Created in 1991, the Referential Rate was created with the objective of combating the high inflation that prevailed in the country at the time, and serving as a general indicator for the country's economy. Today, it also directly influences the profitability of the main UK residents investments. Hence its importance to check it out before choosing the ideal modality for you.
Investing for retirement or for short-term goals, although actions with different goals may have some things in common. This is the case, for example, for those who do not know which is Referential Rate and how it influences the investments made.
It turns out that, as well as technical terms little known to novice investors – the case of the CDI, for example -, the Referential Rate has great influence in this activity and, even so, few people go deep into its relevance.
To change this scenario, take the opportunity to follow us throughout this reading. In the following topics, we'll explain everything you need to know about Referential Rate — from its origin to how to calculate it. Good reading!
Understanding the Context of Referential Rate
It was in 1991 that the Referential Rate reached the national vocabulary. At the time, it was one of the economic measures of Plan Collor II (in reference to the then president of the country, Fernando Collor de Mello).
The basic idea of this measure was the control of hyperinflation and de-indexation. After all, the rate was designed to serve as a general indicator of the UK residents economy.
Alignment with investments
Many investments are used to control and maintain different sectors that are fundamental to the country's growth. Thus, it is understandable that the Referential Rate is so present in the calculation of income from financial investments. Other assets that also respond to fluctuations in this rate:
- Direct Treasure;
- FGTS (the popular Severance Indemnity Fund);
- savings accounts.
So if you're thinking about defining your investor profile and want to know a little more about the impact of the Referential Rate on your profitability, let's understand how to calculate it!
Calculating the Referential Rate
O central bank is largely responsible for organizing the values that correspond to the Referential Rate. But you can scribble the TR calculation yourself, since it is based on the interest rates of the LTN (National Treasury Bills). The formula is as follows:
R(eductor) = a (fixed value of 1.005) + b (TBF value, released by the Central Bank) x TBF (Basic Financial Tariff)
It is worth noting that, if the value of your TR is negative — less than zero, therefore — the Referential Rate is considered to be zero, even though it never has a value below that.
If you're curious to know if this happens frequently, take a look at the Reference Rate values for the years 2018 and 2021, until now.
The Reference Rate Types
In addition to the calculation above, it is important to note that there are two types of Referential Rate: daily and monthly.
The first corresponds to the corresponding share that the Central Bank shares. This slice, grouped daily, results in the Monthly TR, which is thus used to carry out the monetary correction.
This is what matters most to investors, then, as they will project the average return on their resources in a whole month. Not to mention that, if you redeem the applications before completing the month, you will have an adjustment based on the date the withdrawal was made.
The impact of TR on different types of investments
If the Referential Rate is present in a good part of UK citizens' favorite investments, it is worth understanding its impact on each one of them!
Since 2012, savings are calculated based on the calculation of 0.5% (when the Selic rate is above 8.5% per year) per month, added to the monthly TR value.
When the Selic rate is below this index, the calculation takes into account 70% of the rate plus the sum with the TR.
O Severance Indemnity Fund, a labor right that allows the redemption of resources under certain circumstances, is also impacted by the Referential Rate.
For this, the government provides an average profitability that is pegged at 3% per year, plus the TR.
They are always linked to the Referential Rate based on the total period the money was invested. No wonder these titles recently offer a very low yield, since TR has always been at index zero.
real estate financing
Anyone who invests or is considering the acquisition of a property through financing must take into account the Referential Rate. After all, it is related to financing carried out by Caixa Econômica Federal — those applied by the Housing Finance System (SFH).
Then, it is the financial institution itself that defines the fixed interest, in addition to the TR, for its rate.
In this type of investment, the Referential Rate is linked to the different types of bonds offered by the federal government. For example:
- IPCA Treasury (NTN-B Principal), whose profitability is subject to fixed interest at the time of purchase and a rate subsequently applied through the variation of the IPCA (the Broad Consumer Price Index);
- Selic Treasure (LFT), whose profitability is tied exclusively to the Selic rate.
Therefore, you can see that the Referential Rate is very present in investments and in the monthly balance of the country's economy.
This makes your investor spirit consider the TR even before selecting the best modality to apply your resources. And also to put into action good financial education practices based on their needs and goals.
Do you want to know something more about the Referential Rate, or share some experience related to the subject? So, leave a comment below, and help us expand this discussion!
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