My inlaws, parents, and two of my friends want me to invest their monies for them in the stock market?

Question

the way I did it for myself the last 13 years and been successful at.

I am willing to do so, and i believe the best way to do it is to pool all the monies together, and thensplit the profits according to each one's proportionate contribution.
The question is how to do so, without having the tax burden fall in me, since i wil have only one account for everybody.
I do know that Hedge funds kinda do the same thing, except that I am not managing that much money all together (230K), and it would be ludicrous to go through the burden of recreating a model initially set for people with billions.

Also, I do not have a trading Licence of any sort, but daytrading has been my only source of income for the last 13 years, and i am doing pretty well...

Any solutions?

Answer 1

I think there's too much room for error here. If the investment goes bad, everyone will blame you and your family relationships will be miserable for the rest of your life.

Check if the family members could incorporate and invest as a corporation. There are also books about little old ladies who formed investment clubs and pooled their money. Something like this could be educational for these people rather than them relying on you to make the investments. The ladies would gather lots of information about companies and then vote to invest. Along the way, they learned alot too.

Answer 2

I know you are trying to do a good thing for family and friends, but my advice is to let them invest their own money.

You can provide them with recommendations and analysis reports to demonstrate why you think an investment will do well, but I would leave the actual decision to invest with them.

The reason I say this is because money and family/friends does not mix well, especially when a monetary loss is concerned. If a loss occurs, it will only create negative feelings as they will blame you for the loss, which you don't need or want in your relationships.

Even though you have done well for 13 years, and they want to duplicate your success using your investment picks, I would be apprehensive to invest the money of family and friends. If a firm invests their money, if they take a loss then they will blame the firm, not you.

The relationships you have are worth more than money. Don't let the potential loss of their savings ruin your relationships.

A quote from a biography of Warren Buffet is, "Warren never gave stock tips despite constant requests from friends and strangers alike".

Answer 3

You cannot have it both ways.

Either you setup several accounts and trade on several PCs at the same time (You may need to hire some employees) or you pay "your" taxes to save money.

For such a small amount I don't really think multiple accounts (And multiple comissions) is a good idea.

You could also ask your cousin Pedro from Mexico to open a brokerage account and invest all the money without taxes if you know what I mean.

Answer 4

I would separate the money and make sure their names were on each account. You could talk to the banker about your situation and have your name there for other than tax purposes I am sure. Your trying to make them money and it should be in their accounts at the end of the day. It's all family related so there should be a way of doing this without you getting hit with taxes. You also could talk to bookkeeper or accountant if the banker isn't sure the correct procedure.

Answer 5

I would just tell them what you are buying and selling but leave the decision to them. So you are not the blame for loss.