Yield Notes Will Change Your Investing Life

We offer access to strategies typically reserved for individuals with $10M+ net worth and make those solutions accessible to nearly everyone.

Structured yield notes serve as a more secure investment vehicle compared to individual stocks, bonds, or mutual funds, providing a buffer against potential market downturns and volatility. By combining the stability of bonds with the potential returns of equities and consistent returns, structured yield notes minimize risk, even in fluctuating markets.

These customized investment products can provide attractive yields while offering varying levels of protection against market downturns. Picture the world of investing as a marketplace offering various financial instruments, each with its unique features and advantages. Amidst the array, the structured yield note stands out, providing a perfect blend of security, potential returns, and customization.

You’ll likely never use a plain vanilla S&P Mutual Fund again. Why would you when you can combine growth, income and downside protection in a Structured Yield Note?

This month's top picks

Issued & Guaranteed by

Annual Interest

Term

Principal Protection

Downside Buffer at Maturity

Prospectus

14.5%

3 Year

Yes

40%

Link

8.5%

15 months

Yes

35%

Link

12%

15 months

Yes

35%

Link

20.3%

3 Year

Yes

50%

Link

13%

3 Year

Yes

30%

Link

What's a Yield Note?

Structured yield notes are hybrid financial instruments crafted to combine the best of bonds and equities. Investment banks create them by incorporating a bond component, which offers stability and principal protection, and a derivative component, which provides exposure to an underlying asset like stocks or indices.
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They originated in Europe and Asia, with a global market size of approximately $3 trillion. Major banks, such as Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America, and Citi, are involved in their issuance.

While these notes are widely used in Europe and Asia, they are less common in the United States, Structured notes first appeared in the US in the mid-1990s and gained traction in the early 2000s. Since the 1990’s they have been primarily used by the banks themselves or institutional investors. However, high investment minimums - $5-10 million - made them accessible only to ultra-wealthy individuals, private banks, and institutional investors

As an often inaccessible investment option in the US, many American investors, including financial professionals, have limited experience with structured notes. We make the process accessible, easy and available with much lower minimums. At Simple Wealth, we essentially piggyback your investment dollars onto what the banks are already issuing for themselves
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How a Yield Note is Made

One of our highly sought after techniques is the Structured Yield Note. These are guaranteed on the balance sheet of major US banks, names that you would recognize usually for a term of 2 to 3 years with downside protection, and a significant yield. Structured yield notes serve as a more secure investment vehicle compared to individual stocks, bonds, or mutual funds, providing a buffer against potential market downturns and volatility. By combining the stability of bonds with the potential returns of equities, structured yield notes minimize risk and offer consistent returns, even in fluctuating markets. Structured yield notes are hybrid financial instruments crafted to combine the best of bonds and equities. Investment banks create them by incorporating a bond component, which offers stability and principal protection, and a derivative component, which provides exposure to an underlying asset like stocks or indices.

The Perfect Balance: Security and Potential Returns
Structured yield notes are hybrid financial instruments crafted to combine the best of bonds and equities. Investment banks create them by incorporating a bond component, which offers stability and principal protection, and a derivative component, which provides exposure to an underlying asset like stocks or indices.

The creation process begins with the investment bank issuing a bond, usually with a fixed maturity date. The bond component ensures the return of the invested principal at maturity. Simultaneously, the bank purchases a derivative contract tied to an underlying asset, such as a stock index, interest rate, or commodity price, using the interest generated by the bond. The derivative component offers the potential for higher returns, depending on the performance of the underlying asset. This innovative structure allows investors to enjoy market returns while mitigating financial risks. The bond portion offers principal protection, while the derivative portion provides potential upside, creating an ideal balance for investors.

Why Haven't I ever Heard of This?

Banks are using Yield Notes for themselves. Large, institutional investors are using yield notes for consistent income and protection from market swings. It's not that these are a secret, it's that most investors don't have $5M to invest. We knew we wanted a safer investment option for clients so we found a way to make these available at much lower minimums.

