11.9% Guaranteed July 20, 1999February 13, 2017 “I got curious about an ad in the LA Times for an ‘investment opportunity.’ It guaranteed 11.9% annual yield for a three-year period. Which seemed interesting as it beats present bond returns. And one might not be able to guarantee that in the stock market either. 🙂 I called, and they said they’d send a prospectus. They said it was good for IRA’s or plain investment. They said it was like a CD, but NOT insured. They said in ten years of business, they had never failed to return an investor’s principle. I believe they said it was a corporate investment note. Now. Is this a good thing? Or a stupid thing to do. Do you know of this kind of thing? Is it legit or not, and how risky?” — Tom Whitaker Could be vaguely safe or VERY risky. It depends on what stands behind the guarantee. No one borrows at 11.9% who could borrow at 7%, and strong corporations borrow at 7%, not 11.9%. So the banks or commercial paper market have turned them down (or they’re idiots, which is not a strong recommendation, either). I would steer clear unless you knew this deal inside out, and could explain convincingly why it ISN’T too good to be true. # Thanks for clicking here, as many of you have, to go to PlanetRx and get three free products of your choice. (There’s $3.95 shipping.) As you know, if enough people click here, I might actually be one of four Grand Prize Winners who get 25,000 frequent flier miles. In the meantime, I’ve gotten a lot of free itchy-spray, toothpaste, and contact-lens solution. Thanks!