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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Principal Protected Fund

Definition:

Nothing in life is guaranteed except death and taxes, right?

Well, a principal-protected fund can be added to that list—sort of.

This fund guarantees that you will at least get back your initial investment. So if you invest $10,000 and the investment goes to crap, you'll still get back $10G. You won't lose money.

Sounds great, but be sure to read the fine print. To qualify, you have to hold onto the fund for some time. There might be other loopholes, too. Since these funds make big promises, they tend to net smaller returns. You might not lose much but you won't gain much, either, and, uh, isn't that kind of the reason for investing in the first place?