Understanding Structured Growth Notes? Do they fit your portfolio?

Craig Novorr, Chief Investment Officer of Paragaon Capital Management, LLC, discusses Structured Growth Notes, which are presented as a replacement or part of a stock portfolio. He explains that these notes provide equity exposure or stock market exposure with downside protection. Craig emphasizes watching a previous part that explains what structured notes are and how they are issued by major banks as senior and secure debt. Craig mentions approaching major banks with specified terms when creating a growth note. The maximum duration for a growth note is six years, and Craig discusses using benchmarks such as the S&P 500 and Dow Jones Industrial Average. He introduces the concept of a "buffer," a form of downside protection, and suggests a 20% buffer as effective for balancing risk and return. The potential outcomes of the growth notes are discussed. If the worst of the chosen indexes is between 0% and -20 %, the investor receives 100% of the original investment. If the market is down more than 20%, the investor is protected for the first 20%, with a reduced loss. If the market is up, the investor participates with an upside of 150%. Craig highlights the flexibility of the notes, stating that they are uncapped, unlike some other structured products with capped returns. He also mentions the risks, including the lack of dividends from indexes and creditor risk. However, the terms are contingent guaranteed, provided the issuing bank does not file for bankruptcy. https://paragoncap.com