Are Structured CDs Too Good To Be True?

Are Structured CDs Too Good To Be True?
Most people know what Certificates of Deposit (CDs) are. You buy one for a number of years, then at the end, the bank gives you your money back plus a little interest. They’re not huge moneymakers, but they’re about as reliable as can be, which makes them great tools for offsetting risk. Of course, Wall Street had to get in on the action and now they’ve gone and turned one of the more reliable investing tools into something much riskier—and more profitable for them. They call them structured or market-linked CDs. That doesn’t sound too far off from traditional CDs, but the rules are very different. The Wall Street Journal recently exposed how big banks are shilling these products. Basically, they’re pitching them as a risk-free investment—if the stock market goes up while you own the CD, you get a percentage, and even if it doesn’t go up at all, as long as you hold the CD to maturity, you get your principal back. Sounds great, right? Head, you win, tails, you don’t lose. But don’t forget principle #3 of the 12 Principles of Intelligent Investors: “If it sounds too good to be true, it is.” Unfortunately, the fine print of these agreements is fraught with booby traps waiting to surprise the unsuspecting investor. Positive returns […]

Source: Retirement Researchers

Are Structured CDs Too Good To Be True?

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