“Old” Savings Passbooks Yield 6.17 Percent and Beat Other Conservative Investments

RIO DE JANEIRO, BRAZIL – In a world with ‘Tesouro Direto’, CDB, LCA, LCI, CRA, CRI and all this mingling of acronyms, the competition became tough for the “grandma” of conservative investments, the savings passbook.

For those who have money invested in savings and are still subject to the old rules of investment – which changed just over seven years ago – the product is becoming increasingly attractive at a time of cuts in the Selic, the basic interest rate.

The “old” savings passbook is valid for those who have kept their money invested since before May 3rd, 2012 when the new rules of profitability came into force. The change came into force to protect the other bonds and funds, such as the ‘Tesouro Direto’, which are all indexed to the Selic.

Until then, savings had gone their own way, with a fixed margin of 0.5 percent per month, plus the Reference Rate (TR). After changes, every time basic interest rates fell below 8.5 percent a year, the return would be at 70 percent of the Selic, plus TR.

In order to understand what it is like to have an old savings account in the investment basket, the variation of the Interbank Certificate of Deposit (CDI) in 12 months was 6.19 percent – except that the investor needs to pay at least 15 percent income tax (IR) upon redemption. On the other hand, the old passbook reached 6.17 percent in the same period, tax-free.

When compared to fixed income options, it pays the equivalent of a CDB with a net return of 120 percent of CDI. The story researched the CDBs for sale on the Yubb platform and found no similar option. On the website of Tesouro Direto, the IPCA + 2045, yields 6.2 percent per year, but it is necessary to withhold 15 percent income tax on withdrawal.

“Nowhere is there a better product than old savings, neither in the market nor here at the bank,” says Claudio Sanches, Itaú Unibanco’s investment director. “Whoever holds this type of savings should not dispose of this money,” he says.

The Central Bank (BC) does not report how much money is currently invested in old savings. Sanches, however, estimates that the proportion is around 20 percent, or approximately R$165.4 billion (US$41 billion). The total balance of savings today is R$827 billion.

According to experts, those who have this investment know its potential and do not touch the funds. “Here at Itaú, of the R$125 billion in managed savings, R$20 billion are old passbooks. These are older people, sometimes with high amounts. They don’t withdraw this money,” says Sanches.

Lawyer Fábio Hastenteufe, from Venâncio Aires in Rio Grande do Sul State, is 33 years old and owns one of these old passbooks. He started saving when he was four years old, as a gift from his parents. He knows that any money he takes from there will not have the same gain in fixed income. “I don’t want to put my hand on that money. It’s a big advantage these days,” he says.

If Hastenteufe had withdrawn the deposit to reallocate the amount to a CDB of 100 percent CDI as early as 2012, today he would have an accrued return of 84.1 percent in compound interest. With savings, this return is 65.04 percent.

However, Planar’s financial planner José Raymundo de Faria Júnior says that this is not the case. “From now on the Selic will drop further, it may reach four percent, and the difference from old savings to other products will grow even higher.”

‘Pop’ investment

Currently, the new savings, the passbook open to all investors today, yields 3.85 percent per year, or slightly more than inflation, which is in the range of 3.42 percent per year, according to the latest Focus Bulletin of the Central Bank. The trend is for a steady drop in the index, as a new cut in the Selic is expected on October 30th.

“As a product, there are more sophisticated options in the market today, as safe as the passbook, which require a small initial investment, but which seek better profitability, and have immediate liquidity,” says Paula Sauer, ESPM economics professor.

The professor, however, considers the importance of the passbook as a gateway to the investment universe. According to the Brazilian Association of Financial and Capital Market Institutions (ANBIMA), eight out of ten investors are savers. “The passbook, as the ‘grandmother’ of investments, instilled in many Brazilians the good habit of saving. In other words: stop consuming to save money.”

Source: Estadão Conteúdo