What you should know about PPNs?

The Canadian Securities Administrators’ (CSA) lists the following items in their recent Investor Watch of things you should know about PPNs:

Before you buy a PPN, you should know that with some PPNs:

1. There is no guarantee that you will get back more money than you invested.

2. Your money is locked up for several years and, if you take your money out early, you can lose the guarantee on your principal and be charged a fee.

3. You might receive little or no profit on your investment, which would leave you worse off than if you had bought a GIC or other investment with a fixed rate of return.

4. The various fees associated with the PPN can make it harder for you to earn a profit on your investment, even if the underlying market investment performs well.  Understanding these facts can help you identify some of the risks of investing in PPNs. Knowing the risks of an investment before you buy it is one of the key elements to making an informed investment decision.

5. Some PPNs lock up your money for several years and, if you take your money out early, you can lose the guarantee on your principal and be charged a fee.

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