investing

5 financial terms not to take for granted

Guaranteed
Guaranteed © filmfoto/Shutterstock.com

Of all the investment terms out there, none has the same persuasive power of the "G" word. On the surface, an investment guarantee sounds like the perfect choice, but, according to Viktoria Palushaj, market analyst for the CitrinGroup, investors need to peel back the layers that come with a guarantee. "Since no two guarantees are the same," she says, "investors need to know who is guaranteeing it. What is -- and is not -- being guaranteed? Can the company make good on its promise? And what evidence and strategy do they have in place to support their investment claims?"

Palushaj adds that since investors bear the ultimate risk of losing their money, they need to go as far as learning if outside third parties are involved, and what stake those parties have in the guarantee. Bud Hebeler, retired executive, author and founder of AnalyzeNow.com, suggests that investors be cautious about guaranteed products loaded with lots of disclosures and fine print. "When the guarantee has to be explained over 20 pages and it's not in 12-point font, investors should be on guard."

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