Please help! How to setup friends accounts?

P

Predictor

Hello. I've been trading for a while. Some of my friends and relatives want me to manage their money. It's not a lot, between $250 - $500k. I don't know how to setup this up in terms of accounts. Should I have one account per
individual, and put in trades in every account separately. Should I pool the money together? What are the costs associated with having all assets in one account and what name will be on the account? Should it be like a hedge fund? Eventhough
the assets will be quite low. Will hedge fund be cost effective? Do I need to have accountants audit my performance if it will be one account? I would appreciate your help. Thank you.
 
Quote from Predictor:

Hello. I've been trading for a while. Some of my friends and relatives want me to manage their money. It's not a lot, between $250 - $500k. I don't know how to setup this up in terms of accounts. Should I have one account per
individual, and put in trades in every account separately. Should I pool the money together? What are the costs associated with having all assets in one account and what name will be on the account? Should it be like a hedge fund? Eventhough
the assets will be quite low. Will hedge fund be cost effective? Do I need to have accountants audit my performance if it will be one account? I would appreciate your help. Thank you.
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Don't do it!! There's nothing like money to lose you friends and alienate your family. What's it going to be like at your family Christmas/Thanksgiving/whatever dinner when you're in a 20% drawdown?
 
Quote from mmillar:

Don't do it!! There's nothing like money to lose you friends and alienate your family. What's it going to be like at your family Christmas/Thanksgiving/whatever dinner when you're in a 20% drawdown?
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It makes me wonder, what would it be like if your refused their money and you were up 30-40%. lol. Lets just say the holidays wont be that fun either. Lose-lose situation. Nobody wins.
 
Quote from xbrxx:

It makes me wonder, what would it be like if your refused their money and you were up 30-40%. lol. Lets just say the holidays wont be that fun either. Lose-lose situation. Nobody wins.
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That's easy. You keep your mouth shut or say 'the market
is difficult at the moment'. :)

LOSE-LOSE. Totally agree. Don't try and manage money for anyone else - especially friends and family.
 
Quote from xbrxx:

It makes me wonder, what would it be like if your refused their money and you were up 30-40%. lol. Lets just say the holidays wont be that fun either. Lose-lose situation. Nobody wins.
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Good point. I've never had any good experiences mixing family and money.

I guess the thing to consider is whether or not the family members who want you to manage money for them TRULY, and I mean TRULY understand that they are putting up risk capital with you...not $$ needed for Jenny's college fund or anything else. Nothing less than the true understanding of Risk Capital will do.

Also, what if you do make them, say 50% or more, in a year? They may come to expect you to do this year after year, and that will set a dangerously high bar for you.
 
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