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It is important to comprehend the role of FGC in safeguarding investments and to assess the value of investing in assets not covered by FGC protection.
Every investor seeks information on the risks and interest involved in case of issues with the financial institution.
In the financial market, there are plenty of appealing choices for investors, but some investor types may have more concerns about investments lacking FGC guarantees.
The Credit Guarantee Fund (FGC) is a financial tool established in 1995 to safeguard depositors and investors in different fixed-income products, ensuring that investors are protected when investing in financial institutions such as X.
In today’s blog post, we will explore the significance of FGC for investors and account holders. Enjoy the read!
What is the purpose of FGC and what does it entail?
FGC stands for the Credit Guarantee Fund, which is intended to safeguard the capital and returns of fixed-income investors.
The FGC is a non-profit organization that provides protection for savers and investors, enabling them to reclaim deposits or credits of up to R$250 thousand in financial institutions in the event of bankruptcy, intervention, or liquidation.
Many investors, particularly newbies, may not realize that the fund relies on regular contributions from various financial entities like banks, credit companies, and mortgage providers to operate as a nonprofit organization.
The FGC is not just a guarantee for debt payment during financial crises, it holds more significance.
Explore the objectives of the Credit Guarantee Fund.
The Central Bank of Brazil states that the FGC has the following objectives:
- Safeguard depositors and investors in the financial system within the boundaries defined by regulations.
- Help in preserving the stability of the National Financial System.
- Contribute to averting a systemic banking crisis.
Professionals are employed by the entity to prevent emergencies in the banking and financial sector and to maintain the proper functioning of the financial system.
What is the highest amount safeguarded by FGC?
Discovering that the bank that issued a title you purchased has gone bankrupt can be a nightmare, but you can lessen the impact by understanding the Credit Guarantee Fund (FGC).
The organization will refund amounts up to R$250,000 per individual or legal entity, per batch of deposits and investments at each financial institution or conglomerate, with a maximum limit of R$1 million every 4 years, for the security deposits made by each individual or entity.
For joint accounts, the maximum warranty value is capped at R$250,000, or the account balance if it’s lower than that amount, divided by the number of account holders. The guaranteed amount is credited individually.
If you invest in secure products at the same bank where you hold your current account and savings, all total amounts (including earnings) should not exceed R $ 250 thousand to ensure full protection.
For how long does the FGC compensate the investor?
The release of the deposit guarantee is not tied to a specific deadline but rather depends on information provided by the bank’s intervener or liquidator, such as the list of creditors.
Each case is unique, and once the information is received, payments are processed accordingly. Delays in guarantee payments may occur in certain situations, such as during legal proceedings.
Liquidated institutions have historically taken anywhere from 15 days to three months to begin returning funds to eligible individuals, with no interest earned during the waiting period.
How to get items from FCG?
The investor needs to participate in the out-of-court recovery procedure, and the institution must compile a roster of all its debtors, detailing their CPF numbers and the corresponding payment amounts for each.
To do this, it is essential to select a bank’s FGC that will cover losses and honor guarantees.
The Credit Guarantee Fund will establish an agency for the investor to withdraw the fund after selecting the bank. It is important to note that a document must be signed upon receiving the fund payment to confirm its receipt.
It is important to determine which assets are protected by the FGC and which are not.
The FGC guarantee does not apply to all investments and is limited to specific types specified by the Central Bank.
The applications included in the FGC are as follows:
- Savings.
- Exchange correspondence (LC);
- Mortgage correspondence (LH).
- Real estate credit accounts known as LCI.
- Agribusiness Letters of Credit (LCA)
- Bank Deposit Certificates (CDB) are financial instruments issued by banks.
- Bank deposit claims (RDB) are requests for funds deposited into a bank.
- Deposits with a unique guarantee (DPGE).
- Deposit can be made immediately or withdrawn upon request.
- Repurchase agreements from a related company issued after March 8, 2012.
- Deposits made in mobile accounts using checks are used to monitor and manage the movement of funds for payment services such as salaries and pensions.
Discover which assets are not protected by the FGC.
- Real estate crowdfunding.
- Deposits or loans acquired from overseas.
- Legal deposits must be made.
- Debentures.
- Stock market apps;
- Real Estate Assurance Letters (LIG)
- Real Estate Receivers Certificates (CRI)
- Agribusiness Certificates of Acceptance (CRA)
- Treasury Department直接。
- Deposits made in retirement funds, mutual funds, insurance policies, stocks, and investment groups.
Investments not included in the fund should be carefully examined, ideally with a deeper understanding of the asset type and the offering financial institution. Evaluating liquidity, risks, and the institution’s history is crucial before making investment decisions.
In situations not included in the FGC coverage, where there is no guarantee provided, investors will not get back their investment if issues arise with the institution.
Is it worthwhile to invest in apps not protected by the Credit Guarantee Fund? Find out in the following section.
Is it worth investing in apps not supported by the FGC?
Some investors, particularly those who are more conservative, may find the response surprising. Nevertheless, it is essential to understand that it is indeed beneficial to invest in assets not protected by the FGC. This implies that investing in equities in 2021 is a viable and recommended option.
Investing in stocks has become highly beneficial and profitable due to the low Selic rate.
The investor can use variable income to invest money wisely for significant profits and achieve financial independence.
The variable income necessitates a daring investor profile with a high risk tolerance and willingness to sacrifice liquidity for greater returns.
You should investigate whether your profile is daring to take further action. Find out here.
Choosing a quality investment without the FGC’s protection.
Every investment choice, whether in fixed or variable income, should be carefully considered as it can impact your financial independence. It’s important to select a secure financial institution for investing, whether or not it offers FGC protection.
Before making a decision, it is essential to proceed with caution.
- Examine the company’s past.
- Compare terms, fees, due dates, and anticipated returns.
- Consult with specialists in the field.
- Be cautious of offers that guarantee questionable advantages.
- Enroll in classes about the stock exchange.
- Choose a company with a strong reputation and a proven track record in the market.
If uncertain, you can refer to the Central Bank’s IF.data system for up-to-date information on authorized company operations.
Wrap-up
It is important for investors to understand that the Credit Guarantee Fund provides support for different types of applications, whether they are short, medium, or long term.
For more information about FGC, please refer to the website www.fgc.org.br.
Investing is not a complicated task and can be learned safely and effectively through dedication and study.
The success of any investor relies on discipline and knowledge. Learn how to create your financial plan here.
Just having knowledge and a bit of self-control is necessary to attain positive outcomes.
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