Structured products are financial instruments that are designed to provide investors with a customized investment solution. They offer a combination of different types of investments such as bonds, stocks, and derivatives. In this blog post, we will discuss why individuals are turning to structured products rather than the more traditional investment routes.
Diversification:
One of the main reasons why individuals should invest in structured products is diversification. Structured products allow investors to diversify their portfolio by investing in a variety of assets such as equities, bonds, and commodities. This can help to reduce the risk of losses as it spreads the investment across different types of assets.
Tailor-made:
Structured products are tailor-made to meet the specific investment objectives of the investor. This means that investors can choose the type of product that best suits their investment needs, such as the level of risk they are comfortable with, the desired return, and the time horizon of their investment.
Risk management:
Structured products can also help investors to manage risk. For example, some structured products come with a built-in protection mechanism that limits the downside risk. This means that if the underlying asset drops below a certain level, the product will be redeemed at a pre-determined price, protecting the investor from further losses.
Potential for high returns:
Structured products can offer the potential for higher returns than traditional investment products such as bonds and stocks. This is because structured products are designed to provide exposure to multiple assets, and the return is based on the performance of these assets. Therefore, if the underlying assets perform well, the return on the structured product can be higher than that of traditional investment products.
Accessibility:
Structured products are accessible to a wide range of investors, including those with small amounts to invest. This is because structured products can be designed with different levels of capital protection, allowing investors to participate in the market with lower risk. Furthermore, structured products can be bought and sold on the secondary market, making them a liquid investment option.
Conclusion
In conclusion, structured products can offer a range of benefits to investors. They provide a diversified investment solution that can be tailor-made to meet the specific investment objectives of the investor, while also providing risk management and potential for higher returns.
So where can I find these products? Despite what you might think, structured products are easily accessible for the average investor, you can simply purchase through your bank or set up an account with an investment manager. If your unsure on how to find the right product that fits your liquidity, risk or income requirements, speak with a professional who can suggest suitable options for you.