What do you think of structured notes.
Hello,
I'm a 34-year-old woman who has been saving for a house down payment for some time. I don't think I'm quite ready to buy yet, so I'm comfortable investing that money for another year or two if it makes sense.
Currently, most of my down payment fund is in a high-yield savings account, with the remainder in a CD. During a recent visit to my bank, I was introduced to structured notes. I had never heard of them before, but the way they were explained made them sound very attractive, potentially offering much higher returns than keeping my money in a CD. It sounds great, but I'm assuming there must be some trade-offs or risks that I'm not fully understanding.
Here's what I'm being offered:
100% principal protection
12% annual coupon
Interest paid monthly
Payments are tied to the performance of 4 stocks
As long as none of the stocks falls more than 25% below its initial value from the purchase date, I receive that month's interest payment
Principal will be available for withdrawal after 1 year.
I don't know much about investing or structured products, but overall the offer sounds appealing if the stocks perform reasonably well.
What am I missing here?