Fixed Income Yielding 20% a Year Is Possible

Fixed income at 20% a year exists, but it has nothing to do with savings accounts or protected bank CDs.An interview by the Primo Pobre channel with Daniel Miari, founding partner of INCO

Is fixed income paying 20% a year possible?

Yes, it is possible to find 20% annual rates in fixed income, but only by taking on direct corporate credit risk and giving up FGC deposit insurance. The content creator behind the Primo Pobre channel traveled to the INCO fintech office in Belo Horizonte to grill Daniel Miari, the company's founding partner, with seven core questions about the viability and dangers of this investment category.

The nominal rate caught the eye of investors accustomed to the caps offered by major commercial banks. Retail investors typically associate the term fixed income with the absolute safety of a standard savings account or Treasury Selic, creating a dangerous illusion when they encounter yields hovering around 20%.

In practice, what INCO operates is real estate and corporate crowdfunding (known in the market as peer-to-peer lending). Instead of lending money to a financial institution backed by Brazil's Credit Guarantee Fund (FGC), the investor directly finances projects by mid-sized developers and companies, absorbing the specific default risk of each transaction.

How does INCO's investment structure work?

INCO acts as a direct bridge between companies seeking capital for construction or expansion and individuals willing to finance those projects in exchange for high interest. Daniel Miari explained during the Primo Pobre interview that borrowing companies turn to the platform to fund projects that often face red tape or slow processing through conventional banking channels.

To successfully raise capital from individual investors, the borrowing company must offer a substantial premium over traditional market rates. It is precisely from this risk premium that the advertised rate of up to 20% a year arises, reflecting the liquidity urgency and debt profile of the company issuing the debt.

Within this ecosystem, the investor purchases a fractional share of a corporate debt instrument. If the borrowing company honors its amortization and interest schedule, the investor pockets the full promised yield, minus only the regressive income tax according to the standard fixed-income tax bracket.

What is the catch with the 20% annual rate?

The mandatory trade-off for any 20% annual fixed income rate is the complete transfer of credit risk to the investor. In traditional banking products covered by the FGC up to R$ 250,000 per taxpayer ID (CPF) per institution, the issuing bank absorbs any end-user default. In the direct credit model intermediated by INCO, the platform merely connects the parties and performs the initial background check.

This means that if the construction company or financed business falls behind on construction, faces legal disputes, or simply fails to sell the units in a development, delays and potential losses fall entirely on the investor. The platform can assist with collections and the execution of collateral, but it is not financially liable for borrower defaults.

• Gross returns well above the CDI rate and inflation-linked government bonds.
• Direct access to real estate projects in the real economy without the usual banking intermediaries.
• Total absence of FGC coverage or sovereign backing from the federal government.
• High liquidity risk, since early redemption before project maturity is rarely available.
• Real possibility of payment schedule delays if the borrowing company's sector enters a crisis.

Furthermore, investors must pay close attention to liquidity. Unlike a bank CD with daily liquidity or a government bond that can be sold on Tesouro Direto, money allocated to this type of operation is generally locked up until the agreed final maturity date, with no consolidated secondary market for a quick exit.

What does this change for anyone wanting to invest in this model?

Anyone deciding to allocate capital to platforms like INCO must treat the investment not as an emergency reserve, but as a risk-bearing slice of their fixed-income portfolio. The pursuit of high returns only makes sense when combined with a rigorous diversification strategy across different borrowers.

Another point highlighted during Primo Pobre's visit to the Belo Horizonte office is the need for investors to read the technical fact sheets for every funding round. There is no 20% return without in-depth research into who is borrowing the money, the company's financial health, and the collateral backing the transaction.

What to check before entering a direct credit offering?

Before confirming any investment driven by high returns, investors should follow three basic elimination filters. Enthusiasm for double-digit rates must not override a cold analysis of risk and repayment capacity.

With these three precautions, investors can turn an attractive rate into a genuine opportunity for wealth growth without exposing their accumulated capital to ruin if one of the companies faces operational turbulence.