Retail notes are a type of investment that many people are unfamiliar with. Although they are not the most common form of investment, they can provide investors with a lot of unique advantages. Here are the basics of retail notes and how they work.

Retail Notes

The retail note is a type of fixed income security much like a corporate bond. Retail notes are issued by some of the largest corporations in the world. These are basically debt instruments that you can purchase directly from a particular company. This type of investment is going to pay you a fixed amount of interest over its lifespan. These retail notes are available to purchase in increments of $1000. This makes them affordable for many different types of investors.


In order to purchase this type of investment, you are going to need access to a broker that is familiar with retail notes. Every week, a new listing of retail notes is going to become available to the public. In order to buy these, you will have to work with your broker and they will contact the company on your behalf to make a purchase. Every week you will be able to find many different offers that have different interest rates, different maturities, and interest payment frequencies. Most of the time, you are going to be dealing with companies that are very highly rated in the industry.


Many of these retail notes are callable. This means that the company can decide to call them back at any point and cash you out. Most of the time, when a retail note is callable, they are going to be guaranteed for a certain amount of time. This means that you can count on receiving interest for a minimum period. Some retail notes are not callable and you will not have to worry about this.

Survivor's Option

Most of these retail notes carry a unique feature known as the survivor's option. If the holder of a retail note passes away, the beneficiaries can take the note and redeem it for a par value. This means that even if the market value of the retail note has declined, the survivors can take it back to the retailer and redeem it for a par value of $1000. 

Who Should Invest

This type of investment can be beneficial to a number of different types of investors. If you are the type of person who wants to create a steady source of income for yourself, retail notes could make a lot of sense. They are relatively safe because you are investing with some of the biggest companies in the world.

Even those who are planning for retirement can take advantage of this type of investment by including it in their retirement portfolio. This way, you will be able to take the gains from the retail note interest without having to pay any taxes on them at the time.

blog comments powered by Disqus