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An introduction to structured investments and common misconceptions about them.

OTHER LINKS:
Getting Started with Structured Investments Infographic: https://bitly.simonmarkets.io/SI-Info...


Structured Investment Highlights for Financial Advisors and Investors: https://bitly.simonmarkets.io/SI-High...


TRANSCRIPT:
What if you could get the upside of a market index—but limit your losses if the market goes down?

Or buy a bond that could pay more than the market rate under the right conditions?

How about an FDIC-insured CD with a payout tied to the price of oil?

Those are just a few examples of structured investments.We’ll show you what they are, and how they can be used to meet your investment needs.

So what is a structured investment? It starts with an ordinary investment, like a stock, an index, a currency, or an ETF. That’s called the underlier. The structured investment is a package that links to the underlier and shapes its performance to meet specific investor needs.

One of the most important things to understand about structured investments is that they come in a wide variety. And with that wide variety comes different terms and conditions.

There’s one for almost any market outlook or investment goal: Some offer security with moderate or limited growth. Others offer greater upside, but come with greater risk.

Here’s an example. If you want to invest in the equity markets, you can buy an S&P 500 mutual fund or ETF. When the index goes up, you make money; when it goes down, you lose money. But instead, you can buy a structured investment that uses the S&P 500 as an underlier. When the structured investment matures, if the S&P has gone up, you'll have an opportunity to participate in the market gains. And if it’s down, you’re protected from market losses.

Now, every investment comes with tradeoffs. So, depending on the terms of your investment, your gains may be capped or your loss protection may be limited. And like all investments, there are risks, as well as rewards, which we’ll talk about in these videos.There are a lot of misconceptions about structured investments.

For example, some people say they aren't transparent. Actually, structured investments come with clearly defined terms that tell you exactly what returns you’ll get when you hold them to maturity, subject to the credit risk of the issuer.This will include whether principal repayment at maturity is 100% or subject to contingencies such as the performance of the underlier. This will also describe the fees and expenses associated with the investment, which you should review prior to making any investment decisions. Structured investments might be less familiar than some traditional investments, so we’ll take you through the basics in these videos.

Some people think they’re too risky.In fact, some structured investments are market linked CDs, which have 100% principal protection at maturity and are FDIC-insured up to the applicable limits. Others give you greater exposure to the market, but come with greater risk, including the credit risk of the issuer. And there’s a wide range in between.

You may have heard you cannot sell your structured investment before maturity. These are illiquid instruments, which means there isn't a guaranteed secondary market. But you may be able to get some or all of your money back, if you decide to sell early and the issuer elects to buy them back. Historically, issuers, through their trading arms, have bought them back, but they are under no legal obligation to do so and the price could be substantially lower than what you bought them at or what you might receive, if you held them to maturity. So, if you're used to highly liquid products, you'll need to be prepared to buy and hold for the full term.

Finally, you might have heard they aren’t right for most people. But there’s a wide variety of structured investments, so you can find one for almost any need. There are many types of structured investments. But there are two that you’ll see most often:market-linked CD’s, which are FDIC-insured, and market-linked notes, which offer higher returns, but carry the credit risk of the issuer.