Quote:
Originally Posted by lifehappen
I have a conference meeting yesterday with my banker. One thing he proposed is to put $50K to the 1 or 5 years structured CD.
Take the 5yrs CD as an example, they use 5 different stocks as reference: BMY, GM, INTC, IBM, VZ. On the annual interest payment date (which will be the exact same day&month you opened such account), if the prices of all reference stocks are greater than their initial prices (initial price refers to the stock prices on the date you opened your CD account), then you will get the Minimum Interest Rate (MIR) + Performance Rate. Otherwise, you will only get the MIR, which is 1.35% (or .75%) depending on the option you choose. Performance rate could be 3.65% with 1.35% as MIR, or 7.25% with .75% as MIR.
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Stay away from products like this. Your banker is pitching them to you because he gets incentive for selling bank-specific products (much like the fund you mentioned at the outset). He is looking out for his and the bank's interest here - not yours. I would advise seeking different counsel who is a fiduciary and does not get any sort of commission for selling specific products.
Moreover, those products are engineered to be profitable. Else the bank would not sell them, right? Not only is it too complicated; it caps your return in exchance for guarantied principal protection. If you have a long-term perspective; that's a lousy trade.
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