Disclaimer: This article is for educational purposes only and do not constitute investment advice. All investments involve risk, including potential loss of principal. Please consult with qualified professionals before making investment decisions.

What does "principal protection" mean?

Principal protection means you're guaranteed to receive back at least your original investment amount, regardless of how the underlying market performs.

How is this protection provided?

The protection comes from the bond component of the structured note. A portion of your investment is essentially set aside to ensure you get your money back at maturity.

Are there any exceptions?

The main risk is credit risk - if the issuing bank fails, you could lose money. This is why we only work with highly-rated institutions.

Types of protection:

• Full principal protection - 100% of your investment is guaranteed*

• Partial protection - A percentage (like 90%) is guaranteed*

• Conditional protection - Protection applies unless certain market conditions occur*

*Subject to the credit risk of the issuing financial institution. Protection refers to return of principal at maturity, not protection against market fluctuations during the term.

What about inflation?

Principal protection typically means you get back the same dollar amount, not adjusted for inflation. However, the growth component may help offset inflation over time, though this is not guaranteed.

Key takeaway:

Principal protection allows you to participate in market growth while knowing your original investment is safe, making it ideal for conservative investors who still want growth potential.

Want to see how principal protection could work for your portfolio? Everyone's situation is different. Our experts can show you specific structured note strategies that provide the right level of protection for your goals.

Get a custom analysis of protection and growth strategies for your wealth.