Paying a friend to manage my money?
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Thread: Paying a friend to manage my money?

  1. #1
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    Paying a friend to manage my money?

    I have a friend and coworker who's been experimenting with the stock market for the last couple years. He's doing this while paying mortgage on a house with 5% down. I have a condo that's about 30% paid off, with auto-doubled mortgage payments.

    He projected a 700% annual increase on his $5000 investment last year based on his performance for the first 3 months, but "only" ended up making 350%. He thinks this year will be worse, like 100-200%. I like these massive numbers, but have no interest in getting involved in the details. I once jokingly asked him if I can pay him to manage my money and he laughed it off. At lunch today, subject came up and I dangled the offer again. We started semi-joking about his percentage cut from my gains, etc. Of course, I know nothing, so I gave what he called a very generous offer:

    I give him access to my TSFA somehow, and he'll make the exact same trades with my money as he does with his
    10% guaranteed return by end of 1 year
    he keeps 1/3 of all gains beyond 10%

    Technically he can only do it legally for free, but I'm sure there are ways to distance his earnings from his work through the way a contract is structured?

    Last edited by gentlepuppies; 2017-01-09 at 11:28 PM.

  2. #2
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    What is it they say, a fool and his money are soon parted?
    Surely you know this is not a good idea.

    You are being reeled in by the lure of getting rich quick. I'm not saying they are scamming you but anyone telling you they only made 350% not the 700% they expected is effectively a snake oil braggard who got lucky gambling. And there is no way in good conscience that they can even guarantee you 10%.

    If you consider this person a friend, I would not mix your friendship with their get-rich quick scheme. If things go sideways, all the contracts, guarantees and assurances will not be enough to ensure you ever see your money again.
    Last edited by OnlyMyOpinion; 2017-01-09 at 11:57 PM.

  3. #3
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    Obviously I'm taking his claims with a grain of salt, hence I'm more interested in advice on how to make an iron-clad contract. Oh and whether there are legal loopholes to make this work in the first place.

  4. #4
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    I can do that at the casino occasionally but never on the stock markets and certainly not long term lol

  5. #5
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    I can do that at the casino occasionally
    Exactly what I wanted tp say

  6. #6
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    OP this is not something I would recommend.
    Two main reasons.

    1. Your friend may have been able to get these so called returns by taking very risky positions which might make your stomach churn.
    2. lets say he takes a risky position and boom your funds are wiped out - what do you do there? if this is your friend how does he come to you and say hey i lost your money?

    As others have stated in the thread, you are better off gambling that way you have some control.

    Also, anyone can claim %% of return. Ask him to show you exactly what he did so you can understand what the risks are.

  7. #7
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    1. how a bout doing a virtual " practice run" for say 6 months or so... see how you would've made out...?OR..
    2. turn your $$$ over to ME! I'll do it for only 5%! ... OR
    3. dig in to some of the very sage advice here on the forum for a while & do-it-yourself !
    (I'd go for #3)

  8. #8
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    Just forgetting about the risk thing (depending on your situation, maybe you are willing to "let it ride" if you are only using your TFSA for this endeavor) the biggest hurdle I see is that he can't legally manage your investments for money.
    The "iron clad contract" your looking for simply won't be possible.

    Would he ever get in trouble for managing such a small amount for one person? It might be unlikely, but I'm sure you would feel bad if he got slapped with a fine/penalties from IIROC or another regulatory body.

  9. #9
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    If your friend is this talented of a trader, you could encourage him to start a subscription blog or newsletter where he posts his trades and tell him you'll be his first customer.

  10. #10
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    Which is more valuable to you; your money or your friendship? If you go ahead with this, chances are you'll lose both. I am just wondering which one you'd be more upset about.


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