Selic changes savings income; see how the investments are

The rise in the basic interest rate, the Selic, which this Wednesday (8) went from 7.75% to 9.25% per year, will also affect the correction of savings. Preferred investment by Brazilians, the passbook will earn 0.5% per month plus the TR (Referential Rate), which occurs whenever the Selic is above 8.5% per year.

With a basic rate of up to 8.5% per year, savings yield the equivalent of 70% of the Selic rate.

Even with the change, savings will remain severely disadvantaged compared to most fixed-income investments and will still lose badly to inflation.

Considering the effects of the new Selic on the average yields of a basket of nine investments, financial investment searcher Yubb estimated that savings accounts will now deliver an annual variation of 6.17%, above the 5.42% it was paying.

This will still represent, however, a loss of 3.64% compared to the inflation of 10.18% projected for 2021 in the latest Focus survey, by the Central Bank.

Savings is the second worst investment analyzed by Yubb, second only to the CDB (Bank Deposit Credit) offered by large banks, whose estimated real variation (discounted for inflation) will be negative at 3.92%.

CDBs issued by medium-sized banks will be just 0.60% behind the rise in the cost of living.

​Incentivized debentures will expand their advantage and continue as the only investments capable of delivering gains (3.30%) above inflation, considering the options analyzed by Yubb.

Debentures regularly show gains in periods of rising prices because they are partially inflation-linked, in addition to being exempt from IR (Income Tax). These assets, however, are issued by private companies and can be considered risky. The purchase is suitable for investors with the ability to assess the issuer’s financial health.

Despite the negative return on other investments in relation to the variation in the cost of living, the increase in the Selic rate places some conservative fixed income investments at levels close to inflation.

With a negative real yield of 0.06% per year, LCs (Bills of Exchange) appear as the best conservative option for those seeking fixed income protection. In the same family, LCIs (Real Estate Credit Bills) and LCAs (Agribusiness Letters of Credit) will be in the red at 0.77% and 1.10%, respectively.

Bernardo Pascowitch, founder of Yubb, points out that the rise in Selic increases the advantage of fixed income over equity investments and makes the scenario especially challenging for companies that have shares listed on the Stock Exchange.

“The discount investors demand on a company’s valuation goes up when interest rates are higher, and consequently the share price falls because investors demand a higher return,” says Pascowitch.

The Ibovespa, the reference index of the Brazilian stock exchange, is negative by 9.4% in 2021.

Calculation of savings changes with new Selic

Since May 2012, when the basic interest rate is below or equal to 8.5% per year, the profitability of savings is equivalent to 70% of the Selic, plus the TR (Referential Rate), which has been practically zero for about three years old.

The rule determines, however, that in periods when the Selic exceeds 8.5%, the return is equal to that applied to deposits made in passbooks before May 2012, known as old savings, which is 0.5% per month, plus the TR variation.

Considering the 9.25% Selic and the current TR, the annual savings income would correspond to 6.17%.

The TR is defined daily by the Central Bank based on the interest rates of the National Treasury Bills, which in turn vary according to the Selic rate. That is why, indirectly, the TR is linked to Selic.

The Reference Rate should start to present a slight increase from the rise in basic interest rates this Wednesday, according to economist José Dutra Vieira Sobrinho.

Dutra estimates that this will raise the savings correction, initially, to 6.35% per year. The calculation and disclosure of the official TR are, however, up to the Central Bank. “It is not possible to know the exact income of the passbook without the new TR, which is only calculated and published by the Central Bank”, stated Dutra.

While the TR has daily variation, the correction of savings is monthly and the new income, therefore, will only be noticed by savers in one month.

The Central Bank did not say when it will release the new TR.

Cristiane Gercina and Lucas Bombana collaborated