Since Brazil's central bank cut the Selic from 15% to 14.75% in March 2026, the fixed-income market has entered a transition phase. The April Focus Report projects the rate at 12.50% per year by the end of 2026 — a cumulative drop of 2.25 percentage points in less than ten months.
For fixed-income investors, this environment calls for a portfolio review. Keeping everything in floating-rate instruments means accepting that returns will fall alongside the Selic. Moving your entire capital into fixed-rate instruments means taking on the risk of inflation coming in higher than expected. Making the right call starts with understanding what each product actually offers today — and who each one makes sense for.
This guide compares the main instruments available to individual investors in Brazil: Tesouro Selic, Tesouro IPCA+, Tesouro Prefixado, CDB, LCI, LCA, and incentivized debentures. Each is evaluated with current rates, real after-tax returns, and ideal use cases.
The Current Fixed-Income Landscape
Brazil closed 2025 with the Selic hiking cycle peaking at 15% — the highest level since 2016. IPCA inflation came in at 4.71% in March 2026, above the central bank's 4.50% ceiling, which made the rate-cutting cycle more gradual than many had anticipated.
The combination of high nominal rates and persistent inflation creates a specific context for fixed income: real returns are still meaningful — between 8% and 9% per year before taxes for floating-rate instruments — but the trend points toward compression over the coming months. Locking in rates now, whether through fixed-rate or IPCA+ instruments, could benefit investors who act during this window.
At the same time, more than 8 million individual investors are registered on B3, and a significant share of that capital is still sitting in floating-rate instruments out of inertia. The migration toward inflation-protected or locked-rate instruments has been accelerating — and that has practical implications for which products are offering the best rates right now.
Tesouro Selic: Your Liquid Reserve
Tesouro Selic is the most liquid fixed-income instrument in Brazil. It tracks the benchmark rate daily with no mark-to-market risk — meaning it can be sold at any time without meaningful loss.
With the Selic at 14.75%, the net yield after B3's custody fee (0.20% per year) sits at around 14.55% per year gross, or 12.37% per year net for holders past the two-year mark (15% income tax on gains).
The key structural point: every central bank cut directly reduces the instrument's return. If the Selic reaches 12.50% by December 2026, someone investing today in Tesouro Selic will earn the prevailing rate in each period — not today's rate for the full term. The final return will be a weighted average of the entire cycle, not the current 14.75%.
Best for: emergency reserves, capital that may be needed within 12 months, or a holding position while evaluating other opportunities.
Tesouro IPCA+: Long-Term Real Return Protection
Tesouro IPCA+ pays IPCA inflation plus a fixed real rate locked in at the time of purchase. Series available in April 2026 are offering approximately IPCA + 7.50% per year for maturities in 2035 and beyond.
That number deserves context. With current IPCA at 4.71%, the implied nominal rate would be roughly 12.5% per year — and if inflation rises, the real return holds while the nominal return follows. The investor does not lose purchasing power regardless of the inflation scenario.
The main caveat is mark-to-market risk. If you buy Tesouro IPCA+ today and need to sell before maturity, the market price may be below what you paid, depending on how real interest rates move along the curve. The longer the maturity, the greater that volatility. For investors who hold to maturity, that volatility is irrelevant in practice — the contracted return is guaranteed.
In rate-cutting cycles, Tesouro IPCA+ tends to appreciate in the secondary market, since bonds paying 7.5% real become more attractive as future rates decline. This is the mark-to-market mechanism working in the investor's favor.
Best for: long-term goals (retirement, children's education), structural inflation protection, capital that will not be needed before maturity.
Tesouro Prefixado: Locking in Rates at the Cycle Peak
Tesouro Prefixado maturing in 2029 is trading at rates between 13% and 13.50% per year in April 2026. The logic is straightforward: anyone buying today earns that rate until maturity, regardless of where the Selic ends up three years from now.
If the Focus Report is right and the Selic reaches 12.50% by year-end 2026, a Tesouro Prefixado locked at 13.25% will be earning 0.75 percentage points above the economy's basic cost of capital. For 2027 and 2028, when models project even lower rates, that spread could widen further.
