As longer term interest rates have picked up in the second half of 2013, we have seen major US banks – particularly Chase, Citibank, Morgan Stanley and Goldman Sachs – come to market with interesting debt-side Structured Notes after having been unable to fund these notes in 2012 and 2013. US subsidiaries of HSBC and SocGen, two major European banks, have now come to the US market with their own notes.

HSBC’s Structured Note is a 15 year note paying as much as 10% APY (on quarterly payment dates) based on the difference between the 30 year and the 5 year Constant Maturity Swap (CMS) rate note and is very similar to the recent Citibank offering that I wrote about earlier. This Note, however, is slightly more favorable than the Citibank offering in two respects. First, the HSBC note is only callable at the first anniversary of its issue and at the eighth, not quarterly after the first year like the Citibank Note. Second, the Note offers 4.25x the 30 year CMS over the 5 year CMS, whereas the Citibank Note only offers 4x. Since HSBC and Citibank have similar credit ratings, this Note is arguably more attractive. I, however, recommend avoiding this Note for the same reason that I told readers to avoid the Citibank Note – the spread between the 30 year and 5 year is too narrow and unpredictable historically to rely on it for the next 15 year period. (I am more comfortable with the spread between the 30 year and the 2, as was offered by Chase, a better credit rating, in October.) Those interested in this Note, however, can learn more about it by referencing CUSIP No. 40432XNT4 or ISIN No. US40432XNT45.

Societe Generale’s Structured Note is also based on another much used equation by investment banks these days. Their offering, also 15 years, pays a fixed 7.75% APY, provided that the 6 month LIBOR rate stays between 0 and 5% and the S&P 500 does not fall by more than 25% from its value on the pricing date. This Note, called a "hybrid" note because of the two separate contingencies, is similar Note issued by Chase in September (discussed here), but the comparison is not favorable. While the Chase note only offered 7.50%, Chase has a much stronger credit rating. I also view the S&P knock-out provision in the Societe Generale Note as a real risk on a 15 year note, especially for a Note priced after a tremendous rally in the stock market. Those interested, however, can find this note under CUSIP No. 83368WGG0 or ISIN No. US83368WGG06.

As tempting as Structured Notes are, especially with interest rates looking likely to remain at low levels for a prolonged period, investors would be well advised to take a balanced approach and wait for those with the best terms and highest credit ratings (Chase and Goldman Sachs) and not to chase questionable offerings such as these from subsidiaries of European banks.

Following up on my previous article on ten things recent college grads need to know about savings, this article is designed to help those starting out to optimize the funds that they have (while the article is focused on those in their twenties, everyone could benefit from the majority of these tools). The 21^st century has brought with it the advent of user-friendly financial software that is sophisticated enough to be useful yet not overly complicated. The number of companies in this arena increases daily and there are surely more services available than the ones that I’ve listed below. That being said, those that I have chosen are some of the most affordable (ideally free) and efficient programs I've found.

