Author Topic: Structured notes?  (Read 1583 times)

Anniemaygo

  • 5 O'Clock Shadow
  • *
  • Posts: 24
  • Location: Massachusetts
Structured notes?
« on: October 27, 2016, 07:12:58 PM »
Met with a financial advisor today who suggested these as a diversification option.
Thoughts?

Lisa

kiwigirls

  • Stubble
  • **
  • Posts: 162
Re: Structured notes?
« Reply #1 on: October 27, 2016, 07:20:06 PM »
Quick google search comes back with a resounding HELL NO!  Get rid of your advisor and put your money in Vanguard.

Some detail from the web -

While structured notes may enable individual retail investors to participate in investment strategies that are not typically offered to them, these products can be very complex and have significant investment risks. 
https://www.sec.gov/oiea/investor-alerts-bulletins/ib_structurednotes.html

Structured products have risky elements and many features that are more complex than traditional deposits. Remember that:  Higher returns mean that higher risk is involved.  In the worst case scenario, you could lose all of your investment.  The interest payments may not be guaranteed.  Find out what factors would affect them. Your money will be tied up for a set period of time.  Redeeming your investment before maturity may not be possible, or would come with substantial cost. Make sure you will be able to keep your money invested for the duration.
Refernce http://www.mas.gov.sg/moneysense/understanding-financial-products/investments/guides-and-articles/making-sense-of-structured-notes.aspx

Forget investing; Wall Street is a marketing and sales machine, and this time it has developed a real stinker of a product that at first glimpse appears to be the answer to your prayers, but really is just one more way Wall Street is going to separate you from your money. The product is the structured note and it advertises its ability to benefit from good stock market performance while simultaneously providing protection against the bad market performance. The cost for this protection is covered by modifying the benefit. It sounds good, but unfortunately, the cost of the protection usually outweighs and undermines any benefit.

http://www.investopedia.com/articles/bonds/10/structured-notes.asp

Anniemaygo

  • 5 O'Clock Shadow
  • *
  • Posts: 24
  • Location: Massachusetts
Re: Structured notes?
« Reply #2 on: October 27, 2016, 07:55:05 PM »
I did a google search but he told me to read past the first few google results and research it. 

It is offered by fidelity and not purchased through him so he does not make a commission; I wanted to know if anyone had experience with them.

I am ok with no liquidity for 5 years to get better than CD type rates.  It seems odd you could lose all of your investment when the principal is fdic insured...
« Last Edit: October 27, 2016, 08:06:40 PM by Anniemaygo »

MDM

  • Walrus Stache
  • *******
  • Posts: 9307
Re: Structured notes?
« Reply #3 on: October 28, 2016, 12:03:10 AM »
I did a google search but he told me to read past the first few google results and research it.  ...
Did you find anything to persuade you that the Investopedia and SEC links mentioned by kiwigirls should be ignored?

Seems lumping structured notes in with indexed annuities and other complicated, mostly-for-the-benefit-of-the-seller products is appropriate.

Anniemaygo

  • 5 O'Clock Shadow
  • *
  • Posts: 24
  • Location: Massachusetts
Re: Structured notes?
« Reply #4 on: October 28, 2016, 03:47:59 AM »


MDM, I agree with "Seems lumping structured notes in with indexed annuities and other complicated, mostly-for-the-benefit-of-the-seller products is appropriate."

It just isnt added up for me because a fee-only financial advisor suggested I could buy them myself through Fidelity within my Roth IRA.
He suggested a 7/12 philosophy for the diversification of my 401k.