How much should I charge?

Lamont_C · Aug 8, 2006

There's a name for guys like you . . .

litigants.

hans37 · Aug 8, 2006

Quote from bl82:

Good advice above.

I would probably not do it. If I did, I would be sure that this is discretionary money this friend could afford to lose. If that's the case, 20% would be the norm; 10% might be a friends and family introductory rate...

LOL,you forget that discretionary money is at the discretion OF THE OWNER.

JimmyJam · Aug 9, 2006

Quote from JA_LDP:

Yeah, no kidding. Even with advice. About 6 months ago, my dad wanted me to help him out, so I did. I made him some money, but after being in the green, he refused to take my advice on exiting positions.

Yeah, the greed factor kicks in and they think it can just "keep going up" ... those emotions again.

It's a long story but I'll just say that we don't talk about the economy or markets at all anymore.

I seriously hope you guys don't let some minor little BS like this get in the way of your relationship ..., ain't enough money for that in the whole wide world.

Later,

JJ

JA_LDP · Aug 9, 2006

Quote from JimmyJam:

Yeah, the greed factor kicks in and they think it can just "keep going up" ... those emotions again.

That's exactly what happened. I would suggest he get rid of a few positions and he would ask me, "Why? Why don't I get rid of them when they start losing?" I tried to explain to him the need for a plan and that's it's ok to take profits and plus...the future didn't look good anyways but, he didn't listen. 3 weeks later he would call me up yelling like he used to do at his old broker. Yelling about why we didn't sell a month ago. This happened several times.

Quote from JimmyJam:

I seriously hope you guys don't let some minor little BS like this get in the way of your relationship ..., ain't enough money for that in the whole wide world.

There are far more/deeper problems that happened a long time ago that hurt our relationship. I appreciate your concern.

volente_00 · Aug 9, 2006

You are better off not getting into this situation. The BS is not worth the reward of managing OPM, especially friends. I did this a long time ago and people do not listen and still make irrational decisions even when they are not calling the shots.

5Pillars · Aug 9, 2006

40% of profits.....if your system has a proven track record of a minimum of 6 months.

In your case I would not touch his money....there is very minimal potential gain for you....just hassles.

GTS · Aug 9, 2006

Quote from Epiphany:

I am currently managing $5000 for 3 friends. I charge them no expenses and guarantee their initial investment.

I let them know that after I double their money twice, we can talk about charging a fee, they had no problem with that arrangement.

Can I be your friend?

thecalip · Aug 9, 2006

Quote from comp652:

A friend is going to let me have little bit of money to invest for him on the stock market.
We decided that if I make money I should get a percentage of the total profit and that if I don't make money I won't get anything.
My question is how much do people usually charge for this?
This whole thing is very un-official and is just between the two of us. So there are no major contracts involved.
Weâre good friends and the money is little.
This is more a joke than some major serious thing.

Thanks

Comp

How is it different than someone come over to me and say, I will give you tips on XYZ, if you make money on it, I want a cut. If you lose, it's not my responsibility.

lindq · Aug 9, 2006

Quote from JA_LDP:

That's exactly what happened. I would suggest he get rid of a few positions and he would ask me, "Why? Why don't I get rid of them when they start losing?"

Brings back memories and again underscores the hassles involved with OPM, and without solid contracts.

I was trading 1.5 million for a "friend". After 6 months, I had him up 16%, with a flat S&P.

Then he gets involved in looking at his trades each day. Bad news. Always happens.

He called one morning upset wiith me that I had sold one of his stocks at a loss. (It was down .25 and not going anywhere.) He couldn't figure out why anything should be sold at a loss.

That was the last trade I made in his account.

There are two bad things that can happen when trading for friends. (1) You make money, (2) You lose money.

Epiphany · Aug 9, 2006

Quote from Epiphany:

I am currently managing $5000 for 3 friends. I charge them no expenses and guarantee their initial investment. I let them know that after I double their money twice, we can talk about charging a fee, they had no problem with that arrangement.

Quote from GTS:

Can I be your friend?

Haha, funny this came up. One of the 3 friends wanted me to invest money for his roommate. But I turned the offer down as I did not know the roommate.

I am not sure why previous posters are so against managing money for good friends: I chose to only manage money for friends (and not random clients) because I get a higher sense of satisfaction making money for people I care about.

When you invest for friends, they have faith in you. I lost a large chunk of profits and they did not even bat an eye, and now I have recovered.

Others pointed out that if you lose their money, the friendship might sour. Well, that is easily solved, just guarantee their initial investment. That is what I did, and now that I have made money for them, they calmly accept any drawdown from the equity peak as just playing with house money: they are still up net-net.