When making investments in fixed income, the question often arises: is it worth exchanging a security purchased at a low rate for another security that offers a higher rate? After all, when to sell fixed income ? What is the best strategy that guarantees the best returns? Understand in the article below when it is worth selling fixed income securities before maturity to buy them at higher rates. Check it out and discover the best strategy. summary Watch the video: When to sell fixed income before maturity? Is it worth selling fixed income securities to buy the same at a higher rate? What happens to my bond when the rate rises? Understanding mark-to-market Transaction cost and taxes When is it worth selling fixed income securities? How much does an investor earn if he sells a bond early.

Selic Treasury Pre-fixed securities and IPCA+ CDB, LCI and LCA Conclusion Watch the video: When to sell fixed income before maturity? In this video, Marilia Fontes, fixed income analyst at Nord Research, explains details about selling fixed income securities before cell phone number list maturity. Check out when it's worth it! Is it worth selling fixed income securities to buy the same at a higher rate? In general, choosing to sell apre-fixed titlepurchased at a lower interest rate, aiming to acquire the same security at a higher rate is not an advantageous strategy. Imagine you purchased a five-year fixed-rate bond in 2020 at a rate of 5%. However, in 2021, inflation increased and the Central Bank raised the interest rate to 13.75%. So now, in 2023, the same five-year fixed-rate bond is available with a 10% rate. You wonder if it is worth selling the security you own at 5% to buy the same security at 10%. At first, it may seem like an obvious choice to switch to a bond that offers a higher annual yield.

However, the answer is not that simple. When you buy a fixed-rate bond, you are locking in your rate of return at the time of purchase, and that rate does not change over the life of the bond. Therefore, this exchange is actually not advantageous. What happens to my bond when the rate rises? To answer this question, it is important to understand how fixed income securities work. When you purchase a pre-fixed loan, you are fixing the yield rate at the time of purchase. In the example cited, your 5% bond is based on that rate. At the end of the five years, you will have a surrender value calculated from that rate. However, if the market rate rises to 10%, your current bond suffersmarking to marketto reflect this new rate. Therefore, if you try to sell your current bond, you will receive value based on the market rate, which in this case is 10%.