Fixed income and equities: risks and features

In Brazil, “renda fixa” (fixed income) and “renda variável” (variable income, mainly equities) are the two big families of investment. The names suggest a simple split between safe and risky, but that is not quite right. Both groups carry risk. What changes is the type of risk and the way the return is calculated.

This article explains the features of each family, the risks of each and a few points that often cause confusion. It does not recommend products or say what is best for you: that depends on your time horizon, goals and tolerance for losses.

What defines fixed income

According to the Investor Portal of the CVM (Brazil’s securities regulator), in fixed income the return, or the way it is calculated, is known at the time of investment. You lend money to an issuer (a government, bank or company) and expect to get back the amount lent plus interest.

Common examples:

• government bonds, issued by the National Treasury and sold to individuals through Tesouro Direto, the Treasury’s retail bond program;
• CDBs (bank certificates of deposit), issued by banks;
• LCIs and LCAs (real estate and agribusiness credit notes), also issued by banks;
• debentures, debt securities issued by companies.

“Known” does not mean “fixed in reais”. The CVM divides fixed income into three forms of return:

Form	How the return is calculated	Example cited by the CVM
Fixed-rate	Rate set at purchase; you know how much you receive at maturity	Tesouro Prefixado
Floating-rate	Tracks a benchmark rate, usually the DI (interbank deposit rate) or the Selic	CDB at a percentage of the CDI, Tesouro Selic
Hybrid	A fixed part plus an inflation index, such as the IPCA	Tesouro IPCA+, debenture at IPCA + rate

With a floating-rate or hybrid bond, you know the rule but not the final amount, because it depends on the behavior of the benchmark rate or inflation. To understand why inflation matters, see Inflation: causes, measures and consequences. To see how interest accumulates over time, see Compound interest: how it works in practice.

What defines equities

In variable income, the return is not known in advance. According to the same CVM page, it varies with the performance of the related business. The main example is shares: the result depends on the company’s profit, the dividends it distributes and the price the market is willing to pay for the share.

The B3, Brazil’s stock exchange, in an educational article on its Bora Investir portal, lists as variable income shares, real estate investment funds (FIIs), ETFs (funds that track indexes), BDRs (certificates representing foreign shares traded in Brazil) and funds that invest in these assets.

Creditor or partner

The difference becomes clearer when you compare a debenture with a share of the same company. ANBIMA sums it up as follows:

• whoever buys a debenture lends money to the company for a period and receives interest on the agreed terms. They are a creditor;
• whoever buys a share becomes a partner. They may receive dividends and gain from appreciation, but only if the company makes a profit and grows. The share has no maturity.

With the debenture, the main risk is the company not paying. With the share, it is the price falling. The company is the same; the type of exposure is different.

The risks of fixed income

The CVM is blunt: despite the name, fixed income securities carry risks, and in fixed income “it is also possible to have negative returns”. There are three main ones.

Credit risk is the possibility that the issuer does not pay the interest or does not return the principal. It depends on who issues: a federal government bond, a CDB from a large bank and a debenture from a small company have very different credit risks. How the government and banks fit into this system is explained in How the modern financial system works.

Market risk is the change in a bond’s price before maturity. When market interest rates rise, bonds paying a lower fixed rate lose value, because no one pays full price for a security that yields less than a new one. If you need to sell before maturity, you may receive less than you expected, and even less than you invested. The Tesouro Direto rules describe this mechanism: in an early sale the market price applies, and the return may differ from the contracted one; those who hold until maturity receive the rate agreed at purchase.

Liquidity risk is the difficulty of turning the investment into cash when you need it. Some CDBs have lock-up periods, and many debentures have few buyers in the secondary market. Selling in a hurry may mean accepting a worse price.

There is also the risk that the investment earns less than inflation, which reduces purchasing power even with a higher nominal balance.

The risks of equities

In equities, market risk is the core issue. The price can fall a lot and for a long time, and the CVM notes that investors can lose the entire amount invested.

According to the B3 article, variable income assets generally fluctuate more than fixed income ones, but there is no single rule: volatility (how much the price rises and falls) varies from asset to asset. The same article says that, over the medium and long term, variable income tends to have a higher expected return. “Expected” is the key word: it is an average long-term tendency, not a promise for any period or any asset.

Equities also carry liquidity risk (thinly traded shares and funds) and risks specific to each company, such as management, debt and changes in the sector.

Guarantees: what the FGC covers

The FGC (Fundo Garantidor de Créditos, Brazil’s deposit guarantee fund) reimburses investors when a member financial institution fails. According to the FGC itself, as consulted on October 8, 2026:

• the guarantee is up to R$ 250,000 per CPF or CNPJ (individual or corporate taxpayer ID), per financial institution or conglomerate;
• there is a cap of R$ 1 million every four years for the same CPF or CNPJ, when several institutions fail in that period;
• covered products include, among others, checking accounts, savings accounts, CDBs, RDBs, LCIs and LCAs;
• not covered are Tesouro Direto government bonds, fixed income funds, debentures, CRIs, CRAs and financial bills (letras financeiras).

Government bonds are outside the FGC because the debtor is the National Treasury itself; the risk in that case is that of the federal government. The FGC also does not protect against price fluctuations or losses on shares: it covers the failure of the institution, not the result of the investment.

Taxes: a practical difference

For most fixed income, income tax is withheld at source and follows a table that decreases with the holding period. Law No. 11,033/2004, art. 1, sets the rates (text checked on October 8, 2026):

Investment period	Income tax rate
Up to 180 days	22.5%
181 to 360 days	20%
361 to 720 days	17.5%
Over 720 days	15%

Provisional Measure No. 1,303/2025, which proposed changing this table, appears in the compiled text of the law with the note “validity ended”. Some investments have their own rules: according to the B3, LCIs, LCAs and CRIs are tax-exempt for individuals. In variable income, taxation is different and depends on the asset and the transaction; check the Receita Federal (Brazil’s Federal Revenue Service) rules for your case.

A side-by-side comparison

Feature	Fixed income	Variable income
How the return is defined	Rule known at investment	Depends on the business and market price
Investor’s position	Creditor	Partner (in the case of shares)
Maturity	Usually has one	Shares do not
Core risk	Issuer’s credit	Price fluctuation
Can you lose money?	Yes, through default or early sale	Yes, including the entire amount
FGC guarantee	Only on some bank products	No

Key takeaways

• The difference between fixed income and equities lies in the rule for returns and in the investor’s position (creditor or partner), not in whether there is risk.
• In fixed income, ask who the issuer is, whether you can hold until maturity and what the liquidity is. In equities, ask whether you can stand to see the value fall for a long period.
• Guarantees and taxes vary by product. Check the rules at the official source on the date you invest. For government bonds in detail, see Tesouro Direto: bonds, rates and risks.