Is early redemption of investments a good option?
Typically, this process involves paying fees or losing income from your application. Understand how it works.
Understand below how this procedure works and when it is possible.
What is Early Redemption on Investments?
When money is invested, there is an agreement with the issuer on the minimum period that it must remain yielding. But that doesn’t necessarily mean you won’t have access to it. Early redemption is the withdrawal of money before maturity.
Depending on the chosen investment, it is possible to request redemption before the term of the total or part of the amount invested. However, there may be a need to pay fees to carry out this action.
When is the best time to make an early redemption?
When financial unforeseen arise, it is necessary to dispose of an amount in the shortest possible time. Early redemption is an option for you to resolve them.
The truth is that there is no ideal time to make an early redemption, as each type of application has its rules.
In most cases, the longer the money has been invested (and the closer to the asset’s maturity date), the better.
As this money has remained in constant income, sometimes for a long term, it may be that the fees to redeem it early will be covered by the updated value. Thus, you do not have significant losses on the amount invested.
Early redemption or daily liquidity?
When investing, if you think you are likely to need the money invested in the short term, it is important to choose investments with daily liquidity – If you want to redeem your investment, you can do so whenever you like.
Investments with daily liquidity are also good options for building your emergency reserve , one of the most important steps in a person’s financial life. This is an amount that must be kept to cover unforeseen expenses that require greater than usual expenses.
This way, you avoid early redemption and postponing the results of your investments and, consequently, your financial goals.
To build your emergency reserve, you can invest in fixed income, for example, or choose an income payments account. For example, you can invest in government bonds, such as the Treasury Selic and Treasury Direct bonds, which are pre-and post-fixed. There are also CDBs and other assets with daily liquidity.
Mark-to-market in financial investments
Upon early redemption, your security will be offered for early sale to other investors at its current market value. This is called mark-to-market. In practice, this marking takes into account a series of factors that can enhance or devalue the paper.
Thus, it may happen that you do not have 100% of the accumulated profitability and even lose of the amount initially invested. Therefore, it is important to plan and carry out this procedure only in extreme situations.
What is the difference between daily liquidity and maturity liquidity?
A daily liquidity bond can be redeemed at any time. This means that, regardless of when you redeem, you will have the amount initially invested plus the profitability proportional to the period you remained with the title, less income tax and/or IOF.
The bond with liquidity at maturity works in another way. In theory, you should stay with him until his end date. But, in case of emergencies, you can carry out the early redemption, remembering that your bond can be traded at current values.
