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Direct Treasury or Savings?

I have seen a large number of specialists defending investment in Treasury Direct, considering the fact that net interest is usually much higher than what is offered by savings.

Recently, Tesouro Direto, a trading platform for Federal Public Securities, underwent three important reformulations: Change in the name of traded securities, reduction in the minimum investment value and increase in liquidity.

With the new rule, today it is allowing the investor to acquire 1% of Public Bonds. Using the LFT (now named Treasury Selic 2021) as an example, the minimum amount to invest is now less than 70 reais (1% of R$6,750.54).

Redeeming the investment has also become easier: daily investors are able to sell their securities with the guarantee of repurchase by the National Treasury.

Thus, there is an opportunity for small investors to start investing in this type of investment. In the last month of March, the volume of business on the platform exceeded R$ 1 billion and surpassed the mark of 480 thousand registered investors.

But, facing this new door, an inevitable question arises: is investing in Treasury Direct really better than investing in savings? After all, when is investing in Treasury Direct more advantageous than investing in savings?

Some costs to apply to Treasury Direct

While savings are an investment exempt from income tax and administration fees, Tesouro Direto incurs some extra costs, as we will see:

1) Income Tax

The IR incident varies from 15% to 22.5% of the income, depending on how long the application is maintained. Thus, if the amount invested is redeemed within 180 days, the IR incident will be 22.5%. If the redemption occurs after 720 days, the IR will be 15%.

2) Administration Fee

This fee varies, depending on the broker or bank used to access this investment. Management fees have varied between 0% and 2% per year, levied on the total amount invested.

3) BM&FBovespa Custody Rate

This rate is fixed, remaining at 0.3% per year on the amount invested.

Based on these costs we can do a quick simulation.

Direct Treasury x Savings

So that we can get a better idea, I decided to propose a quick simulation in which a person has R$ 100.00 to invest. Let’s see what would happen if she invested in savings and what would happen if the investment was in Treasury Direct.

To facilitate our calculations, let’s consider a scenario in which the Selic rate is 13% per year and the management fee negotiated with the broker is 0.1% per year.

Situation 01 – Application period of less than 180 days

As a first scenario, let’s imagine that our investment of BRL 100.00 was held for a period of 5 months (150 days).

In savings, we would have monthly interest of approximately 0.5%. At the end of the 5 months we would add R$ 102.60.

In Treasury Direct, considering the annual Selic rate of 13%, we would have gone from R$100.00 to R$105.22 in these 5 months. However, from this gross redemption amount, we must subtract the custody fees (0.3% pa), administration fees (0.1% pa), and the income tax of 22.5%. In the end, R$ 103.63 would remain.

Situation 02 – Application period greater than 720 days

In the second scenario, the value of our initial investment remains unchanged (R$ 100.00), but the term becomes 2 years (720 days).

Thus, in savings, at the end of the two years, we would have an accumulated amount of R$ 116.64, while, in Treasury Direct, a value close to R$ 123.03 (IR at 15%).

Conclusions: Direct Treasure x Savings

As our simulations indicate, Tesouro Direto proves to be advantageous, both in terms of an investment whose term is less than 180 days, and in an application whose term exceeds 720 days.

It is important to emphasize that the administration fee directly impacts the final result, so that high fees can make the Treasury Direct account disadvantageous in relation to savings.

All this serves to reinforce what experts have been advocating for some time: there is no longer any reason to invest in savings in the face of a high Selic rate. Treasury Direct is an investment as conservative and safe as savings, but a significantly higher net return.

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