Structured Notes
Schedule a Meeting With Eli Mizrahi or Call 206-356-5682
Are Structured Notes Right for You?
Structured notes combine a bond with options tied to an index or basket. They can provide attractive income and defined outcomes, alongside risks that depend on the note’s specific terms and the issuer’s credit.
How They Work
- Income: Fixed or contingent coupons paid on set schedules.
- Linked Returns: Tied to indexes or baskets (e.g., S&P 500®, Nasdaq-100®).
- Time Frame: Usually 1–10 years; best held to maturity.
- Barriers & Calls: Rules that shape downside and allow early redemption.
Key Considerations
- Issuer credit risk (no FDIC insurance).
- Barrier risk if the underlying drops beyond set levels.
- Call risk may cap upside via early redemption.
- Liquidity & tax can be limited/complex.
Illustrative Example (3-Year, 12%/yr, 30% Barrier)
Invest $100,000. If conditions are met, coupons of $12,000/yr are paid. If called after Year 1, you receive $100,000 + $12,000. If held to maturity without a barrier breach per the note’s terms, total coupons would be $36,000. If the barrier is breached under the rules, principal may be reduced.
Where They May Fit
- Seeking enhanced income with defined rules
- Diversifying beyond traditional bonds
- Comfortable with complexity and holding to maturity
Regular Review
Your life will change. And your plan must change with it. At our regular plan reviews we check for progress, realign to new information, and address any information that is out of date. Our support team is here for you to get you the answers you need when you need them. Regular plan reviews are just another part of doing it the right way.
