in a CDB?

With the increase in the Selic rate, the profitability of CDB bonds is becoming more attractive to investors.

However, although profitability is very important in an investment, it is also necessary to take other factors into account before making investments, such as:

Minimum contribution

There are investments “for all budgets”.

However, some titles require a higher minimum contribution, which can be R$ 5 thousand or R$ 10 thousand, for example.

But there are more accessible CDBs, where you can start investing with just R$100.

Liquidity

Liquidity is the ability to convert an asset into cash.

A highly liquid investment is the one that can be redeemed more easily without losing value.

A low liquidity option is one in which the investor has more difficulty withdrawing the money, or may suffer financial losses if he makes the early withdrawal.

In addition to considering profitability, minimum investment and liquidity, it is also important that you know exactly what your investor profile is and create an investment strategy.

This way, you can analyze which applications are most suitable for your portfolio.

Conclusion

Now you know what CDB 120% from CDI is and what types of CDB titles are available on the market.

Although it is a fixed income and low-risk investment, it is always important to analyze some characteristics of the asset before making any investment!