"Synthetic Bonds"
Before we talk about "synthetic" bonds, let's look at what "real" bonds yield today.
Pretty pathetic if you're an investor, isn't it?
Now let's try a different way of thinking about "yield" or "investment return".
Instead of thinking of an "annual" return of 12%...
...think of 1% achieved in a month ( x 12) as a 12% "annualized" return...
...or .46% achieved in 2 weeks (X 26) as a 12% "annualized" return...
...or .23% achieved in 1 week (x 52) as a 12% "annualized" return. **
Synthetic Bonds are structured so as to generate modest returns in short periods of time that translate to significant "annualized" returns, which if done continually will eventually translate into significant "annual" returns...typically between 7% - 12%...in many cases doubling or tripling today's conventional bond rates.
Now let's talk about PROBABILITIES.
We think in terms of a "real" bond being able to deliver it's stated interest and returning the investor's principal at maturity as having close to a 100% probability of success, particularly if it is a U. S. Treasury bond.
Synthetic Bonds are created by combining a few different securities together so as to deliver a specific "annualized" return within a short period of time...much like a T-Bill...with a success probability around 95%...and with even that slight risk tightly controlled.
These "bonds" are not hard to create, and can be easily executed through any brokerage firm.
Questions: cyberterrys@hotmail.com
** Compounding of interest and taxes are not taken into account in this section.