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Exchange Traded Note (ETN) Investing

Make great money investing, while remaining liquid, with an exchange traded note

By Phillip Galey
An exchange traded note (ETN) is a great place to put the investment dollars your business earns. These unsubordinated debt securities are a good choice for investors because they provide the returns of various market benchmarks, and the credit of the issuing bank backs them. They're neither equities nor index funds, but share advantages from both. Like equities, they can be shorted; and like index funds, they're linked to a benchmark index.

ETN investments are tax efficient because they're treated like a prepaid contract. Thus there are no dividends or interest to be taxed and capital gains tax can be deferred either until maturity of the ETN or until you sell it. ETNs also eliminate the tracking errors seen with exchange traded funds (EFTs) because although ETNs track the index, the underlying securities do not control the return. Moreover, while most structured products are buy-and-hold, the ETN investor maintains liquidity and can turn around and trade the ETN on the securities exchange at any time. To acquire more exchange traded note information:

1. Seek exchange traded note advice;

2. Get exchange traded note training;

3. Earn money by buying and selling ETNs.

 

Pick the brain of an exchange traded note consultant

Investing in debt securities can be a tricky matter and it's best to seek the expertise of a qualified consultant for advice and help with exchange traded note investing.
Try: Capital Investment Advisor will connect you with an investment professional who can advise you on investing in ETNs. Another option is to subscribe to published investment advice such as what is available at TheStreet.com to help you find your way in the ETN trade.

Increase your ETN savings by obtaining training on ETN investing

Your ETN investments will benefit by getting some rounded training in investing. It's good to get general training in investing, so that you will know whether ETNs are your best choice or whether something else might be.
Try: Investment Banking Institute provides complete training in investment banking, including, of course, training on ETNs. Optionetics also offers courses that will help you learn about exchange traded note investing.

Explore the choices for ETN online trading

There are a number of companies available that will process your ETN buy and sell transactions, online or otherwise.
Try: TradeKing charges very little per trade while iPath markets exchange traded notes from Barclay's.

 

  • Invest in ETNs that do not track foreign currencies. The IRS ruled that ETNs that track foreign currencies are to be considered a debt. Thus, even if you hold the ETN for more than a year, you won't enjoy the 15 percent long-term capital gains rate, but will have to apply your normal tax rate.

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