Inflation, debt and more profitable investment alternatives may explain the withdrawal of money from savings in July

Chief strategist at RB Investimentos, Gustavo Cruz, states that the Selic rate at 10.5% encourages investors to withdraw money from savings to allocate to more profitable investments, such as government bonds.

“Government bonds are paying very attractive rates compared to the historical average. All of the most basic Treasury Direct bonds are encouraging investors to leave their savings accounts, preserving their conservatism,” he says.

Debt payments may also be behind the negative balance in the savings account last month, according to the expert.

“A large part of the population is highly indebted. According to the Central Bank, 48% of the average Brazilian’s income is tied up in some kind of debt. In other words, it encourages you to withdraw from savings to pay off this debt and avoid being in an even worse situation,” he points out.

Rodrigo Leite, professor of Finance at the Coppead Institute of the Federal University of Rio de Janeiro (UFRJ), recalls that withdrawals from savings accounts have been exceeding deposits for some years.

“This is a trend that has been going on since 2021, after Covid. In 2020, we had a record inflow into savings accounts. This was also due to people receiving aid and then you have these withdrawals. The withdrawals are continuing the movement caused by the large influx in 2020.”

Another factor that may be influencing withdrawals from savings accounts is inflation, according to Leite. “Even though inflation is under control, inflation has decreased not in the sense that prices are falling, but that they are increasing at a slower rate.”

In practice, this means that if the prices of products and services continue to rise, people tend to withdraw money from savings to make ends meet at the end of the month.

More advantageous options

When it comes to fixed income, Cruz points out that, in addition to government bonds, other investments offer higher returns than savings, such as LCIs and LCAs, which are bonds used to raise funds for the real estate and agribusiness sectors, and debentures, which are issued by companies in various segments.

“The more risk a person is willing to put into their portfolio, the higher their return will be. Even with fixed income, there are big differences in risk,” he adds.

Since the beginning of the year, the savings account has recorded net withdrawals of R$3.7 billion.

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