Fixed Income vs Stocks (Long Term)

Fixed income vs equities: the risk/return trade-off

In Brazil's 2026 environment, with the Selic rate at 15%, a CDB paying 100% of CDI yields roughly 12.7% net per year after IR. The historical Ibovespa nominal return is around 6–8% in real terms, with peaks of 15–20% in bull markets — but with possible drawdowns of −30%. For horizons under 3 years, fixed income is generally preferable (risk of unrecovered drawdown). Above 10 years, equities statistically outperform. Classic asset allocation rules: 60/40 stocks/bonds and the "100 minus age" rule popularized by John Bogle (the percentage in equities equals 100 minus your age).

Applications

Retirement planning, the FIRE movement (Financial Independence, Retire Early), suitability profiling under ANBIMA, and portfolio construction at robo-advisors (Magnetis, Warren, Vitreo) and brokerages.

FAQ

Is fixed income always safer? Less volatile in nominal terms, yes — but it carries inflation risk (negative real returns) and, for private credit, issuer default risk.

How much in equities for a 30-year-old? Bogle's rule suggests around 70% in stocks; modern variants raise this to 80–90% given longer life expectancy.

How do I rebalance? Annually (or when a class deviates more than 5–10 percentage points from target), selling what appreciated to buy what fell — sells high and buys low automatically.