capital protected structured notes

its been a few years since structured financial products have been on the rise. structured notes protect the capital that is invested for a number of years, caps the maximum interest each year. a good alternative to bonds, since canadian bonds have not been doing so well due to higher interest rates. structures notes enable the investor to expose his portfolio to the stockmarket without too much risk. for example, one captial protected structured note from citigroup follows 8 different stock market indicies all over the world. it has compound interest capped out at 10% each year, a 2% MER at the purchase of the note, no other MER later on, and a vibrant secondary market where notes are sold 6 months to a year after purchase at 103% to 127% over stock price.

one of the negative aspects is that if the markets are negative, the interest will be negative, so clients will have to wait until the note matures before cashing in only the guaranteed capital. still, not a lot of investments guarantee capital, so this might be a nice alternative to stocks and bonds.

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Author: range

I'm mathematician/IT strategist/blogger from Canada living in Taipei.

2 thoughts on “capital protected structured notes”

  1. I’m new at this so excuse me if the post is in the wrong format. Its a general question about being a financial analyst.

    Hi. I stumbled on your posts today as I was trying to get some info on financial planners. The info I seek is not how to choose one, but rather is it or is it not a good profession? I have enjoyed your postings very much and would appreciate any assistance on this matter. Here is some backround:

    I work for the Fire Dept (which I love), and I am searching for a side job. I have a Master of Business Administration that I really don’t want to see go to waste and a very good understanding of finance (I went to school for this before the fire dept with plans of going on to work in business law. Due to the additional schooling commitment, etc.. that is no longer a viable option).
    I was recently offered a positon with a small investment firm in NY as a financial planner. I’ve been friendly with the owner for a few years, and he has been offering me a job for a long time stating that they will show me the ropes. I’ve heard horror stories about the big companies, but this place is small and you establish, and keep your own book of business.
    Now, here lies the problem: they want me to target my friends and fellow workers. I am nervous about this because although my co-workers do like and trust me- money, as you said, is a touchy subject with most; I can only imagine how it must be to your average blue-collar workers who don’t know much about investing.
    I am not worried about taking the series 7 (stoke broker exam for the states) or making money. I know that these things can be done. What I am worried about is what a job like this makes you become. Shameless is a word that comes to my mind, and I have wondering if that is really how you have to be. I mean, right now it sounds pretty embarrassing to call up my friends and coworkers to try and get them to invest with me. What if I do get them all to, and I explain up and down about investment risk and such, and then the market tanks. Will half of them hate me. Guys I have to work with for years then seeing me as a saleman. At first thought it sounded perfect. Help people, make money doing it, and do something I am interested in. Now it seems like a sure failure. Espically if I dont really need the money. It would be nice, but its not worth it if it is as bad as it seems.
    Basically, I know that noone at the finance office cares about this stuff, but I do. And I really don’t know who to ask. Your blogs were really interesting and I would greatly appreciate any info that you could provide

  2. Hi

    Thanks for your comment.

    Now, to answer some of your questions.

    In my experiences, it is better not to mix money with friends. With clients, you can keep a distance, but with friends, as soon as there is some kind of issue, trust comes up. Like you, I trust my friends implicitly, and do not wish for this trust to be lost. I have actually had problems with some of my friends because of it. With others, my very old ones, there wasn’t an issue really. They were very satisfied with what I sold them. But, in the end, I prefer not to do it again, because I could see how it might have looked to them. And how it looks to me in retrospect.

    With an MBA, I think you should actually consider working as a financial analyst for a big firm. All financial institution have need of these and these come with fixed salaries, a lot of opportunity for promotion and interesting christmas bonuses. Maybe you should think about becoming a chartered financial analyst.

    Being a salesman changes you. Most definitely. I was never a salesman before becoming one in 2003. You see every meeting as a chance for a sale. It jades your view of people and reality. At least for me. It wasn’t a good thing. I can see that maybe it isn’t the best job for your either, since you are having doubts about it.

    From what I understand, you are trying to find a part time job. If you are considering going into finance, I suggest fulltime and with a big firm. But not in financial planning. To be a successful financial planner, you need to be able to set up your own practice quickly and effectively. This means that you need to have experience in this. You also need to have the necessary capital to purchase clients from older financial planners.

    Oh, and Welcome To The Memoirs.

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