Investment Break-Even Calculator
The Break-Even Yield: Angola’s Most Important Number
To maintain purchasing power at 15.7% inflation (INE, December 2025) while paying 10% Imposto sobre a Aplicacao de Capitais (IAC) on investment returns, an investor needs a nominal pre-tax yield of at least 17.4%. This break-even rate – computed as inflation / (1 - tax rate), or 15.7% / 0.90 = 17.44% – is the single most critical benchmark for evaluating any Kwanza-denominated investment. Every instrument yielding below 17.4% is destroying real wealth; every instrument yielding above it is building it.
What This Tool Does
The Break-Even Calculator determines the minimum nominal return required to preserve purchasing power after accounting for both inflation and investment taxation. It also computes your actual after-tax real return at a given nominal rate, showing the gap between where you are and where you need to be. For investment committees, financial advisors, and individual investors allocating capital in Angola, this tool provides the foundational threshold against which all yield comparisons should be measured.
How to Use It
- Enter the investment amount in Kwanza. While the break-even rate itself is independent of the amount, the tool uses this to compute the Kwanza value of any real gain or loss over one year.
- Set the annual nominal return – the default is 14.8%, reflecting current 91-day Bilhetes do Tesouro yields.
- Enter the inflation rate – the default is 15.7% (INE, December 2025).
- Set the tax rate – the default is 10%, the standard IAC rate on interest and capital gains.
- Click Calculate to view the break-even nominal rate, your actual real return, and the shortfall or surplus relative to breakeven.
Worked Example: Kz 5,000,000 in Treasury Bills
An investor places Kz 5,000,000 (~$5,468 at USD/AOA ~914.60) in 91-day Bilhetes do Tesouro at 14.8%:
| Metric | Calculation | Value |
|---|---|---|
| Nominal Return | 14.8% | Kz 740,000 |
| IAC Tax (10%) | 740,000 x 0.10 | Kz 74,000 |
| After-Tax Return | 740,000 - 74,000 | Kz 666,000 (13.3%) |
| Inflation Loss on Principal | 5,000,000 x 15.7% | Kz 785,000 |
| Net Real Position | 666,000 - 785,000 | -Kz 119,000 (-2.1%) |
| Break-Even Nominal Rate | 15.7% / (1 - 0.10) | 17.4% |
| Shortfall vs. Break-Even | 14.8% - 17.4% | -2.6 percentage points |
Despite earning Kz 740,000 in nominal interest, the investor loses Kz 119,000 in real purchasing power because the after-tax yield (13.3%) falls short of inflation (15.7%). To break even, the investment would need to yield 17.4% before tax – a rate currently above any available Kwanza-denominated government security.
Break-Even Rates Under Different Scenarios
As the BNA’s easing cycle progresses and inflation trends downward, the break-even threshold will shift:
| Inflation Scenario | Tax Rate | Break-Even Nominal Rate | Current BT Yield | Gap |
|---|---|---|---|---|
| 15.7% (current) | 10% | 17.4% | 14.8% | -2.6% |
| 13.0% (mid-2026 estimate) | 10% | 14.4% | ~13.5% (est.) | -0.9% |
| 10.0% (2027 target) | 10% | 11.1% | ~12.0% (est.) | +0.9% |
| 8.0% (BNA long-term) | 10% | 8.9% | ~10.5% (est.) | +1.6% |
The table reveals that positive real returns on short-term government securities likely require inflation to fall below approximately 13-14% – a milestone that could be reached by late 2026 or early 2027 if current disinflationary trends continue.
Strategic Implications
For Kwanza savers: The current break-even gap means that only longer-duration bonds (5-year OTs at ~16.8%) and potentially some corporate or quasi-sovereign instruments approach breakeven. The 91-day BT, while liquid and low-risk, is a guaranteed real loss at present.
For institutional allocators: The break-even framework argues for duration extension and/or USD-indexed allocation. Locking in 16-17% on 3-5 year OTs today positions the portfolio for positive real returns as inflation declines, effectively front-running the disinflation trade.
For business operators: If your working capital or treasury deposits earn below the break-even rate, you are subsidizing operations with real wealth erosion. Excess cash should be deployed into instruments that at least approach 17.4% nominal, or converted into USD-indexed instruments that remove the inflation variable entirely.
With the BNA having cut its base rate from 18.5% to 17.5% in January 2026, the market is pricing in further easing. The break-even rate will compress as inflation falls, but the near-term reality is that preserving purchasing power in Kwanza requires active management and informed instrument selection.
For the full real return analysis, use the Real Return Calculator to compute exact after-tax, after-inflation returns on any instrument. The Inflation Calculator projects future purchasing power erosion, the Comparison Table ranks all instruments by real yield, and the Bond Calculator helps identify specific OT series that approach or exceed the break-even threshold. The Asset Allocation Optimizer builds portfolios designed to maximize the probability of positive real returns across the full yield curve.