Guarantee
Categories: Muni Bonds, Banking
When you buy the latest phone, you might get a warranty or guarantee that the phone will work or you can exchange it. When your granny gets her hair dyed, the manufacturer of the dye might guarantee a certain shade of fetching blue.
Guarantees are basically promises that protect the customer and make them feel better about buying because they've got nothing to lose.
So, uh, why is a guarantee bad news in the financial world?
The trouble starts when the word is thrown around in connection with returns or investments. In these cases, guarantees are a big no-no and are considered fraud. Why? Because Big Guy Broker can't guarantee that your stocks are going to do well. As fancy as his suit is, it's just not up to him.