Basics of Market Linked Debenture
When investing in an Market
Linked Debenture, it's essential for investors to grasp several basic terms .
Participation Level
Participation refers to
your involvement in a financial product's potential returns. When you participate in an investment or
insurance product, you have a stake in its performance. For instance, if you participate in a market-linked
investment, your returns will be linked to the performance of the underlying assets.
Principal Protection
Principal protection is
a key concern for many investors, especially those seeking stability and preservation of capital. In
financial products offering principal protection, your initial investment amount is safeguarded, often
through mechanisms such as insurance or structured products. This means even if the market experiences
downturns, you won't lose the principal amount you invested.
Maturity Date
The maturity date is
the date when an investment or insurance product ends or reaches its final phase. It's crucial to be aware
of this date as it determines when you'll receive the benefits or returns from your investment. For
instance, in the context of a fixed-term investment, the maturity date signifies when you can expect to
receive your principal investment back.
Underlying Assets
Understanding the
underlying assets is essential for evaluating the risk and potential returns of an investment product. These
assets could include stocks, bonds, commodities, or other financial instruments that form the basis of the
investment's performance. As your financial advisor, we provide insights into the composition and dynamics
of underlying assets.
Capping
Capping refers to a
limit or cap imposed on the maximum potential returns of an investment product. This feature is often seen
in structured products or indexed investments where there is a predefined maximum return. While capping
offers a level of downside protection, it also limits the upside potential of your investment.
