Structured Notes
Structured Notes offer a way of investing in an asset class by limiting or attempting to control the risk in various ways, including the exchange for lower potential return, depending on note structure.
Structured products are a diverse type of investment: while principal-protected notes are perhaps the simplest form of structured investments, structured notes that do not guarantee principal are far more common and complex.
Crosswind Advisory, a Registered Investment Advisor (RIA), is capable of determining which, if any, of these solutions is suitable for you.
FDIC-Insured CD’s
While Treasury bills and money market account have long been considered attractive choices to protect principal value, an alternative group of investment options offers the safety of a government guarantee in addition to the preservation of capital. The recent increase of the FDIC insurance limit per account from $100,000 to $250,000 requires a closer look at these alternatives:
Brokered CDs offer some unique features and differ from those of a directly purchased bank CD. One of the main differences is that a secondary market may exist for brokered CDs. A bank CD is intended to be held until maturity and assesses a penalty for early withdrawal. In contrast, a brokered CD may be resold on the secondary market if an investor wishes to redeem prior to maturity. Further, a bank will only offer its own CDs, whereas a brokerage firm can look for more competitive rates at banks across the country. A brokered CD could experience incremental gains or losses depending upon the price received by the market trade.
CDARS CDs allocates an investor’s deposit in increments less than the FDIC insurance limit across CDs at member banks across the country, thereby allowing the principal and interest to remain fully insured. This distribution process is invisible and seamless to the investor. A fee for this service is charged by the program facilitator.
FDIC-Backed Bank Bonds. Recent actions by the U.S. government in response to the liquidity crisis have resulted in the creation of a new type of security that offers the same FDIC protection as a CD. These instruments typically offer higher yields than U.S. Treasuries of similar maturities but with comparable risk, as the FDIC is guaranteeing the timely payment of principal and interest should an issuer default on payments. Additionally, FDIC-backed bonds allow investors to maintain the federal guarantee above the current $250,000 limit on bank deposits.
The importance of cash management strategies cannot be underestimated for those seeking to build and preserve wealth. Crosswind Advisory, a Registered Investment Advisor (RIA), will work with you to develop a strategy.
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