Steve Sjuggerud is teasing us with something genuinely compelling as he urges us to subscribe to his True Wealth newsletter: investments that NEVER go down.

Really?

Yep, his pitch is that he has three kinds of investments that, if taken together, can be considered to be a “mutual fund” that never goes down. They’re not actually a mutual fund, of course, that would be too easy — but apparently they provide some sort of diversification and, most importantly, they protect against loss of principal.

Anyone who has lived through the last four years in the stock market will instantly light up a little bit at that “never goes down” part — which is, of course, why the copywriter put that in the headline. And then followed up with this jabber that makes it seem even better:

“There are no fees… no marketing department… and no salesmen or brokers.

“But the three assets that make up this unique “fund” have beaten the stock market by as much as 165% over the past decade, and are among the only investments in the world that are guaranteed to never go down….

“What I discovered over the past few years is incredible—3 assets with great upside potential, which come with a contractual guarantee that they will never lose a penny in value.

“You can buy just one of these investments… or you can buy all three, and you will own what is essentially a “mutual fund” that can NEVER go down.

“What’s remarkable about this situation to me is that you are very unlikely to see any of these opportunities advertised to the general public.

“And of course, this ‘fund’ is not listed on any stock market—nor are any of the assets it contains. There’s no prospectus report. There’s basically no advertising or marketing.

“In fact, this is something you are unlikely to hear about or read about anywhere else, as far as I know.”

So what is he really talking about?

Well, he teases three investments that “never go down” — the first one he calls the “Royal Currency” and implies that Warren Buffett and Bill Gross personally use it in their own accounts. It apparently goes back almost 200 years to Great Britain, and involves some sort of government guarantee.

Here’s an excerpt of the clues for that one:

“On a research trip to London a few years back, I found a government-issued asset that has been secretly used by some of the wealthiest families in American history (like the DuPonts, Roosevelts, and Lillys), to safely build and protect wealth….

“This asset has nothing to with stocks, bonds, gold, silver, coins, commodities or any other investment asset you’ve likely heard of before. Over the past decade, I have seen it written about just once in the mainstream press, in an April 2010 edition of The Wall Street Journal.

“Some experts call this mysterious investment ‘The Royal Currency,’ because it was first issued by the Royal British Government almost 200 years ago, and has actually been used as money in many places around the world.

“But this unique investment, as it is used today, is not an actual currency. And while the British were the first to issue the Royal Currency, today almost every government in the world has its own profitable version.”

And apparently the returns have been dramatic, particularly during times of inflation:

“In fact, during the 1970s, many Royal Currency investments went up by as much as 1,000%. I’m sure I don’t have to tell you that with all the money printing our government has been doing, we’re very likely to have very high inflation in the years to come.

And even in non-inflationary times, the government-created Royal Currency does extremely well. A different index created by a private firm shows that this unique investment has gained 209% since 1998.”

There is at least one little disconnect here — apparently there is the government-related “royal currency” out there, but the way to get it with the “never goes down” guarantee is privately sold …

“You can make an investment in the Royal Currency that is guaranteed to Never Go Down….

“I have located the best Royal Currency broker in the world. They have been in business since – get this – 1856. That’s more than 150 years….

… when you make a Royal Currency investment with this brokerage, you will receive a written contract that guarantees you cannot lose money over the next five years. In other words, the worst you can do is break even. I believe you could double your money, easily – you could possibly make 250% or more. Remember, during the 1970s, this investment went up about 1,000%. ”

Which, frankly, has the Thinkolator stumped — it’s been churning and smoking over there in the corner for a good half hour, and nothing definitive is leaking out into the results bin.

So we’re left to speculate — my guess? Well, I can’t give you promises of accuracy here like I usually try to do (I generally don’t reveal a stock as a teaser solution unless I’m 99% sure it’s a match — and more typically we’re 100% certain), but here’s what I think:

For the broker that’s been around since 1856, we have a couple choices but the logical guess is Credit-Suisse, which is the only big investment bank that I know of that was founded in that year. As to the investment? Again, I don’t really know on this one — but it sounds a lot like the various market-indexed certificates of deposit that are available. And there was an article in an April, 2010 issue of the Wall Street Journal that talked up these products, though they’ve also been covered in previous articles in that paper (they were pretty popular when the market was crashing and folks were looking for downside protection in 2008 and 2009).

Here’s that article on market-linked CDs from the April 5, 2010 WSJ. They’re not issued by governments, though they do carry FDIC insurance in most cases so they are government-related. Doesn’t really sound like a great match for the “royal currency” bit, but that’s the best I can do right now. And here’s a bit more about these types of CDs from an older WSJ article.

Essentially, market-indexed CDs give you downside protection by saying that (in every example I’ve seen) you will get your principal back, guaranteed and backed by FDIC insurance. In exchange, you have to lock your cash up for a set time period, usually at least two years and more commonly longer, and you will get some portion of the return on a set index — for example, you might get any upside returns from the S&P 500 for a given time period, but with the upside capped at, say, 12% per year, or you might get half of the upward move of the index for that time period — they’re all structured differently, which makes it tough to compare them. I know HSBC sells a fair number of these, as do other big banks like JP Morgan and smaller outfits like Everbank, but I don’t know about Credit-Suisse or others. It’s perfectly possible that what’s being teased here is some other structured guaranteed principal product from another investment bank, I can’t tell you for sure based on those clues.

So let’s move on to the other two parts of the “never goes down” investment “mutual fund,” shall we?

