What are investment notes ?

Question

Thinking about saving money long term, someone mentioned investment notes. What are they and how and where can i learn more ??

Answer 1

Notes are loan agreements in general, but usually referred to longer term loans or bonds. Notes, bonds, or bills are basically contracts describing a payment or payments of certain amount(s) sometime in the future. A non-coupon note (bond) would be a contract of, say $1000 to the holder of the note at a date for example 5 years from now. How much that note is worth to you now? Surely not $1000, right? Because the note says it is worth $1000 on a date exactly 5 years from now. So depending on the current interest rate and risk factors, you would buy it at less than $1000 price or in other words at a discount. You might buy a note like that for, say, $850 and expect to be repaid a $1000 in 5 years, according to the note. The profit you make is implicitly the interst that you are earning on your $850.
Notes that agree to pay, for example, $1000 at a date exactly 5 years from now plus $50 at the end of every year in those 5 years are called coupon bearing notes (bonds). You value these similarly by discounting the returns.
Notes or bonds are issued by the government (Treasury Bonds, Treasury Bills, etc) and corporations to raise capital. Any broker will be able to get you exposed to some bonds. Obviously, need to learn about the basics in valuation of these structured cash flows (bonds, annuities, etc) as well as the company whose bond you are interested in buying. Long-term debts involve a lot of risk besides the most obvious default risk.

Answer 2

today introduces Investment Notes, institutional quality products which are designed to enable investors to complement their portfolios in volatile market conditions, earning returns on their investment with an element of capital protection at maturity. The launch of Investment Notes will see retail investors directly accessing London Stock Exchange listed structured products for the first time. Created by Barclays Capital, Investment Notes will be accessible online and over the phone through Barclays Stockbrokers.



Investment Notes are the first structured products to be available via a live secondary market through their listing on the London Stock Exchange. This will enable investors to take advantage of enhanced liquidity and transparent pricing. Like more traditional structured products, Investment Notes will provide investors with pre-determined return profiles that are linked to the performance of an underlying instrument, such as a basket of shares or an index, and each will have a different maturity term and specific risk/reward profile.
To better understand go to
www.pressbox.co.uk/detailed/Financial/Barclays_Launches_Investment_Notes_81842.html
www.pamboston.com/investment/community/

I hope this helps u

Answer 3

investment notes are simply private debt agreements, like a privately held mortgage or contract for deed.

There's a reason why most bonds are held in massive portfolios, to reduce the risk that one default could wipe out all your cash.

The only way to make any real money in investment (promissory) notes is to buy them at a healthy discount to their future value. For example, you have a $10,000 note paying 7%. The only way to earn more than 7% is to purchase the $10,000 note for less than $10,000. This is actually quite common, you might pay $9,000-$9,500, and have an instant gain on your investment. This also helps compensate you for the risk in buying it.

Small individual investors shouldn't really do this, as it's just too damn risky. You'd be better off buying laddered CD's or US Treasury bonds (both are considered 100% risk-free). At least you are guaranteed to see your principal investment again.

Answer 4

If you’re saving for long term them you'd want to go with mutual funds instead and have a small portion of your portfolio consisting of cds or bonds.