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InterNotes®: Understanding the Investment Vehicle, Features, and Risks

Last updated 04/30/2024 by

Abi Bus

Edited by

Fact checked by

InterNotes®, offered by investment firm InspereX, provide retail investors with access to the corporate bond market. With customizable terms and features like low initial investments and diverse maturity dates, InterNotes® offer convenience and flexibility in fixed-income investing.

Understanding InterNotes®

InterNotes®, a product of InspereX, serve as a bridge between retail investors and the corporate bond market. These medium-term notes offer customizable terms, making them accessible to a broader range of investors who seek higher yields than traditional savings accounts or government bonds can offer. The clear and transparent terms provided by InspereX include features such as low initial investments, flexible maturity dates, and a reasonable offering period, providing investors with time to make informed decisions before committing funds.

Features of InterNotes®

InterNotes® offer several key features that make them attractive to investors:

Low initial investments

One of the most significant advantages of InterNotes® is the ability for investors to access the corporate bond market with relatively small upfront investments. Unlike traditional bond offerings that may require substantial capital, InterNotes® allow investors to buy in $1,000 increments without facing discount or premium prices. This means investors can purchase InterNotes® at par or face value, with no additional costs.

Diverse maturity dates

Another appealing feature of InterNotes® is the range of maturity dates available. Maturity periods can range from as short as one year to as long as 30 years. This flexibility allows investors to tailor their investment strategy by laddering their fixed-income investments. Laddering involves spreading investments across different maturity dates, which can help diversify a portfolio, manage risk, and provide liquidity as bonds mature at different intervals.

Reasonable offering period

InterNotes® also provide investors with a reasonable offering period of five days. During this time, investors have the opportunity to review the terms and details of the InterNotes® offering before making a commitment. This offering period allows investors to conduct due diligence, seek financial advice if necessary, and make informed investment decisions.

Issuers and Industry coverage

InspereX, formerly known as Incapital, offers InterNotes® that provide fixed-income exposure to a wide range of companies across various industries. These industries include but are not limited to:
Financial services

Issuer examples

Some notable issuers of InterNotes® include:
Bank of America
John Deere
General Electric
These companies represent a diverse set of industries, offering investors the opportunity to invest in sectors they believe will perform well.

Investment process

Investing in InterNotes® involves a straightforward process:
Research: Investors should research the available InterNotes® offerings to understand the terms, maturity dates, and issuer profiles.
Purchase: Once an investor has identified a suitable InterNotes® offering, they can purchase the notes in $1,000 increments during the offering period.
Hold or Trade: After purchasing InterNotes®, investors can choose to hold the notes until maturity to receive interest payments or trade them on the secondary market if liquidity needs arise.
Here is a list of the benefits and drawbacks of investing in InterNotes®.
  • Accessibility to retail investors
  • Customizable terms
  • Low initial investments
  • Diverse maturity dates
  • Reasonable offering period
  • Fixed-income exposure to various industries
  • Callable bonds may be redeemed early by issuers
  • Interest rate risk if rates rise after purchase
  • Market risk if bond prices fluctuate

Frequently asked questions

What is the minimum investment amount for InterNotes®?

The minimum investment amount for InterNotes® is typically $1,000, allowing investors to start with relatively small sums.

Can InterNotes® be sold before maturity?

Yes, InterNotes® can be sold on the secondary market before maturity, providing liquidity to investors who need to access their funds.

Are InterNotes® suitable for conservative investors?

InterNotes® may appeal to conservative investors seeking fixed-income exposure with customizable terms and manageable risk levels.

How often are interest payments made on InterNotes®?

Interest payment schedules for InterNotes® vary depending on the terms of the specific offering. Some may pay interest semi-annually, while others may have different payment frequencies.

What happens if an InterNotes® issuer goes bankrupt?

If an InterNotes® issuer goes bankrupt, investors may face a risk of default and potential loss of principal. However, this risk can be mitigated by diversifying investments across multiple issuers and industries.

Key takeaways

  • InterNotes® offer retail investors access to the corporate bond market with customizable terms.
  • Features such as low initial investments and diverse maturity dates make InterNotes® attractive to investors.
  • Issuers of InterNotes® include companies from various industries, providing investors with fixed-income exposure across sectors.
  • Investors should weigh the pros and cons, including callable bonds and market risks, before investing in InterNotes®.

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