I am wanting to know if I could start a business that offers an
investment instrument for clients that has a guaranteed return, like a
certificate of deposit for example, but can legally have use of those
funds prior to their maturity date, to invest them in the equities
market to theoretically realize a greater return over and above the
promised return to the client gearing toward profitability of the
company itself.

I am not interested in starting a bank per say that offers a
certificate of deposit, because the only way to offer an FDIC insured
bank certificate of deposit is to obviously comply to their
regulations; including the regulation stating that investing the
certificate of deposit funds in the equities market is not a
permissable activity.

I realize that the company may have to base their headquarters in
another country or work another creative angle comparable to that. 
Therefore, I am open to pretty much any avenue in achieving this
concept.

I am also thinking some type of insurance company offering an
insurance product may be the avenue of achieving this concept; hence
what the FDIC is, an insurance for certificate of deposits, with
governmental regulations.

Furthermore, I am not interested in hearing you can take the
certificate of deposit funds, and as a bank or any other comparable
entity and invest them in real estate development or community
enhancement because I am already aware of that.  I do not want to
invest the funds prior to maturity date in the real estate market, as
stated above, I want to invest them in the equities market.

I'm a bit hazzy about most of your details, but regulators are
suspicious of guarentees of safety as your assets could disapear,
causing you to default on your guarentee. Investors are suspicious of
out of country deals as some of them are frauds.
 A good test of your business plan is: can you find an insurance
company that is willing to underight your guarentee for small
preimiums?   Neil

Neil

Maybe I should not have used the phrase, "I want to start a business."
 Basically, I have a few family members that are wanting me to invest
their money, but offer a guarantee on their funds.  I have suggested a
traditionaly route through a banking institutions with certificate of
deposits, but they want me to take care of it personally.  Having said
that, I would have to find a way to guarantee a return and then my
small profit would only come if I went over and above the guarantee;
but more importantly I would have to make sure, as you stated, did not
miss that guarantee or I would be in big trouble, and with the markets
today that may be a relevant issue of consideration.

Furthermore, is there any chance that you are going to be able to find
this answer and/or what can I do to help us get this question answered
as soon as possible; you know family members, they are getting antsy.

Thank you for the reply.

Talk with you soon,

brandon

You might want to consider using your own money to guarantee a portion
of their investment. For example, they invest $100k through you. You
turn around and invest $90k in bonds that yield, say 6%, then offer
your family members 5% guaranteed return. You can use 1% of their
investment to cover anything that goes awry with the other $10k, which
you will invest in whatever equities you think are appropriate; extra
loss comes out of your pocket. Hopefully you realize a gain of at
least 5% (above transaction fees) on the remaining $10k. For example,
a 12% return on $10k gets you 12%-5%, or $700 + 1% of the other $90k
for a total of $1600.

I?m assuming practically zero risk on a low-yield bond. Your risk on
the $10k is hedged by the 1% gain on $90k plus any personal capital.
Hedging risk with options is a good idea too. But hedging downside
generally hedges upside as well. You?ll have to do some soul searching
to find out how risk averse you are (or aren?t.)

I hope this helps.

zeroaffinity-ga 

thank you for the advice, but i desire just a touch more.  how do i
make this legal, how would i draw up contractial agreements that would
offer that guarantee on their money; sure they can take my best
intentions and let that guide their decision, but how do i make it
official.  there again, poses the question is it legal to make it
official, is there an opportunity to offer this proof with some type
of assurance that if i fail they will keep their principal as well as
realize their guaranteed rate of return.

i need more information on the angle i would have to take, on the
process that would be involved, on the regulations that would interact
in the exploration of this concept.

look forward to your comments

brandon

>how do I make this legal, how would i draw up contractial agreements
that would offer that guarantee on their money;

Temper my remarks with the fact that I am not an attorney, but as long
as the contract isn?t unconscionable you can put anything in it that
you don?t mind being bound to. I would suggest including a scope and
purpose of your services and what you guarantee in terms of
deliverables. The part about ?how? you intend to provide a guarantee
is typically something that would go into a proposal of services, a
document that should accompany your contract.

You can draw up the contract yourself, use an attorney, or go to a web
site for free/inexpensive legal templates such as the following:
http://www.lawdepot.com/contracts/serviceagree/?&pid=ld-serviceagree_-consulting

If you are really concerned about personal liability (a wise concern)
then you should establish yourself as a corporate entity (C-Corp,
S-Corp, LLC, or similar) before entering into contracts with anyone.

>poses the question is it legal to make it official, is there an
opportunity to offer this proof with some type of assurance that if i
fail they will keep their principal as well as realize their
guaranteed rate of return.

A contract created by you and entered into by both parties (subject to
applicable contract law) is legal. Any attorney will tell you it?s
probably not advisable because of the holes that would possibly be
exploited by a clever counterparty, but legal nonetheless.

Your offer looks a lot like a zero coupon bond to me, so that?s how
I?ll phrase this, and can be as simple as: ?I guarantee a one-time
payment of $xxxx on maturity of Investment, with maturity date June 1,
200X, initial capital investment of $yyyy, and effective return rate
of x%.? Obviously, do whatever it takes to remove all ambiguity. Maybe
include annuity (or otherwise) calculations you feel are appropriate
to clarify your promises.

>i need more information on the angle i would have to take, on the
process that would be involved, on the regulations that would interact
in the exploration of this concept.

Okay, here are the ideal steps:
1) Figure out your investment strategy to make sure this is really
something you can afford to do ? I?m speaking in terms of risk.
2) Organize a company if you don?t already have one that shields you
from personal liability, yet affords you with optimal tax treatment.
An LLC is a good example of this. You?ll have to check to see if there
are any restrictions on types of business organization for investment
firms.
3) Create a mutually acceptable agreement that specifies everything
you intend to do, complete with financial and time scope, and how
exceptions will be dealt with.
4) Conduct your business. I suggest you find an accountant if you plan
on making any substantial income. You can get murdered on tax
treatments from poor planning of capital assets.

Hope this helps.