It’s not just about stock purchases and savings that the investment market lives on. Among the various financial products that are available today, one modality worth mentioning are the Real Estate Credit Letters (LCIs).
If you have never heard of LCI and you have no idea what it is, check out our guide that explains what this type of investment is, how it works, what its advantages and disadvantages are and for whom it is indicated. Come on?
What are LCIs?
They are fixed income securities, that is, they are an investment that has a fixed return or linked to an index for the one who applies. They are just the opposite of variable-income investments, such as shares of publicly traded companies, which change their value according to when they are listed in the stock exchanges.
LCIs are quoted from the real estate loan. They are issued from the credit that financial institutions obtain from mortgaged real estate or that are under fiduciary alienation, that is, when the bank owns to property from a contract with the lender.
LCIs may have pre- or post-fixed variation. The pre-set tells the investor exactly what the application’s income will be. Fixed assets fluctuate according to the Interbank Deposit Certificate (CDI), which usually varies according to the Selic, the basic interest rate that is defined by the Central Bank.
What are the advantages of investing in LCIs?
The application in LCI guarantees the investor the certainty of how much and when the money applied will yield. This gives the investor the assurance that he will not lose money and let him know with some certainty how much he will own at the end of a period.
In addition, the application in LCI is exempt from Income Tax (IR) for individuals. IR taxation for legal entities varies for longer application periods.
The LCIs are also guaranteed by law by the Credit Guarantee Fund (FGC) until applications of R $ 250 thousand. That is, if you invest in LCIs from an institution that might get into financial trouble, then the FGC guarantees the return for your application.
What are the limitations of LCIs?
The main limitation of application in LCI is to have a fairly high minimum investment amount. In general, the application value usually ranges from R $ 30 thousand to R $ 50 thousand, which makes LCIs restricted only to those who have a good amount of money reserved for investment.
Other than that, LCI applications can not be redeemed at any time. They have redemption terms that vary according to the type of real estate agreement that served the basis for LCI’s issuance.
For whom LCI is indicated
LCI investment is recommended for those who want a guaranteed return on financial investment. Because they are a fixed-income investment, LCIs are considered a conservative form of application, that is, it offers less risk but less significant gains.
If your goal is to invest without risking losing money, LCIs are a good option. However, if you want to raise a lot of money in the short term, it is best to seek more aggressive forms of investment, such as buying stocks.
To help you decide on investing in LCIs, here is a list of accredited LCI issuers and the different returns, liquidity and maturity periods, among other information.