{"id":613,"date":"2023-05-30T11:17:42","date_gmt":"2023-05-30T03:17:42","guid":{"rendered":"https:\/\/sgtayjeremiahj.com\/?p=613"},"modified":"2023-11-22T17:43:23","modified_gmt":"2023-11-22T09:43:23","slug":"exploring-my-investment-options-structured-notes-vs-corporate-bonds","status":"publish","type":"post","link":"http:\/\/sgtayjeremiahj.com\/exploring-my-investment-options-structured-notes-vs-corporate-bonds\/","title":{"rendered":"Exploring My Investment Options: Structured Notes vs. Corporate Bonds"},"content":{"rendered":"\n\n\n

In my recent discussions with my bankers, the topic of investing in Structured Notes and\/or Corporate Bonds has emerged as an opportunity for diversification. Given my existing exposure to the direct equity market, I am exploring the potential of these two distinct investment instruments. However, it’s crucial to understand that Structured Notes and Corporate Bonds come with their own unique characteristics and considerations.<\/p>\n\n\n\n

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Here’s a simple comparison between the two:<\/p>\n\n\n\n

Structured Notes:<\/em><\/strong><\/p>\n\n\n\n

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  1. Structure: Structured notes combine a debt component (typically fixed income) with a derivative component. The derivative component links the performance of the note to an underlying asset or investment strategy.<\/li>\n\n\n\n
  2. Customization: Structured notes offer customization options to tailor the risk-return profile based on investor preferences. They can include features like knock-outs, knock-ins, or other embedded options.<\/li>\n\n\n\n
  3. Returns: Structured notes provide the potential for enhanced returns, downside protection, or exposure to specific investment strategies.<\/li>\n\n\n\n
  4. Complexity: Structured notes can be complex financial instruments, requiring a deeper understanding of their terms, features, and potential risks.<\/li>\n\n\n\n
  5. Risk and Reward: The risks and rewards associated with structured notes depend on the specific terms and underlying assets. There is potential for both gains and losses depending on the performance of the underlying asset or investment strategy.<\/li>\n<\/ol>\n\n\n\n

    Corporate Bonds:<\/strong><\/em><\/p>\n\n\n\n

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    1. Structure: Corporate bonds are debt securities issued by corporations to raise capital. They represent a loan made by the investor to the issuing company, and the issuer promises to repay the principal amount with periodic interest payments.<\/li>\n\n\n\n
    2. Fixed Income: Corporate bonds provide a fixed income stream through regular coupon payments based on the bond’s stated interest rate.<\/li>\n\n\n\n
    3. Credit Risk: Investors are exposed to the credit risk of the issuing company. If the company faces financial difficulties or defaults, there is a risk of delayed or missed payments.<\/li>\n\n\n\n
    4. Stability: Corporate bonds are typically considered less volatile than equity investments, offering relative stability and predictable cash flows.<\/li>\n\n\n\n
    5. Market Liquidity: Corporate bonds are generally more liquid than structured notes, as they are often traded on established bond markets.<\/li>\n<\/ol>\n\n\n\n

      A few of my decision-making also relies hugely on the following for the next 12 months:<\/p>\n\n\n\n