Not All Structured Notes Are Bad, But There Are Downsides To Know

Ever since 2012, I’ve invested in equity structured notes to provide for some downside protection. Structured notes have sometimes gotten a bad reputation because they may be complex and expensive. However, just because you don’t understand something doesn’t mean you should burn it at the stake.

In hindsight, I didn’t need downside protection since the S&P 500 has performed very well since I left work. However, because I didn’t have a steady paycheck, I lacked the courage to invest significant sums of money in the stock market. If it weren’t for equity structured notes, I may have just kept the funds in cash or bought even more real estate instead.

For downside protection, an investor in a particular structured note usually has to give up something. That something is usually dividends or capped upside. As a result, these notes tend to underperform during a bull market. But not

Keep reading this article on Financial Samurai.

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