Tips About Investing In Brazil (if You’re Afraid Of Stocks)
Tips About Investing In Brazil (If you’re afraid of Stocks)
Beginners of the investment world often have several questions:
How, when and where to invest? What is the best investment? It is worth investing in the brazilian stock market? Is it risky? How much can I earn? How much can I lose?
To help these investors, I write this article with two great investment tips for beginners.
Conservative Tip
If you want to start investing but is afraid of the brazilian Bovespa, do not worry. You can still find profitable investments in Brazil that will satisfy you.
Where?
In treasury brazilian bonds!
The most popular investment is the Tesouro Direto, created by the Brazilian Treasury. These bonds have very high yields (11% – 13%) while at the same time maintain a very low risk.
However, there are several options of Brazilian Bonds, so what to choose?
I like the LTN’s and NTN-B’s.
With an LTN, the investor knows EXACTLY how much he will receive and on what day. If you buy a bond that generates 12% a year, you can rest assured that you will earn 12% per annum until the bond reach its maturity, or be repurchased by the Tesouro, that you will get your original investment plus the profits of the year in which its capital remained applied.
The NTN-B’s keep up with the inflation. That is, if some catastrophe happens in the country and inflation reaches epic levels, those bonds will keep your money 100% secure. The income of NTN-B’s tend to be slightly smaller than those of LTN’s, but this is the price the investor pays for having a large margin of security against inflation.
How much can I earn?
With the LTN’s, around 10-12% per year not counting inflation and with the NTN-B’s, 5-6% above inflation.
How much can I lose?
The Treasury keeps its money very safe. The investor’s capital is very secure. You will only lose something if Brazil goes bankrupt. Considering that this is very far from happening, we can conclude that it is totally safe to invest in Tesouro Direto.
How to invest?
To start your investments in Tesouro Direto, contact your stockbroker or talk to a broker whom you trust.
“Risky” Tip
For those who want higher yields than government bonds but still do not want to invest in the stock market, there is the brazilian ETFs.
What are ETFs?
They are stock funds that trade like common stocks on the stock exchange. While a typical investor buys securities from a company like Petrobras using the Home broker system, an investor’s purchases ETF shares of a fund in the same way, also using the Home Broker. Nice, easy and online.
The advantages of ETFs are many. Firstly, if the investor does not know exactly where to invest, the ETFs provide diversification. This is because an ETF is nothing more than a portion of a fund that manages many different assets at the same time.
Moreover, many of these funds track indexes of Brazilian stocks. So if you invest in an ETF, you’re basically diversifying your investments while maintaining a high profitability and also invests in several Brazilian companies at the same time. You will be investing almost in Brazil. And man… brazilian stocks are skyrocketing!
But in which ETF should I invest?
In Brazil, the best and most recommended are index funds and the BlackRock fund PIBB11. Personally, I like the Blackrock funds. If I have to choose only one, I would pick the SMAL11. This fund follows an index of small caps in the Brazilian stock exchange, Bovespa.
Why choose a fund small businesses? Just because small companies have greater growth potential. There are other options of course, but start researching these funds mentioned is a great idea.
When I win?
You can make up more than 100% per annum (no, I’m not jocking, check Yahoo quotes and see for yourself). However, as an ETF fund is still part of the variable income, it is difficult to say exactly. You may get 100% or 50% or 30% or 150% or nothing or lose your pants. There’s nothing certain in the stock market!
How much can I lose?
Chances are you will lose some money in the short term. But since you are investing in several Brazilian companies at the same time, just keep your money invested while waiting for high profits in the future, unless Brazil explodes. But don’t worry, that is really very far from happening.
How to invest?
As with Tesouro Direto, I advise that you contact your stock broker.
Good luck with the brazilian stock market!