Zero-Downside Investing

Ride This “Bull Note” for an Easy 42%… Without an Ounce of Risk

Finally, a way to invest in a broad range of asset classes without any risk…

To be sure, Principal Protected Notes (PPNs) are innovative financial instruments. And anyone can invest in them.

Similar to traditional bonds, Principal Protected Notes return 100% of your initial investment when they mature. But your potential return is much, much higher than bonds. That’s because your investment options are virtually limitless…

You can use PPNs to invest in any asset class, from stocks to precious metals. And you can go both long and short, too. Again, without any risk.

So how does this work? It’s really quite simple…

Principal Protected Notes: A Profitable Blend of Bonds and Derivatives

PPNs trade just like stocks on the major exchanges. And when they’re brought public, part of the proceeds go into a zero-coupon bond that guarantees the principal at maturity. That’s why there’s “zero downside.” The rest of the proceeds are used to purchase the underlying assets – stocks, metals, etc. And in most cases, the asset manager will use derivatives to increase the returns.

Say you’re bullish on silver prices, since supplies are dwindling and demand keeps edging higher. This gap has already pushed the price of silver up more than 225% since 2002. It should continue to do so. But if you’re skeptical, buying a Principal Protected Note let’s you keep any additional upside, but guarantees you won’t lose your initial investment.

Just let your note sit without worrying about it. At the end of your specified term, collect your initial investment along with any additional profits the market may have returned.

Here’s what your potential returns would look like for an 18-month, 100% principal-guarantee PPN.

• Investment: $10,000
• Guarantee: 100%
• Leverage: 500%
• Cap: 31%

Because the financial institution absorbs all of your risk, gains are typically capped. Still, an 18-month 31% return – risk-free – is a worthwhile proposition.

Here’s one of the PPNs we’re recommending right now…

A No-Risk Way to Cash In on the Resurging Land of the Rising Sun

American International Group, Inc. (AIG) has a fantastic offering that gives investors a safe way to play Japan. It’s called the Nikkei 225 MITTS (AMEX: NOW), which is short for “Market Index Target-Term Securities.” With MITTS, you’re getting the true pioneer within the principal-protected asset class.

In fact, most “zero downside” investments model the successful MITTS line (brought to the market first by Merrill Lynch).

This note is linked to Japan’s Nikkei 225 Stock Average, which tracks the performance of a large basket of the top Japanese stocks trading on the Tokyo Stock Exchange. The TSE is one of the world’s largest securities exchanges in terms of market capitalization.

Japanese companies are well entrenched in a period of economic and earnings expansion. In fact, stocks in Japan rose in 2006 for the fourth straight year – its longest wining streak in nearly two decades.

And AIG structured this note with an extra punch…

In addition to its principal-protection feature, the note has a 105% participation rate. That means if the Nikkei 225 Index trades flat or down over the next three years, AIG will pay you no less than the original $10 per share for your investment at maturity. But if the Nikkei 225 Index rises, AIG will not only return the full percentage gain of the index, they’ll give you 105% of the total gain.

For example, if the Nikkei 225 Index rises 40% during the term of your investment, you’ll actually receive a return of 42% (40% x 105% = 42%). This is free money. Why not take it?

Here are four more notes we recommend right now.

~ Lynnsey Eakin and the Investment U Research Team

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