How Fiscal Deterioration Impacts Your Investments in 2026

What is happening with Brazil's public debt?

According to Valor Econômico, the share of public bonds tied to the Selic, known as Treasury Financial Letters (LFT), skyrocketed from 22.78% at the end of 2015 to an astonishing 49.32% in June 2026. This increase is linked to the country’s fiscal deterioration and the constant changes in interest rates driven by the Central Bank.

This means that, in recent years, public debt management has become more complex. The National Treasury has revised its Annual Financing Plan (PAF) seven times since 2010, reflecting the need for adjustments in a challenging economic environment. With this change, post-fixed bonds have become an attractive resource, especially in times of fiscal instability.

Why does this matter?

The increased share of LFTs in public debt implies that the Brazilian economy is becoming increasingly attuned to the fluctuations of the Selic. When the Selic rises, the returns on these bonds also increase, but there is a risk associated: public debt can become more volatile and less predictable. This directly affects investor confidence, which may be hesitant about the country’s fiscal sustainability.

For you, as someone managing personal finances, this means that your investments in fixed income may be impacted. If you have an emergency fund invested in Treasury bonds, the volatility could make your returns less certain. So what does this mean for your wallet? If the Selic continues to rise, you could earn more from your investments, but you also need to be prepared for a scenario of uncertainties.

What can you do?

First, it's crucial to understand how the Selic affects your investments. Here are some actions you might consider:

• Keep an eye on the Selic: Stay informed about the Central Bank's decisions regarding interest rates and how this may impact your investments.
• Diversify your investments: Don’t put all your eggs in one basket. Consider investing in different types of bonds and even in variable income, depending on your risk profile.
• Review your personal budget: If you have your emergency fund invested in LFTs, analyze whether this is the best route or if it would be more advantageous to diversify into other types of assets.
• Plan your financial goals: With economic volatility, it’s essential to have clarity about your goals and how each type of investment can help you achieve them.

Connecting everything with financial organization

Managing your personal finances using the 50/30/20 method can help organize your budget in uncertain times. Allocate 50% of your income for needs, 30% for wants, and 20% for investments and savings. With fiscal deterioration and fluctuations in the Selic, it may be time to adjust this proportion, especially if you feel your emergency fund needs more security.

ADXIS can help you keep track of your finances and make more informed decisions in an unstable economic environment. Remember: being well-informed and organized is essential to protect your wallet in times of uncertainty.