When is a guarantee not a guarantee? Almost always.
In this day and age of political correctness, most people are trying to be cautious with their vocabulary. They want to avoid words and phrases that some might find offensive or otherwise problematic.
Many people, including me, try to be understanding, but I recently came across a list of suggested words and phrases the author thought should be banned.
After reviewing the list I was flabbergasted. Perhaps it’s the origin of certain words. But I just can’t imagine why the word “picnic” would be on a list of words that should be banned. And how about “birthing person” instead of mother? Speaking only for myself, I don’t particularly want to be called a non-birthing person.
In the financial world, however, there are some words that I wouldn’t mind seeing banned.
I have an old t-shirt that says Callahan Auto Parts. It was from an old movie, Tommy Boy, starring the late Chris Farley. Tommy was trying to save his late father’s brake pad company. The competitor’s brake pads were inferior, but they came in a box that was emblazoned with the word guaranteed.
That’s the first word I think should be banned. Not that it’s offensive; it’s just inaccurate. In the financial world, guaranteed implies that you can’t lose your money. But you can. Granted, some bank deposits are guaranteed up to certain limits, but money left in the bank for extended periods of time loses some purchasing power.
Simply stated, if bank deposits earn minimal interest and costs increase at a greater rate, you’re losing. If you have a guarantee anywhere else, like an insurance company, the guarantee relies on the strength of the firm that’s offering the policy. The closest phrase I can think of to replace guaranteed is “comfort net.”
Another word I believe should be banned from the financial services industry is “always.” For years I’ve heard, and it’s widely believed, that real estate always goes up. Anyone who remembers the banking crisis and Great Recession knows better. Many people could not make their house payments and, for quite a while, housing prices actually decreased.
Real estate does generally appreciate, but to say it always does is just not accurate. Case in point: I have clients whose home values have depreciated because their location became less desirable over time.
Another example of the misuse of always is the suggestion in many financial publications over the years that you should never buy a new car. They stated that vehicles always depreciate the moment you drive them off the lot and that you can always buy a one- or two-year old vehicle for a much lower price.
I’ve seen many vehicles that old or even older that sell for more than their original purchase price. Used cars have been getting pretty expensive, and to say you can always save money by getting a slightly used one is definitely not accurate in this Covid economy.
So you see, always is not always right. Words such as frequently or historically might serve the purpose more accurately. But even then, maybe not always. Yes, I’m being a bit tongue in cheek here, but in the world of finances, you just never know what’s going to happen. That’s why you should diversify and expect the unexpected. Always.
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Ken is a registered representative of LPL Financial. Securities and financial planning offered through LPL, a Registered Investment Advisor, member FINRA/SIPC. Ken is Vice-President of the Society for Lifetime Planning in Troy. All opinions expressed are those of Ken Morris. LPL and Society for Lifetime Planning are independent companies. Investing involves risk including loss of principal. No strategy assures success or protects against loss.