We essentially piggyback onto what the banks are already doing for themselves. This specialization has evolved so much that now we have the ability to customize a note to suit the financial goals of each investor. We combine the stability of bonds with income generated from the returns or dividends of equities, wrapped with downside protection and with a guarantee from a top bank. A perfect solution to offer consistent returns and minimize risk, even in fluctuating markets.

Benefit #1 Customizable Features

Tailoring to Unique Preferences

A significant advantage of structured yield notes is their customizable nature, allowing investors to tailor the notes to their unique preferences and financial goals. For example, investors can choose from various underlying assets, payout structures, and levels of principal protection. They can also decide on the amount of equity exposure or the level of safety offered by the bond component. By personalizing the structured yield note according to their risk appetite and objectives, investors can create a valuable addition to their investment portfolios, ensuring that their financial strategies align with their needs and goals. We design the custom solution for you, than shop it around at the top banks and whoever gives the best pricing and terms for you is the one we go with.

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Benefit #2 A Safer Alternative

Reducing Risk and Volatility

Structured yield notes serve as a more secure investment vehicle compared to individual stocks, bonds, or mutual funds, providing a buffer against potential market downturns and volatility. By combining thestability of bonds with the potential returns of equities, structured yield notes minimize risk and offer consistent returns, even in fluctuating markets. Moreover, the customizable features of structured yield notes allow investors to choose their desired level of protection, further enhancing the safety of their investments. This safety net is particularly attractive to investors who are risk-averse or looking to preserve their capital while pursuing potential market gains

Benefit #3 Consistent Yield

Predictable Income for Investors

Structured yield notes are designed to generate consistent income for investors. The bond component typically pays interest at regular intervals, providing a reliable income stream. The derivative component, while offering potential for higher returns, is structured in a way that the investor's principal remains protected. As a result, investors can expect a steady flow of income throughout the life of the structured yield note, as well as sometimes the potential for additional gains, depending on the performance of the underlying asset. This combination of predictable income and potential upside makes structured yield notes an attractive option for investors seeking both security and growth.

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Structured Yield Notes

How do we position our clients for steady dependable income and protect our clients downside risk exposure? We believe that increased education, transparency, and access to the right tools can help more investors become comfortable with this flexible, risk-based investment option.

We can customize notes to meet specific investment goals, such as targeting certain allocation levels, exposure levels, and risk-return profiles. Structured notes can focus on growth, income, or a combination of both. Income-focused structured notes typically pay a quarterly coupon while offering downside protection.‍

Example #1 - Protect Your Principal

You're the principal protection minded person who isn't trying for home runs, just dependable base hits. You’ve worked hard and earned your money, now it’s time to protect it.

What if you could have dependable growth, participate in the S&P and have 50% downside protection:

A real life pricing example on 4/11/2023-Custom yield note, guaranteed on the balance sheet of JPMorgan Chase: 3 Year note based on the S&P500 (SPX), a full 50% downside barrier, non-callable for a year (quarterly thereafter). And if it gets called at a year, you still make an 8.69% call premium. No cap to the upside, 50% downside protection, 8.69% if it's called, fully transparent S&P500 index. Who would choose to stay in an S&P index funds after this?

Example #2 - Consistent Income

Another actiul client example from March 2023 - protect client against an anticipated recession in the second half of the year using cash, yield notes and zero coupon US government TBills.

Solution - 14.5% Yield note from JPMorgan Chase for 3 years and 4.78% on his cash.
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He will make 4.78% on his cash (fully guaranteed by the US Government) and 14.5% on his three year yield note issued by the number one bank in the country. If we have a recession, his money is fully protected until the day of maturity three years from now and even then would have to be and even then comes with a 40% downside buffer.

This great client sleeps very peacefully at night and has no fear of his investment portfolio, and while the rest of the world may be crashing, he'll be getting at least 4.78% on part of his money and 14.5% on the rest.

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