Structured CDs and notes
- Structured CDs and notes typically pair a fixed income investment (such as a CD or bond) with a performance component (generally an option).
- Structured CDs and notes may help you diversify your portfolio and protect it from market volatility.
- Structured products are complex products that involve investment risk and other substantial risks compared to traditional investments and may not be appropriate for all investors.
Potential benefits and risks of structured CDs and notes
- Reduced volatility. Structured CDs and notes may reduce the effects of market volatility within your portfolio.
- Principal protection. If you select a 100% principal protected note or CD (see important disclosures below), the amount of your initial investment may be protected if you hold it until maturity. In addition, there is a possibility for gains on your initial investment. If you select a product with less than 100% principal protection your principal will be at greater risk of loss but more of your investment may be put towards the participation. Note that there can be substantial penalties or charges for early redemption prior to the maturity of the CD.
- Participation. Structured CDs and notes may provide enhanced performance and/or above market coupons.
- Potential risks of structured CDs and Notes are noted in the corresponding Risk Acknowledgment form and include but are not limited to: Lack of Liquidity, Loss of principal beyond FDIC limits for CDs, Loss of principal for notes, call risk and complexity.
- The tax treatment of structured CDs or structured notes can be complicated. For example, investors may pay tax on the earnings of the structured CD each year, even though the investor will not receive any money until the maturity date.
- Performance potential or returns on structured CDs are typically taxed at the rate of ordinary income, not at the lower rate assigned to capital gains and dividends. Thus, investors should consider any potential tax consequences when investing in structured CDs or structured notes.
- If the structured note is called, investors may not be able to reinvest their money at the same rate of return provided by the structured note that the issuer redeemed
Structured CDs and notes available from Ameriprise Financial
- FDIC-insured structured CDs are issued by U.S. banks and your initial investment is backed by FDIC insurance up to applicable limits.
- 100% principal-protected notes are issued by third-party banks. These notes sold through Ameriprise Financial are registered with the SEC and offer principal protection if the note is held to maturity, subject to the creditworthiness of the issuer.
- Principal-at-risk structured notes may help mitigate market loss, to varying degrees and offer the possibility of enhanced performance potential. These notes generally have maturity ranges from three months to seven years.
- Callable yield structured notes are a special class of principal-at-risk structured notes securities with possibility of a knock-in, referred to as callable yield notes or auto-callable yield notes. The issuer may have the right or the obligation to call the security away from the owner at preset call dates and at preset index levels, while also paying fixed or contingent coupon amounts at set intervals over the life of the note.
Take the next step
An Ameriprise financial advisor can work with you to determine if one of these products may be appropriate for you, and then construct a portfolio that uses structured CDs and/or notes with the objective of using varying levels of downside protection while simultaneously maintaining potential for enhanced market participation. To find out more about structured CDs and/or notes, contact your Ameriprise financial advisor or locate an advisor near you.
Structured products are complex products that involve investment and other substantial risks compared to traditional investments and may not be appropriate for all investors. Investors should consider the investment objectives, risks, charges and expenses of the structured product carefully before investing. The prospectus contain this and other important information about the product. Clients should read the prospectus carefully before investing.