馃攳
Investment Income Stream | Structured Note - YouTube
Channel: Travis Sickle
[0]
today I'm gonna talk about an
[1]
alternative investment stream when we're
[3]
in a lower interest rate environment
[4]
maybe we want to shy away from bonds and
[6]
maybe we don't want to invest in some
[8]
annuities if this is your first time at
[10]
our channel or you haven't subscribed
[12]
click on the subscribe button at the
[14]
bottom my name is Travis Sickle
[15]
CERTIFIED FINANCIAL PLANNING with Sickle Hunter Financial Advisors
[17]
When you're looking
[26]
at creating an investment income stream
[27]
there's a few things that you could take
[29]
a look at you can look at something
[30]
passive like real estate or you can look
[32]
at something like an investment like
[34]
bonds or an annuities all these
[36]
different sources can provide different
[38]
income streams unfortunately in this low
[41]
interest rate environment things like
[43]
bonds and CDs that they're struggling CD
[46]
rates are extremely low relative to the
[48]
rest of the market in the bond prices as
[50]
rates continuously rise it's gonna be a
[52]
very difficult bond market so where do
[55]
you invest if you don't necessarily want
[58]
to go right into the stock market but
[60]
you want a little bit more return one of
[62]
those investment income streams is
[63]
taking a look at a structured note now
[66]
there's a lot of different structured
[67]
notes out there but the one that I'm
[69]
gonna talk about today is called the
[71]
Auto callable contingent interest note
[74]
what makes this note so interesting is
[76]
the income stream is extremely high
[79]
relative to almost anything else out
[81]
there that you can find right now it's
[83]
yielding between 7 and 11 percent now
[87]
those rates are gonna change depending
[88]
on the market but right now that is the
[91]
yield that we can get on an annual basis
[93]
and the nice thing is some of these
[95]
notes are paying out monthly and
[96]
quarterly that means you're getting 2 to
[99]
3 percent on a monthly basis and the way
[101]
that these notes work is usually they're
[103]
linked to multiple indices like the S&P
[106]
500 or the Russell 2000 so you put the
[109]
money into the investment and it gives
[111]
you a dividend as long as depending on
[114]
how the markets doing and those indices
[116]
are doing will be dependent on whether
[118]
or not the interest is paid out in
[120]
addition it has up to a 30 percent
[123]
downside protection now these are the
[125]
notes that are currently available and
[127]
they can be customized to have more or
[129]
less downside protection but most of the
[132]
notes
[133]
today are at 30% downside protection so
[137]
what does that mean so if you're
[138]
investing into a structured note and
[140]
take the S&P 500 for example if the SP
[143]
500 goes down five percent if you were
[146]
invested in the stock market you would
[148]
lose the five percent well in the
[150]
structure note it would continuously pay
[153]
that interest but you would have that
[155]
downside protection if you were invested
[157]
in one of these notes and it's linked to
[159]
the S&P 500 and let's say the SP 500
[161]
goes down by 10 percent that note
[164]
continuously pays now if the market
[166]
doesn't go below the 30 percent
[167]
threshold and you don't lose anything
[169]
and you get back your principal plus all
[171]
of the accrued interest that you've
[173]
already received so that's a pretty good
[176]
investment
[176]
now if the market goes down 30 percent
[179]
or more than you have what's called
[181]
market participation but that won't be
[183]
any different than if you were invested
[185]
in an index fund in the S&P 500 so it's
[189]
in the index fund if the index went down
[191]
by 30 percent you would have lost 30
[194]
percent in the structure note you're
[196]
protected up to that 30 percent
[199]
threshold we're depending on what that
[201]
note has as its trigger point now that
[203]
could change depending on the note
[205]
now the second downside to the structure
[207]
note is looking at the upside or the
[209]
opportunity cost now in that same
[211]
example if we were invested in the S&P
[213]
500 and the market went up by 10 percent
[216]
you would get 10% that's how much your
[219]
investments would have performed or
[221]
improved well if you were invested in
[223]
the structured note and it went up you
[226]
wouldn't receive any of that upside
[228]
potential but you would get your money
[230]
back because these are called auto Kabal
[232]
so as soon as they go above the
[234]
threshold which is zero then it gets
[237]
called and you get returned or principal
[239]
now each note is set up a little
[241]
differently but this is one particular
[242]
note that could be valuable in the right
[245]
situation if you're trying to produce an
[246]
income stream and looking for an
[248]
alternative investment source these
[250]
notes can vary from 12 months up to 5
[253]
years and they're offered in commission
[255]
based and fee only accounts so it's
[258]
really important that you understand
[260]
which type of structure note and which
[262]
type of structured product that you're
[263]
investing if you've enjoyed this video
[265]
be sure to subscribe
[266]
liebherr comments down at the bottom
Most Recent Videos:
You can go back to the homepage right here: Homepage