Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Experience with Structured Notes
Old 11-14-2017, 12:38 PM   #1
Dryer sheet aficionado
 
Join Date: Jul 2017
Posts: 33
Experience with Structured Notes

Hi everyone. Does anyone have any insight, opinions on structured notes. I'm thinking about purchasing a few of these products - one tied to the Euro Stoxx 50 and the other to the Russell 2000 that are offered through Citibank. Thanks in advance!
-bee
__________________

__________________
beeboy is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-14-2017, 12:43 PM   #2
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 41,858
Structured notes: a financial instrument sold rather than bought

Quote:
... 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.
https://www.investopedia.com/article...ured-notes.asp
__________________

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 11-14-2017, 12:58 PM   #3
Full time employment: Posting here.
gcgang's Avatar
 
Join Date: Sep 2012
Posts: 914
My understanding is Structured Notes are a wonderful source of profit for the financial services industry.
__________________
In theory, there's no difference between theory and practice. In practice, there is. YB
gcgang is offline   Reply With Quote
Old 11-14-2017, 01:03 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,504
And among their other attractive aspects:
Quote:
Structured Note terms are generally between 18 months and six years and it is important that you can afford to tie up your money for that period, because your principal is only protected when Structured Notes are held for their full term.
Quote:
Investors assume full credit risk of the Issuer and/or the Guarantor. This means that should the Issuer and/or the Guarantor become insolvent or fail in any other way you may not receive back any of your investment monies, not even the initial investment amount as the principal protection will not apply in this situation.
__________________
Pas de lieu Rhône que nous.
braumeister is online now   Reply With Quote
Old 11-14-2017, 01:14 PM   #5
Dryer sheet aficionado
 
Join Date: Jul 2017
Posts: 33
RE Wahoo, gc & braumeister - thanks so much for the insight. They definitely sound pretty scary. I'm looking to take some of the money I have in cash right now and put it to work as I'm sick of seeing the .01 return. But, so far structured products don't sound like the best place to park it.
__________________
beeboy is offline   Reply With Quote
Old 11-14-2017, 01:23 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,504
Quote:
Originally Posted by beeboy View Post
I'm sick of seeing the .01 return.
If that's all you want, it's easy to open an online savings account that gets 1.25% with complete safety and liquidity.
__________________
Pas de lieu Rhône que nous.
braumeister is online now   Reply With Quote
Old 11-14-2017, 01:28 PM   #7
Recycles dryer sheets
VanWinkle's Avatar
 
Join Date: Oct 2017
Location: Brighton
Posts: 82
Quote:
Originally Posted by braumeister View Post
If that's all you want, it's easy to open an online savings account that gets 1.25% with complete safety and liquidity.
I also stash cash in a short term investment grade bond fund. Pays about 2.25% with minimum principle risk.

VW
__________________
VanWinkle is offline   Reply With Quote
Old 11-14-2017, 01:36 PM   #8
Recycles dryer sheets
 
Join Date: Jun 2017
Location: Western NC
Posts: 219
Quote:
Originally Posted by vanwinkle View Post
i also stash cash in a short term investment grade bond fund. Pays about 2.25% with minimum principle risk.

Vw
vcsh ?
__________________
ncbill is offline   Reply With Quote
Old 11-14-2017, 01:37 PM   #9
Dryer sheet aficionado
 
Join Date: Jul 2017
Posts: 33
Quote:
Originally Posted by braumeister View Post
If that's all you want, it's easy to open an online savings account that gets 1.25% with complete safety and liquidity.
I'd like a lot more than .01 or 1.25%. Although don't we all.
__________________
beeboy is offline   Reply With Quote
Old 11-14-2017, 01:40 PM   #10
Dryer sheet aficionado
 
Join Date: Jul 2017
Posts: 33
Quote:
Originally Posted by VanWinkle View Post
I also stash cash in a short term investment grade bond fund. Pays about 2.25% with minimum principle risk.

VW
Not bad.
__________________
beeboy is offline   Reply With Quote
Old 11-14-2017, 02:07 PM   #11
Recycles dryer sheets
 
Join Date: May 2015
Posts: 56
I have several structured notes in my portfolio. Some make sense / some don't - you need to see how they fit in your portfolio. One of my current notes is linked to the Euro Stoxx 50. 15 month term......if the Euro 50 is up - I get the greater of 24.75% or the return of the market......if the Euro 50 is flat to down 10% - I get par......if the market is down greater than 10% - there is no protection, my losses are equal to the market. In all markets, this note is better than owning the actual index.
__________________
OnTheBeach is offline   Reply With Quote
Old 11-14-2017, 02:15 PM   #12
Full time employment: Posting here.
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 860
Quote:
Originally Posted by OnTheBeach View Post
... In all markets, this note is better than owning the actual index.
That appears to violate the TANSTAAFL rule. Who is your counterparty and why would they be willing to do such a deal? Are you sure you've read all the fine print?
__________________
OldShooter is offline   Reply With Quote
Old 11-14-2017, 02:17 PM   #13
Recycles dryer sheets
 
Join Date: Aug 2014
Posts: 394
I had a Structured CD once from my local bank guy. It was FDIC insured so I couldn't loose money, which was my concern for that part of my investments at the time. I read the full prospectus thoroughly and had to explain to the sales guy (a.k.a. investment person) exactly what it guaranteed and how it worked. He wasn't up to speed on it. it must have been something he was told to push.