The main risk is the opposite scenario: if inflation surprises to the upside and the central bank is forced to resume rate hikes, the fixed-rate bond may fall below market rates. Selling before maturity in that scenario would generate a loss. Holding to maturity still delivers the contracted rate, but the opportunity cost would be real.
Best for: investors with a 3- to 5-year horizon, conviction in a rate-cutting scenario, capital that will not be needed before maturity.
CDB: Flexibility With Tax Implications
CDB (Certificado de Depósito Bancário) is issued by banks and covered by FGC deposit insurance up to BRL 250,000 per institution per taxpayer ID. The most common offerings in April 2026:
- Floating rate: 100% to 120% of CDI, depending on term and issuing bank
- Fixed rate: 13.50% to 14% per year for 12- to 24-month maturities
- IPCA-linked: IPCA + 6.50% to 7% per year for longer terms
Taxation follows the regressive income tax table:
| Term | Income Tax Rate |
|---|---|
| Up to 180 days | 22.5% |
| 181 to 360 days | 20% |
| 361 to 720 days | 17.5% |
| Over 720 days | 15% |
This means a floating-rate CDB at 110% of CDI, held for over two years, delivers approximately 93.5% of CDI net — after 15% income tax on gains. For shorter terms, the net return drops noticeably.
CDBs from smaller banks typically offer higher rates — 115% to 120% of CDI — as a premium for credit risk and lower liquidity. FGC coverage up to BRL 250,000 mitigates the risk, but fragmentation matters if the invested amount exceeds that threshold.
Best for: diversification across institutions, moderate risk-premium appetite within FGC limits, specific terms that Tesouro Direto does not match exactly.
LCI and LCA: The Tax-Exemption Advantage
LCI (Letra de Crédito Imobiliário) and LCA (Letra de Crédito do Agronegócio) are exempt from income tax for individual investors. This creates a structural advantage that needs to be calculated correctly.
With current rates — LCI/LCA paying between 88% and 95% of CDI for 12- to 24-month terms — the net return comparison looks like this:
- LCI/LCA at 92% of CDI: 92% of CDI net (no income tax)
- CDB at 110% of CDI for 2+ years: ~93.5% of CDI net (after 15% income tax)
The break-even between these two products sits at around 108% to 109% of CDI at the two-year mark. In other words, an LCI at 92% of CDI is equivalent to a CDB at approximately 108% of CDI. If the market is offering CDBs above 109% of CDI, the CDB may win. If it is below that, LCI/LCA comes out ahead.
There is a more intuitive way to think about it: the equivalent gross yield of an LCI/LCA at 92% of CDI, projected against the current CDI of ~14.65%, translates to an annualized pre-tax equivalent of ~17% per year relative to a taxed CDB. This is why LCI and LCA are often described as "equivalent to a ~17% CDB."
Liquidity is typically lower — minimum terms of 12 months are common, and early redemption may not be available. This limits their use as short-term reserves.
Best for: capital with a defined 12- to 36-month horizon, investors who already have a separate liquidity reserve, tax optimization within a broader portfolio.
Incentivized Debentures: Private Credit With Tax Exemption
Incentivized debentures are debt securities issued by infrastructure companies, exempt from income tax for individual investors (Law 12.431/2011). Eligible sectors include energy, sanitation, transportation, and telecommunications.
Current secondary market rates sit at around IPCA + 7% to 9% per year, depending on the issuer, term, and credit rating. This puts them on par with Tesouro IPCA+ — with the added benefit of income tax exemption that government bonds do not offer — but with issuer credit risk that is substantially higher than sovereign risk.
Key considerations:
- Limited secondary market liquidity. The bid-ask spread can be meaningful.
- Issuer credit risk is not covered by FGC insurance.
- Tax exemption applies only to individual investors; legal entities and funds are taxed normally.
- Diversifying across issuers reduces concentrated credit risk.
For investors with a more seasoned portfolio, incentivized debentures from AAA- or AA-rated issuers can occupy the private credit allocation within fixed income, capturing both the yield premium and the tax exemption simultaneously.
Best for: investors with capital above BRL 100,000, appetite for private credit, a 3- to 7-year horizon, and willingness to analyze issuer ratings and sector exposure.
