What are LCI and LCA?
LCI (Letra de Crédito Imobiliário) and LCA (Letra de Crédito do Agronegócio) are fixed-income investments issued by banks. The big advantage: they are exempt from Income Tax for individuals.
Difference between LCI and LCA
The only difference is the destination of the money:
- LCI: the bank uses it to finance the real estate sector
- LCA: the bank uses it to finance the agribusiness
For the investor, they work in the same way.
Advantages
- Exemption from IR (higher net income)
- Protection by FGC up to R$ 250,000
- Yield generally linked to CDI (85-100%)
- Security similar to CDB
Disadvantages
- Minimum lock-up period of 90 days (cannot withdraw before)
- Minimum investment usually higher (R$ 1,000-5,000)
- Fewer options available than CDB
LCI/LCA vs. CDB
An LCI that pays 85% of CDI can yield more than a CDB of 100% of CDI, due to the exemption from IR:
| CDB 100% CDI | LCI 85% CDI | |
|---|---|---|
| Gross yield | 13,65% | 11,60% |
| IR (15%) | -2,05% | 0% |
| Net yield | 11,60% | 11,60% |
In this example, they yield the same. But an LCI of 90% of CDI already beats the CDB of 100%.
When to invest in LCI/LCA
- When you won’t need the money for at least 90 days
- To diversify fixed-income investments
- When you find rates above 90% of CDI