What is the difference between a structured financial product and a traditional financial product?

What is the difference between a structured financial product and a traditional financial product Introduction: Navigating the Financial Landscape Hello and welcome! The world of finance is a vast and intricate one, with various products and instruments designed to cater to different needs. Today, we'll be focusing on two key categories: structured financial products and traditional financial products. While they may seem similar at first glance, they possess distinct features that set them apart. Let's dive in! Defining Traditional Financial Products: The Bedrock of Finance Traditional financial products, also known as plain vanilla products, form the foundation of the financial market. These include stocks, bonds, and mutual funds. What characterizes them is their simplicity and straightforwardness. For instance, when you invest in a stock, you're essentially buying a share of ownership in a company. The value of that stock fluctuates based on market dynamics, and you may earn returns through dividends or capital appreciation. Similarly, bonds represent debt obligations, with investors lending money to entities like governments or corporations in exchange for periodic interest payments and eventual repayment of the principal amount. Structured Financial Products: A Fusion of Elements