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Bonds: money you lendrisk 2 of 5: low, steady lending

Government bond

Rules, protection and tax below are for Brazil.

What it is

A loan to a national government. You hand over the money, the government pays a fixed interest payment on set dates, and at maturity it repays the original sum. Rich-country governments almost never fail to pay, which makes their bonds the reference point for what a very safe return looks like.

The catch is the price in between. A bond can be sold to someone else before maturity, and its price moves in the opposite direction to interest rates: when new bonds pay more, old ones paying less are worth less. Hold to maturity and none of that matters; sell early and it does.

Most countries let ordinary people buy directly from the treasury, cheaply, and the same bonds sit inside many funds and pensions.

How it works

  1. The government issues a bond with a face value, a fixed annual interest rate called the coupon, and a maturity date.
  2. You buy it at issue or from another holder, then receive the coupon on schedule, usually twice a year.
  3. The market price moves daily with interest rates and confidence in the country, so the yield you lock in depends on the price you paid.
  4. At maturity you receive the face value, whatever the price did in between.

The honest pros and cons

For

  • Rich-country government bonds are the closest thing to a promise that exists in investing.
  • You know the income and the repayment date in advance if you hold to maturity.
  • They tend to hold or gain value when shares fall, which steadies a mixed portfolio.
  • Direct purchase from the treasury is usually free or nearly free.

Against

  • Rising interest rates push the price of existing bonds down, sometimes sharply for long maturities.
  • The return is modest and can lag inflation for years.
  • Bonds of weaker governments carry real default risk, and a high yield is the warning sign.
  • Income is usually taxed unless the bond sits in a tax-sheltered account.

Getting it in Brazil

Tesouro Direto available

  • Account type: Conta em corretora (brokerage account)

Wherever you are

  1. Decide the horizon first and pick a maturity that matches it, so you are never forced to sell early.
  2. Compare the treasury's direct-purchase route with a bond fund; direct is cheaper and predictable, a fund is simpler and spreads maturities.
  3. Look at the yield to maturity, not the coupon, because that is what you actually earn at today's price.
  4. Buy, note the payment dates, and leave it alone.

Try it

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Getting it from another country

Via United States allowed· available there

Open an account with a US broker that accepts Brazilian residents (several do, fully online) and send money through an authorized exchange operation, which itself costs a spread and a transaction tax.

What you gain

  • Direct ownership of US shares and ETFs in dollars, a far wider menu than the BDRs listed on B3.
  • A deliberate dollar holding, which many Brazilians want as a counterweight to real weakness.
  • US trading costs are among the lowest anywhere.

What you give up

  • Currency risk cuts both ways: a stronger real shrinks dollar gains the day you convert back, and every transfer pays a spread plus IOF tax.
  • US withholding tax of 30 percent on dividends, with no treaty between Brazil and the US to reduce it.
  • Income and gains from abroad are taxed in Brazil under the foreign-investment rules that took effect in 2024, declared in the yearly return.
  • Holdings abroad must be declared to the Receita Federal every year and to the Central Bank above thresholds.
  • No FGC. US broker protection covers a broker failing, never a market loss.
  • Protection there: SIPC protects up to 500,000 dollars of securities per customer if the broker fails, including 250,000 in cash; it does not cover losses in value (source, checked 2026-09-10)
  • Tax: income and gains from investments abroad are taxed in Brazil at the flat rate set by the 2024 foreign-investment rules and reported in the annual return; holdings above thresholds are also declared to the central bank (source, checked 2026-09-10)

Currency reality check

The same BRL 1,000 left for 10 years, at each country's savings rate:

Kept in BRL at about 9.5% a year

BRL 2,454

Sent to USD at about 2.5% a year, the account would show

USD 393 the tempting number

Brought back to BRL after the exchange rate moved 67.2%

BRL 2,136 what you can actually spend

Before tax, before fees, and before the risk that the exchange rate does something quite different next time. A higher rate abroad is only a higher return once it has survived the conversion back.

Go deeper

Also called

gilts, treasuries, Tesouro Direto, JGBs, sovereign bonds

Often confused with

  • Corporate bond: A loan to a company that pays interest; riskier than lending to a government because companies fail more often.
  • Term deposit: Money locked at a bank for a fixed period in exchange for a known interest rate.
  • Bond ETF: An exchange traded fund holding a basket of bonds.

Learn more, for free

Government bond in Brazil · wealth-coop