1. Mint.com: Perhaps the most well-known of the bunch and the first that I encountered, Mint is a fantastic tool for those looking to streamline their budgets. Mint allows you to link all your bank accounts, credit cards, loans, investments and more, so that you can easily keep track of your income and spending. Each expenditure is categorized so you can observe any trends.,The site also allows you to enter your budget for each category, so you get accurate picture of your spending habits. Mint will even analyze your accounts and find ways for you to save money, including alerting you when you have a payment due or have incurred a bank fee. For young savers fresh out of college, Mint is a tool that emphasizes accountability and fiscal responsibility.
2. Ready for Zero: With Geezeo no longer taking on new customers and Wesabe down for the count, RFZ does exactly what its name implies – helps you pay down your debt. The software gives you informative infographics on all your outstanding debt that allows you to visualize progress. It also provides payment reminders as well as general suggestions on the best way to pay off debt. If you’re willing to pay a little extra ($75 per year) for a Plus account, you’ll get automatic paycheck alignment, credit score improvement planning, and a lot of other goodies.
3. Planwithvoyant: How can you prepare for an uncertain future? Voyant Inc. has you covered with software designed to help you forecast the impact of uncertain events. It’s a pretty user friendly interface even for those without finance backgrounds, and Planwithvoyant makes it easy for you to set up a financial plan. The goal here is always to get the highest expected return with the lowest amount of variability and risk;to that end, Voyant lets you test a variety of different scenarios’ effects on your financial condition, such aspregnancy, retirement, etc. They’ll also give you suggestions on how to mitigate some of that risk through different investment strategies. Voyant also has a listing of financial advisors whom you can ask for advice and a (what type of forum?) forum to boot, making it a good jumping off point for young investors who don’t want to deal with more sophisticated investment technology.
4. LearnVest: This may be a female-focused financial advisory site, but don’t let that fool you, it has value for both genders. LV is a little pricey, but you do get some bang for your buck. In addition to a real-life financial advisor you communicate with vie email and phone, they give you nifty infographics and cool diagrams so you can see where your money is and where it’s going. LV also emphasizes financial education, offering a wealth of articles on the subject andvirtual bootcamps for those who are into that kind of thing.
5. Shoeboxed: So you’ve got that nice company card to expense all your work and travel expenses and rack up points. The only thing is, even in the digital age, keeping track of all those receipts can be a serious pain in the neck. That’s where Shoeboxed comes in: quite simply they take all your receipts and keep track of them for you in one place. Neat huh? There is a free version and multiple free trials, but for a little more money you can save yourself a lot of hassle. However, if you’re absolutely insistent on doing a lot of the tedious work yourself in which case it will always be free.
6. Portfolio Monkey: This is not the sexiest program, but it is incredibly effective as an investment evaluator. Using historical data, Portfolio Monkey will analyze your current portfolio allocation and make suggestions. Specifically, it’ll offer different stocks that have a low correlation with your current portfolio (diversification lowers your risk) and high expected returns. The app then lets you run various simulations based on different hypothetical investing scenarios and allows you to compare your portfolios to others. While this site may require a little more sophistication than others, it is certainly a valuable, free tool to have in your arsenal.
7. Buxfer: Don’t worry, just because you’re out of college doesn’t mean you still can’t have roommates. Unless you’re making buku bucks or live where housing is cheap, chances are you have a roommate or two (yes, besides your cat). Yeah yeah it lets you do all that budgeting and financial planning stuff, but Buxfer is also great for sharing expenses. Whether you’re trying to figure out rent and utilities with your roommates, collect on IOUs, or hinting to your significant other it’s time he/she paid for dinner, this app is an easy way to reduce tension in your life.
8. Pocketsmith: Yes, another app to help you keep track of bills! The good thing about Pocketsmith, in addition to its smooth interface, is its long term planning options. It can be easy to fall into the trap of living month to month, with all these new expenses coming in that you didn’t have before. Pocketsmith helps keep you on track with your monthly and annual spending compared to your actual income, allowing you to start building a savings that lasts more than two months. For those that like to have concrete goals or those that have trouble holding themselves accountable, this is the platform for you. The calendar-based viewing allows you to see with a quick glance how you’re doing from week to week.
9. FINRA: Wait a minute….that’s not software, that’s just the government!? Actually FINRA isn’t the government, it’s a private corporation that is regulated by the SEC, but still they’ve got some nice free tools. Between their Broker Check and Risk/Scam Meter you can save yourself a lot of grief and avoid financial predators. For those of you who aren’t interested in combatting fraud and doing background checks on your potential financial advisors, these tools are not for you. Bernie Madoff eat your heart out!
10. Credit Karma: Finally, acredit score that’s actually free! Hopefully none of you got caught up in FreeCreditScore.com, because Credit Karma will give you that score for virtually free (you do have to give up the last four digits of your social; they’re not mind readers). They give you a report grade based on a variety of factors, compare you to other similar users (in terms of age, state, etc.), and suggest ways to improve your score and lower your overall debt. There is a slight conflict of interest in that different credit card companies can advertise on the app, but it’s fairly obvious and, because it’s free, you know they had to pay the bills somehow.

Use this list as a nice jumping off point for your path to a higher level of financial responsibility. I’m sure many of you have different programs that you use already that aren’t listed, so feel free to leave suggestions in the comments. Happy saving!

I have written previous articles on this website about Structured Notes (an introduction to these notes is here). While Structured Notes involve real risks, I have suggested that those trying to put money away safely with a long horizon can pick up yield by placing some small part of their assets in these Notes.

In this recent article, I discussed a JP Morgan Chase issue that was tied to the spread between the 30 year Constant Maturity Swap (CMS) and the 2 year CMS. The instrument, which is now fully syndicated, pays the 30 year rate minus the 2 year rate times 4 to a maximum of 9% annually, provided the S&P stays above certain benchmarked levels.

This new Citibank offering is similar, except it is tied to the 5 year CMS instead of the 2 year. The Note, which is callable, pays 10% in the first year and then in years 2 through 15 pays four times the 30 year CMS rate minus the 5 year CMS rate to a maximum of 10%. Determination of applicable rates is based on a measurement date 2 business days before the quarterly pay date, and the Note pays nothing if the 5 year CMS rate is greater than the 30 year CMS rate on that measurement date.

I was somewhat enthusiastic about the JP Morgan Structured Note and actually took a small position in it. The Citibank Note will be more interesting to some as it has certain advantages over the JP Morgan issue. In particular, I discussed the large risk associated with the payment condition set in the JP Morgan Note that the S&P index not fall by more than 25%. The Citibank Note does not have this S&P contingency; it is entirely based on the CMS spread. It also pays 10% in the first year and can pay up to 10% in subsequent years. Earning 10% on your money is obviously more attractive than 9%.

I personally am not sanguine and would not recommend buying these Citi Notes for three reasons. First, unlike the JP Morgan Notes, this Note is callable after the first year. On an illiquid 15 year note, a call feature creates tremendous disparity between the buyer and the seller/issuer. The seller, Citibank here, has the option to call it quits at any given quarter if the spread is not moving in their favor. Second, I am more concerned especially when I look out over a 15 year horizon at the spread between 30 year and 5 year interest rates (as reflected in CMS), than I am about the spread between 30 year and 2 year rates. (I will however admit that charting the rate for the last 15 years shows that the risk has not been dramatically greater.) Third, Citibank is less credit worthy than JP Morgan, and would be more vulnerable in the event of another banking crisis in the next 15 years.

While I wouldn’t recommend this instrument, those interested in this note can find it listed under CUSIP 1730T0A82 and ISIN US1730T0A821.