|Every used car you ever bought
has been guaranteed. So.........
A guarantee is just another word for a promise. A
promise comprises two things: the nature of the promise and the
name of the person/entity doing the promising. Unless those two
things are spelt out you do not have a guarantee (or a promise).
You just have an expression of hope.
You know what 'Guaranteed Used Car' means. Approach
financial guarantees and promises accordingly.
If a financial product is guaranteed by an entity
in Liechtenstein you should ask whether the financial institution
selling you the product stands behind this guarantee. Get it in
writing. From the institution, not your financial adviser.
What do words like 'secure' and 'safe' mean in the context of a
financial product? Something like 'almost guaranteed' maybe? 'Almost
guaranteed' is like being 'almost pregnant'. You either are or you
If the income is "guaranteed",
what about the capital?
How is the return of capital determined? It is easy to guarantee
income for a limited period by dipping into capital.
We are happy to guarantee you an income of 20% per
annum for 4 years if you'll invest in our four-year Greedy Bonds,
repayment terms unclear. We'll put your money under the mattress,
take 10% for ourselves, pay you 20% each year for four years and
give you back 10% at the end.
You may laugh, but a sophisticated version of this
idea is what underpins the 'high income' versions of Structured