ForecastingStocks

LCI (Letra de Crédito Imobiliário) and LCA (Letra de Crédito do Agronegócio) are bonds issued by banks, much like a CDB, but with their proceeds earmarked for specific sectors: real estate (LCI) and agribusiness (LCA).

The headline feature — tax exemption

At the time of writing, LCI and LCA returns are exempt from income tax for individuals. This is their defining advantage. Tax rules change — confirm the current treatment before relying on it.

A tax-free 90% of CDI can beat a taxable 100% of CDI. To compare fairly you must convert one to the other:

Gross-equivalent of a tax-free rate
  = tax-free rate / (1 - tax rate)

So a tax-free 90% of CDI, against a 15% income-tax band, is equivalent to a taxable:

0.90 / (1 - 0.15) = 0.90 / 0.85 = ~1.058, i.e. ~105.8% of CDI

That is the number you compare against a CDB.

The trade-offs

Minimum holding period (carência) — LCI/LCA usually impose a lock-up (historically a minimum of several months, set by regulation) before you can redeem. They are less suited to an emergency fund than a daily-liquidity CDB.
Often higher minimums and sometimes less availability than CDBs.

The protection

Like CDBs, LCI and LCA are covered by the FGC guarantee (next chapter), so the bank’s credit risk is mitigated up to the FGC limit.

When to use them

For money you can lock up for the carência period, a tax-exempt LCI/LCA frequently delivers the best post-tax return among the bank instruments — but only after you have converted rates to a comparable basis as shown above.