When investing, it’s important to consider all the options at your disposal. Market-linked growth notes offer a different class of investment that can be a valuable tool in helping you better balance risks and rewards associated with your investments. These notes provide for the repayment of principal plus a fixed minimum return, while also offering potential for a higher return at maturity based on the average performance of the attached market underlier. Because of the variations in note design, identifying a structure that reflects your financial objectives is imperative. That’s precisely where Miser Wealth Partners can help.
What is a market-linked growth note?
A market-linked growth note is a specialized bond that’s performance is linked to specific market underliers over a set period of time. These may include an equity, bond or commodity index, exchange-traded fund, individual commodities, foreign currencies, or a combination of any of these. Many note structures are designed to strike a different balance between downside protection and upside participation in the performance of the underlying market.
How does a market-linked growth note work?
Hypothetically, let’s say you’re looking for an 8% yield for three years, which can’t be done with a certificate of deposit (CD). Miser Wealth Partners can price those specifics in the market through their special relationships with multiple banks across the country to see what’s available. JP Morgan, for instance, might come back and say that, based on the underlier you wish to invest in, they’ll give you a 40% buffer on your investment. What that means is as long as the underlier doesn’t go down more than 40% during the term of the note, you’re going to get 8% paid monthly on an annual basis. At maturity, if the underlier increases in value, investors will receive their principal plus a supplemental redemption amount, subject to the maximum payment.
The downside in this (versus with FDIC insurance) is that on the maturity at the end of the term, if the note is trading below 40% from where it was at the time the note was opened, then your investment turns into an equity investment and you have a 40% reduction in the value of your holding. But it’s not exactly that cut and dry. In this hypothetical situation, remember you got paid 24% in the course of the three years, so you’re really only down 16%. In general, the market-linked growth note offers you the potential for above average yield and some principal protection. There is some risk but only on the day of maturity. If the underlier declines or does not appreciate in value, investors will receive their initial investment.
Who should invest in market-linked growth notes?
This type of investment may be appropriate for investors who are concerned about principal risk but seek a return based on the underlier. It can also be a great option for those who are willing to forgo current income in exchange for the repayment of principal at maturity plus the potential to receive a supplemental redemption amount (if any) based on the percentage increase in the value of the underlier.
Why should I choose Miser Wealth Partners to manage my market-linked growth note?
Our knowledgeable advisors use a time-tested, research-driven approach to market-linked growth notes that allows us to identify and engage high-quality issuers, avoid potential structures that offer a low probability of adding value, price offerings with multiple issuers to obtain attractive terms, and provide options on a monthly basis for a diverse selection of market-linked growth notes.
What’s my next step to investing in market-linked growth notes in East Tennessee?
If market-linked growth notes sound like an interesting prospect to diversify your portfolio, simply schedule a meeting with Miser Wealth Partners. We’ll have a conversation to learn all about your most desired financial goals and formulate a tailored plan that offers you the most benefit through this specialized form of investing. Call us today at (865) 281-1616 or click here to set up a time to talk with us.