At the time I invested, coming out of the 2008 lows, I expected it to do very well no matter what. Heck, it couldn't go much lower. And I was guaranteed not to loose a single penny. Well, some parts of it did good and others did more than equally bad leaving me with less than I had in it. Due to the FDIC, I ended up getting exactly what I had started with. I will not do this again!
__________________
CRLLS is offline   Reply With Quote
Old 11-14-2017, 02:30 PM   #14
Recycles dryer sheets
 
Join Date: Oct 2016
Posts: 145
I have a couple years of cash in laddered 2-year CDs. I just renewed one today at 1.8% APY. Not a bad rate, the money is guaranteed, and I can go to these if a period comes when I don't want to touch anything in the rest of my portfolio.
__________________
Not sure if I'm retired early or just unemployed.
Curmudgeon is offline   Reply With Quote
Old 11-14-2017, 02:33 PM   #15
Recycles dryer sheets
VanWinkle's Avatar
 
Join Date: Oct 2017
Location: Brighton
Posts: 82
Quote:
Originally Posted by ncbill View Post
vcsh ?
VSCSX and VFSUX are the 2 Vanguard funds I use.

VW
__________________
VanWinkle is offline   Reply With Quote
Old 11-14-2017, 02:36 PM   #16
Recycles dryer sheets
VanWinkle's Avatar
 
Join Date: Oct 2017
Location: Brighton
Posts: 82
Quote:
Originally Posted by Curmudgeon View Post
I have a couple years of cash in laddered 2-year CDs. I just renewed one today at 1.8% APY. Not a bad rate, the money is guaranteed, and I can go to these if a period comes when I don't want to touch anything in the rest of my portfolio.
+1 A great way to guarantee principle at a decent rate.

VW
__________________
VanWinkle is offline   Reply With Quote
Old 11-14-2017, 04:21 PM   #17
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 1,685
Quote:
Originally Posted by gcgang View Post
My understanding is Structured Notes are a wonderful source of profit for the financial services industry.
+1
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 11-15-2017, 12:41 AM   #18
Dryer sheet wannabe
 
Join Date: Jul 2017
Location: Seattle
Posts: 17
Quote:
Originally Posted by beeboy View Post
Hi everyone. Does anyone have any insight, opinions on structured notes. I'm thinking about purchasing a few of these products - one tied to the Euro Stoxx 50 and the other to the Russell 2000 that are offered through Citibank. Thanks in advance!
-bee
I had a couple about 10 years ago. Both tied to european indexes with "downside protection"

One lost money and the downside protection meant I got my capital back (so an effective loss)

One returned a decent amount but on the whole it feels to me like gambling and I don't plan to use them in future
__________________
limeyx is offline   Reply With Quote
Old Yesterday, 08:23 AM   #19
Dryer sheet aficionado
 
Join Date: Jul 2017
Posts: 33
Quote:
Originally Posted by OnTheBeach View Post
I have several structured notes in my portfolio. Some make sense / some don't - you need to see how they fit in your portfolio. One of my current notes is linked to the Euro Stoxx 50. 15 month term......if the Euro 50 is up - I get the greater of 24.75% or the return of the market......if the Euro 50 is flat to down 10% - I get par......if the market is down greater than 10% - there is no protection, my losses are equal to the market. In all markets, this note is better than owning the actual index.


This is actually similar to the one they are trying to sell me. Linked to Euro Stoxx, but with a 70% limit on the upside, 20% protection on the down side. So, it sounds like you are happy with it. Thanks for the advice.
__________________
beeboy is offline   Reply With Quote
Old Yesterday, 08:34 AM   #20
Dryer sheet aficionado
 
Join Date: Jul 2017
Posts: 33
Quote:
Originally Posted by limeyx View Post
I had a couple about 10 years ago. Both tied to european indexes with "downside protection"



One lost money and the downside protection meant I got my capital back (so an effective loss)



One returned a decent amount but on the whole it feels to me like gambling and I don't plan to use them in future


Isn’t investing in the stock market a little like gambling? :-) I hear you though, certainly not sold on them and after reading most of these comments, I certainly am not putting as much as they want me to put in them. Maybe test it out with a smaller investment.
__________________

__________________
beeboy is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Twitter Experience Like ER-Forum Experience? TromboneAl Other topics 10 03-23-2015 01:17 PM
Investment in Structured Settlements Steelart99 FIRE and Money 20 11-25-2014 05:54 PM
Are loans normally structured this way? CompoundInterestFan FIRE and Money 6 02-16-2010 11:17 AM
Another take on structured investments brewer12345 Other topics 3 08-13-2007 09:21 AM
What is your take on Structured Products chinaco FIRE and Money 19 04-16-2007 08:08 AM

 

 
All times are GMT -6. The time now is 06:51 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.