Full Comparison
The table below summarizes the main instruments under April 2026 conditions:
| Product | Current Rate (April 2026) | Income Tax (Individuals) | Liquidity | Guarantee | Best For |
|---|---|---|---|---|---|
| Tesouro Selic | ~14.55% p.a. (gross) | 15% (2+ years) | T+1 | Sovereign | Emergency reserve, liquidity |
| Tesouro IPCA+ | IPCA + 7.50% p.a. | 15% (2+ years) | T+1* | Sovereign | Long-term, inflation protection |
| Tesouro Prefixado | 13.00–13.50% p.a. | 15% (2+ years) | T+1* | Sovereign | Rate-cutting cycle, 3–5 year term |
| CDB floating rate | 100–120% CDI | 15%–22.5% | Varies | FGC up to BRL 250k | Diversification, risk premium |
| CDB fixed rate | 13.50–14.00% p.a. | 15%–22.5% | Varies | FGC up to BRL 250k | Specific terms, smaller banks |
| LCI/LCA | 88–95% CDI | Exempt | 12+ months | FGC up to BRL 250k | Medium-term capital, tax optimization |
| Incentivized debentures | IPCA + 7.00–9.00% p.a. | Exempt | Low | Private issuer | Private credit, mature portfolio |
*Tesouro Direto offers daily liquidity, but early sale of fixed-rate and IPCA+ bonds involves mark-to-market pricing.
Building a Strategy for 2026
There is no universal allocation. What follows is a reasoning framework that can be adapted to each investor's profile and circumstances.
First: separate your liquidity reserve from the rest. Tesouro Selic or a CDB with daily liquidity covering 6 to 12 months of expenses. This portion should never go into instruments without immediate liquidity, regardless of the rate.
Second: assess the time horizon for the remaining capital. Capital you are confident you will not need for 3 years or more has sufficient runway to hold Tesouro Prefixado or IPCA+ to maturity, eliminating mark-to-market risk. Capital with an uncertain or short horizon should stay in floating-rate instruments.
Third: use the tax exemption where it makes sense. LCI and LCA are well-suited for medium-term capital (1 to 3 years) that is already outside the liquidity reserve. The comparison should always be made on net return — not gross CDI percentage.
Fourth: factor in the macro scenario without betting everything on it. The Selic falling to 12.50% by year-end is the market consensus, not a certainty. A balanced portfolio can hold fixed-rate positions without concentrating 100% of assets in them. An IPCA+ allocation provides a hedge against an inflationary surprise scenario.
A reasonable structure for an investor with a 2- to 5-year horizon and moderate risk tolerance:
- 20%–30% in Tesouro Selic or liquid CDB (reserve and dry powder)
- 30%–40% in Tesouro IPCA+ 2035 or equivalent
- 20%–30% in Tesouro Prefixado 2029 or fixed-rate CDB
- 10%–20% in LCI/LCA or incentivized debentures (subject to availability)
These percentages need to be adjusted based on total capital, investment goals, and the investor's income profile.
Risks to Keep in Mind
Reinvestment risk (floating-rate instruments): staying 100% in floating rate means receiving the prevailing rate in each period. If the Selic falls to 12.50% by December, the average return for the year will be significantly below the current 14.75%.
Mark-to-market risk (fixed-rate and IPCA+ bonds): if you need to sell before maturity during a rate-hiking environment, you may incur a loss. This risk is real and frequently underestimated by investors who focus only on the contracted rate.
Credit risk (smaller-bank CDBs and debentures): FGC covers CDBs up to BRL 250,000 per taxpayer ID per institution, but does not cover debentures. Issuers with lower ratings pay higher rates — the premium exists for a reason.
Concentration risk: holding all capital in a single instrument or issuer increases exposure to issuer-specific events. Diversifying across products and issuers is a hedge against idiosyncratic risk.
Liquidity risk: LCI and LCA with long lock-up periods, or CDBs without daily liquidity, can leave an investor without access to capital when it is needed most. A separate liquidity reserve is non-negotiable.
Brazilian fixed income in 2026 still offers meaningful real returns — that is a fact. The relevant question is over what time horizon and with what combination of risk and liquidity. Understanding the differences between instruments is the necessary step before any allocation decision.
If you would like to review your current portfolio against this backdrop, Royal Binary has tools and content to help with that analysis. The starting point is always clarity on your goal, time horizon, and risk tolerance.