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Introduction.
Over the past 20 years the marketplace for market-linked certificates of deposit has grown significantly as they have become an important tool in aiding individuals to overcome the investment challenges faced in today’s global financial markets.
Market linked CD’s offer investors the potential to earn enhanced returns compared to those available with traditional deposit products.
Structured products can take many different forms- registered notes and CD’s to name a few. A very common method in which market-linked deposits are issued is in the form of principal protected certificates of deposit.
Benefits and Features
The only Market-Linked CD’s that we at Flagstone recommend to our clients are CD’s that are 100% principal protected when held to maturity, and are FDIC insured up to Statutory limits* .
There are a wide variety of market-linked CD’s available today, and can offer investors access to a wide variety of assets classes, such as US and international equities, commodities, and foreign exchange by linking the returns of these CDs to the performance of these asset classes. Some market-linked CDs may offer a minimum coupon , paid at maturity, regardless of the performance of the linked asset.
Other Considerations
Market-Linked CD’s are linked to the performance of specific underlying assets and are not equivalent to investing directly in that asset. It is important to note that Market-Linked CD’s may not always reflect the actual performance of the underlying assets and have different risks than traditional CD’s. Market-Linked CD’s may be redeemable prior to maturity, but may redeem at less than the original amount due to fluctuations in the underlying assets and other market factors. In all instances, like any other investment, Market-Linked CD’s should be carefully evaluated with respect to financial objectives, suitability, duration, calculation methods, tax considerations and other risk factors. In addition under us tax rules, investors will be subject to us taxes on interest income that has not been paid during the tax year. Investors should consult their own tax advisors prior to investment. Please read the disclosure materials provided by your financial representative carefully before investing.
Investor Profile
There is no typical client when it comes to Market-Linked CD’s. Designed for buy and hold strategies, the investor profile is broad, including pension funds, retirees, or people who want an investment linked to the to the market without the volatility of traditional asset classes
Investors who are primarily interested in Market-Linked are attracted by the CD’s ability to provide
- 100 percent principal protection, when held to maturity
- The potential for enhanced returns compared to those available with traditional deposit products.
- Focused exposure to a specific financial view.
- Investment horizon of 1-7 years.
Market-Linked CDs may have broad applications in a well-balanced and have become a tool that individuals and their financial advisors should consider to meet certain financial objectives. The CDs can be used as a complement to existing assets in a portfolio or as a way to employ a tactical or strategic view.
To learn more about Market-linked CDs do not hesitate to contact Flagstone retirement Consultants toll free at (1)-866-892-2081, or simply fill out the form at the top of this page.
This material was edited from content originally created by HSBC
Principal Protected CDs are sold only by prospectus and may not be suitable for all investors. Investors should read the prospectus carefully for a more complete description of the risks associated with investing in principal protected CD’s. this communication is prepared solely for informational purposes and should nor be considered an offer to buy or sell or a solicitation to buy any security. Investors should consult their accounting, legal or tax advisors before investing. Many factors may affect investment value such as interest rates, volatility of the underlying asset., trading market and time remaining until maturity. FDIC insurance does not apply to principal losses incurred when selling a CD in the secondary market prior to maturity. An active trading market may not develop. Any returns ill be reduced by all applicable fee’s and charges.
*FDIC insurance: A brokered CD represents a bank deposit obligation and is FDIC insured together with all other deposits you may have with the issuing bank, currently up to $250,000 per depositor for maturities to December 2013 (subject to change). Any funds deposited with the issuing bank (including CDs issued by such bank) in excess of these limits will not be eligible for FDIC insurance, so you should consider and inform your Financial Advisor if you have other deposits at the issuing bank.
Flagstone, HSBC and NPC are separate and unrelated companies
