# Managing private fund - license required?



## hooikk (10 July 2010)

Not sure where this question fits in the forums, but Investing Resources looks like a good start.

I'm thinking of helping a relative a fair sum of money that is sitting in the bank earning a rate of 1-2% p.a. in a TD (obviously not australia). Plan is to take a small cut of profits above a specific benchmark (e.g. 20% of all profits above 15% return on capital).

Benefit for me is that I get to trade using a larger capital base - Benefit for them is that their money works harder (ideally) and they don't have to do it themself (no interest in investing).

I'll be putting in my own capital as well (i.e. 20% or more of the "fund" will be my capital)

If I do set it up, it will probably be trading using a company/trust structure - no different from how I do my own trading.

Is anyone aware of any ASIC requirements/licensing issue before I can "manage" other people's money?


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## Julia (10 July 2010)

Hooik, I love the avatar.  Is that your dog?

I can't help you re regulatory requirements, but have you thought carefully about the possible damage to the relationship if you were to make some decisions that ultimately had an adverse outcome?

Is the relative still going to be happy to have handed over his/her funds for you to manage?   Is the potential financial gain to you worth the risk of damaging a personal relationship?

It's something I'd avoid under any circumstances.


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## wildkactus (12 July 2010)

Hooikk,
Make sure what ever arrangments you put in place are documented in writing with both parties signing them. List all points to the agreement, terms of trading, commisions to be earned, profit targets, etc,etc. this way both parties can see and have agreed to the terms.

It helps in the long run when some says i thought it was like this, then you can just pull out the paper and say no its like we agreed.

depending where you are based (you mentioned money was OS) look to set up OS as it maybe benefical to you both.

Happy Trading


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## tech/a (12 July 2010)

Yes. Absolutely.
Lets say you CURRENT friend loses 50% of his $$s
If he comes after you there is a good chance you'll do substantial time.

While your motives are admirable---your very foolish if you do take the "Risk"

Because your taking ALL the risk---believe it or not!

How much do you value your friendship?


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## CanOz (12 July 2010)

tech/a said:


> Yes. Absolutely.
> Lets say you CURRENT friend loses 50% of his $$s
> If he comes after you there is a good chance you'll do substantial time.
> 
> ...




Just my  but... I have three life rules when it comes to friends and family:

1.) don't live with them after you've left the roost.
2.) don't go into business with them.
3.) don't sleep with their partners.

Most of this applies to friends but relatives once removed would count in my book.

Cheers,


CanOz


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## pixel (12 July 2010)

Hear Hear!
Listen to what Julia and Tech/A and CanOz said. I can't emphasize their advice enough.

If you're indeed such a gun trader that you make guaranteed 15%+, why don't you trade for yourself on margin - within a year or two, you'll have your 400% growth and can trade for your own pocket, keeping ALL of those 15% or 20%, *times leverage!* 
And if that's too much for you to spend on your own - by all means support your poor Overseas rellies with the odd care parcel. (Or send some surplus to me: cat food is becoming increasingly pricey  )


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## hooikk (13 July 2010)

Thanks for the comments guys. I'll take it into consideration when I do more research.

Starting a fund is a personal goal of mine - I don't have any plans to take it public. Just a simple fund for people close to me. My dad has done something similar (not trading - but investments in his business), and I've raised a bit of capital among some of my friends for that as well. Nothing big, but I like the feeling of making money for my friends (we were paying up to 100% return on capital).

wildkactus: I'll definitely put everything in writing. Might eventually base my trading overseas - if it cuts down expenses and taxes.

julia: not my dog unfortunately - wish it was though. It should be one of the standard avatars on ASF


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## pixel (14 July 2010)

hooikk said:


> julia: not my dog unfortunately - wish it was though. It should be one of the standard avatars on ASF




That's just as well, hooikk: Golden Retrievers are very bad for you. Have you ever noticed how many of their owners have gone blind?  :

Now, with cats - that's a totally different matter: They keep you on your toes and fit as a fiddle.


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