FFA offers:
* A free appointment.
* Free presentations to groups about Socially Responsible Investing.
Please contact us for a free meeting with no obligation.
Financial Freedom Associates, LLC
2531 E Richards Place
Tucson, AZ 85716
Email: info@ffafinancial.com
Phone: (520) 325-0769
Newsletter
Structured Notes
The are generally comprised of a fixed part (CD or bond) and an option (or swap). They allow an investor market exposure with downside protection or leveraged exposure to the market.
Most structured investments are for a fixed term (like a CD, with varying levels of protection from loss, and exposure to the return of an index).
Three basic structured investment categories are: principal protected, buffered return enhanced notes and return enhanced notes.
Principal Protected Notes – Market-Linked CD
Market-Linked CDs are a type of principal protected notes. They offer 100% protection of your investment with (most commonly) a 7 year maturity date. They are linked to an index such as the S&P 500, Dow Jones, Nikkei 225, Eurostoxx 50, currency indices, commodity indices …
If at maturity the underlying index is up (higher than when it was purchased), the investor receives 100% of the principal plus that gain.
If the market is down at maturity, the investor receives 100% of the principal.
For example, if you purchase $1,000 of a Market-Linked CD and the underlying index is the S&P 500 and in 7 years the S&P 500 is 70% higher than it was when you purchased the Market-Linked CD, then you would receive $1,700. If the S&P 500 lost 40% during those 7 years, you would receive $1,000 at maturity.
No interest or dividends are paid. In the case of Market-Linked CDs, the principal is protected by a CD that is FDIC insured.
If the investor would like to sell the note before maturity, the underlying CD may be sold back to the issuing bank. Generally, there is a penalty for selling the notes within the first 4 years of buying them. At this point, there is not a secondary market – to sell these to other investors.
Buffered Return Enhanced Notes
Buffered Return Enhanced Notes offer 100% participation in an index with a varying amount of downside protection. A typical offering is for 20% protection with a shorter maturity of 3 years. If the index is 20% lower at maturity, the investor gets 100% of the principal back. If the index is 40% lower at maturity, the investor gets 80% of investment back. The investor gets 100% of the gain in the index at maturity (if the market gains 30%, the investor gets 100% of the principal plus 30%).
No interest or dividends are paid. The return may be capped. As with the Market-Linked CDs, Buffered Return Notes are linked to various indices.
There is no secondary market at this point. Structured notes are very popular in Europe but are fairly new in the US. A secondary market may develop over time.
Return Enhanced Notes
Return Enhanced Notes provide over 100% participation, have capped return and mature in 18 months. An example is having 150% participation with a maximum return of 40%. Unlike the other two types of notes, there is no downside protection. As with the other structured notes, Return Enhanced Notes are linked to a variety of indices.
No interest or dividends are paid. The return may be capped.
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SRI Presentation We have developed a presentation about Socially Responsible Investing. Please let us know if you are part of a group that would like us to present.
Monthly Performance If you would like to see how your holdings are doing on a monthly basis, we would be glad to email you a performance summary at the beginning of each month. Just let us know.
Employee Retirement Plan Please let us know if you have or know of a company that would like a proposal from us to manage employee retirement accounts (401k, Simple, SEP, Pension Trust, Individual 401k …).
Free Portfolio Review We offer a free portfolio review along with a free upfront meeting for prospective clients. If you know of anyone who could benefit from our services, please have them contact us. The highest complement our clients can give is the referral of their friends and family.
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First Quarter Meeting
The First Quarter of 2011 meeting will focus on review of your goals, objectives, risk tolerance, and time frame. We will also review your estate plan. We will examine portfolio updates and reinvestments if securities were sold for tax benefits at year end. We would like to update all of your contact information as well.
Notice
If you have a taxable account at Schwab, we will provide you and/or your accountant with your capital gain/capital loss statement for tax preparation at your request.
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Hopefully your holidays were filled with peace and joy. A blessing in our life this holiday season is the birth of Natalia Ginette Holliday, who joined this world on December 17th. Now as this new year begins we can reflect on the past and focus on what we really want in our lives.
One of the things I learned the end of last year was that when I need help and support, all I need to do is to ask, and it is offered. I had really overextended myself and was feeling resentful that, in my eyes, as one of five children, I was the only one dealing with Mother’s care. The result was that after some reflection, I asked my siblings for help and they all stepped forward. In the process, I heard Gail Sheehy speak on Caregiving and read her newest book, Passages in Caregiving. I highly recommend this to anyone who is in any way helping to care for another. It was really affirming and helpful to me.
So my desire for 2011 is to be conscious of the quality of life, to keep my heart open to give and receive and to really have fun!
Sylvia