Here’s how Sjuggerud pitches this one:

“The second component in our “Mutual Fund” that never goes down is a unique asset Barron’s calls ‘The new way to retire…’

“In short, this asset is offered by some of the richest companies in the United States….

“I call it a ‘Guaranteed Stock Contract,’ because it essentially gives you the large potential gains of the stock market… and a guarantee that your money can NEVER drop in value.

“Plus, you are guaranteed to get paid a MINIMUM withdrawal on your investment of 4% to 7% per year… which can only go up… and NEVER down.

“Right now, for example, the #1 way to make this investment is through a private company in Lansing, Michigan, which offers these contracts to Americans who are retired or getting ready to retire soon.

“What’s nice is that you have the opportunity to make money when stocks go up… but you don’t lose a penny when stocks go down. Even better, when the stock market does go up, you can lock in those gains for the life of your contract.”

And we get some more quotes from the financial press to buttress Sjuggerud’s claims:

“Money Magazine says these stock market contracts, “will become the retirement investing rage.” And why the journal of Financial Planning said “they could be a magic bullet.”

“Fortune magazine actually called these unique investments, ‘the best place for retirement cash.’

“The point is, investment has an unlimited upside, and it comes with a written contract that it will NEVER go down. You certainly don’t want to put all your money here… but it makes a lot of sense to use these Guaranteed Contracts for part of your savings.”

You probably won’t be surprised to hear that these are … variable annuities. Though it sounds like he’s specifically recommending a variety that mixes variable and fixed aspects to some degree, some call it a Fixed Index Annuity, meaning that they use some index (like the S&P 500, or whatever) to boost the annuity’s returns, but they also provide whatever payout guarantee the annuity insurance contract promises.

I know almost nothing about annuities, other than the fact that they are a great tool for providing some backstop to retirement income and the fact that their confusing and convoluted nature means that some investors have been bilked for massive fees from the bad seeds in the industry.

There’s a good article on FINRA for folks who want to know what pitfalls to look for in annuity shopping here.

And I’ll bet that the folks Sjuggerud is talking about are Jackson Annuities — they are in Lansing, MI and they offer a variety of these kinds of annuities. I can’t vouch for them and I don’t know anything about them other than their HQ address, but they do explain their products in this category pretty well here.

And the third “never go down” investment?

Sjuggerud calls it “The only gold investment that’s been guaranteed to NEVER go down,” and teases it thusly:

“That’s why I thought you might be interested in a unique type of investment that was created by a popular, well-respected, and very safe American bank.

“In short, what this bank has done is allow you to put your money in a super-safe FDIC-insured certificate of deposit (CD), with large potential gains, and a contract that ensures you have ZERO downside risk.

“Now all of these CD contracts are a little different. Some of them have unlimited upside, and some don’t.

“Some tie your returns to one precious metal, like gold or silver. Others tie your returns to several precious metals, or even other assets like stocks or even foreign currencies.

“But the important thing to remember is that with each one of these deals, you get the potential for large gains, and the value of your investment is guaranteed (by the bank and the FDIC) to NEVER go down.”

Toss that into the Thinkolator, and I think we must here be being teased about Everbank’s MarketSafe CDs — of which there aren’t any available right this moment.

MarketSafe CDs from Everbank are FDIC insured CDs that guarantee the return of your principal (usually after five years), and boost that by tying the CD to some other asset — they’ve done all kinds of different ones, from gold bullion to Japanese REITs to the S&P 500, but the most recent ones have been based on diversified commodities. They offer these up at specific points and they have a fixed time return and carry a guarantee only if you hold them to maturity, so you can’t just start one up whenever you want, you have to wait until one is offered.

The most recent one they offered launched last August and provided upside based on the average return of five different metals over the next five years, with a cap of 50% for each metal (so if gold goes up 1,000% and copper, silver, etc. all go down by 15% each you would get no premium return, since the gold gain at a capped 50% is more than made up for by the combined losses of the others). You can work out those pluses and minuses yourself if they choose to offer this kind of CD again, Everbank has been the pioneer of this for small individual investors but there may also be other banks doing this for precious metals as well, I just don’t know them. You can get an idea of the terms in the sheet for that CD they started last August but, as I noted, they aren’t selling any today (their MarketSafe sales page is here if you want to browse around). I’ve used Everbank for some foreign currency CDs, but haven’t tried the MarketSafe stuff personally.

So as you probably guessed, there are ways to get guaranteed returns on your investment — or at least, to have your principal protected. They range from the typical stuff you already know like plain vanilla CDs to the complex structured products offered by big investment banks, with a vast range of different kinds of annuities and insurance contracts mixed in the middle. The risk of all of these is not so much that you will lose your principal (assuming the annuity is backed by a strong company, and that you choose a CD that is FDIC insured), but that you will lose a substantial portion of the potential upside in whatever investment it is you’re considering — a choice between risk and safety that every investor has to make on their own, preferably with the help of a financial advisor you trust who can run the possible scenarios with you.

I have never dabbled in annuities, don’t understand insurance accounting or contracts, and have never tied up my money in a CD for longer than a year, so I’m not an expert on much of this … but I’ll be that there are folks out there in the vast Gumshoe readership who know this stuff inside and out — if you’d like to opine, feel free to do so using the friendly little comment box below. Thanks!

Oh, and if you’re one of those folks who has to jump on things in a frenzy because your favorite newsletter writer writes it up as a hot recommendation — don’t! Most of these kinds of investment contracts require you to tie up your money for a considerable time, please think it over and know the terms before you choose one.