Giving financial advice

[robots]

hello,

no worries,

nothing wrong with some more though, what % of portfolio in RE

if you look at the turmoil, with her down 250k and 40k for the privalege i wouldnt put a line through sensible residential real estate

and her own home maybe a place to start

as Beej describes it " a resilient beast"

thankyou
associate professor robots

 

[Largesse]

Of total wealth, property would be about 80%. 1 Commercial and 1 residential (not including PPOR).
She refuses to borrow now though, says she has 'passed that stage'.
Should have seen her reaction when I suggested we open an margin account!

 

[robots]

hello,

could buy another with cash, upgrade PPOR, down size and get another with tip in from cash

plenty of options there

thankyou
associate professor robots

 

[ROE]

thankfully my family isn't like that.
also thankfully, i have no assets in my name.

One thing I know is when it comes to money you better not share, advice or
go into business together

**** will happen down the track and when money involve, it will tear up the family.

I seen it happen countless time and I learn the lesson from other people mistake and stay away.

 

[Trembling Hand]

Should have seen her reaction when I suggested we open an margin account!

Largesse are you mad??

What kind of record do you have for doing this over a long term? like 5 years and many many round trips?

 

[Julia]

Of total wealth, property would be about 80%. 1 Commercial and 1 residential (not including PPOR).
She refuses to borrow now though, says she has 'passed that stage'.
Should have seen her reaction when I suggested we open an margin account!

Good Lord, Largesse, sounds as though she's well off and if she's into the pension phase, not exactly young any more.

Why on earth would you be wanting to expose her to the risk of margin loan when she has more than enough to live on now???

 

[Largesse]

Good Lord, Largesse, sounds as though she's well off and if she's into the pension phase, not exactly young any more.

Why on earth would you be wanting to expose her to the risk of margin loan when she has more than enough to live on now???

Having the facility there does not necessisarily mean it will be used. I see it as just another investment tool, which I felt we should have access to it should a situation arise where it would be could be used responsibly.

 

[Temjin]

I feel compelled to reply to this thread because it sounds almost like a disaster waiting to happen.

First of all, I totally understand your good intention to better improve your family's standard of living, but just intention alone does not necessary mean you may produce the result you want to see.

As you have said, you have "NO ASSETS" to show for. That's a sign of a total lack of experience in the investment world. So how do you expect yourself to provide the "advise" that your family really needs?

In fact, talking about needs, have you found out what they really want?

Are they satisfied with what they have now? What are their risk profile? What is their investment timeframe? These are all basic Financial Planning questions that you should ask prior to prepare any sort of investment plans for clients.

I haven't fully decided what im going to do for her (ahem, what she is going to do with her own money *cough*)
Luckily for her, she is well into pension drawing age, and this money doesn't represent her entire wealth, so the pressure to preserve capital at all costs isn't as strong, although it will be a major influence in my decision making. She does however need to draw some income from the fund.

No, that's only your assumption. Anyone who is well into their pension age would, by standard anyway, be looking to preserve their retirement account capital as much as possible. Making huge amount of capital growth is not on top of their priority.

Naturally, i'll be running some standard portfolio modelling to ensure the quant side of me is as happy as the qualitative side is.

And what sort of portfolio modelling are you looking to do?

Monte Carlo simulation of all "assets" that you are looking to invest and then let it determine what kind of allocation produce the best sharpe ratio (or whatever reward/risk ratio)??? This a very dangerous exercise if you do not know the underlying fundamentals of the modelling. Past performance is no indicator of future performance.

Nothing will be done until I am licensed (RG 146) or before July 1 so plenty of time to think more about it.

Having RG146 will no where near enough for you to start giving out financial advises, especially investment planning. You should invest with your own money for a few years first.

Re: ETF's, Index Funds: Not a fan. I think with buying a 'wrap up/all in" package you end up picking up the tab for the stocks that underperform with in the index. Obviously you can't go through the Index fund and go 'well, XYZ is doing rubbish, give them the flick'. You can match the market yourself pretty easily, assuming you have a bit of time to do the research. Even easier given the weightings of the biggest 10 XAO/XJO components.

Anyway enough from me

It sounds like you believe you can beat the market by trading your family's portfolio through fundamental analysis. To do so, you need to develop an edge with your trading strategy. What is your plan? Risk management in place? Have you actually traded it the strategy before? Back tested it? ETc, etc, etc. You are assuming you can do a better job than alot of the "money managers" out there. (which in my opinion, most do a crap job at trying to beat the market)

As for your ETFs, you should not simply dismiss them just like that. They are, in my opinon, one of the greatest financial innovation in recent times that seperates it from other "evil" ones that was partially responsible for causing this GFC. (i.e. securitisation)

Spend more time on the sort of opportunities you can do with ETFs first. You can practically invest in anything with those if you know where you are looking for. I prefer them over standard managed funds with the exception of managed futures / funds of hedge funds.

I'm sorry if I sound harsh here, but you are placing too much confidence in your ability to "help" your family. It's not as easy as you might think.

I would STRONGLY RECOMMEND YOU to avoid giving any kind of advise to your family at this time. Spend at least a few more years to invest with your own money. Experiences are far more important than theories and good intention.

Cheers

 

[nunthewiser]

yep ..........

just what the world needs

yet another bright eyed uni student with NO actual live based financial experience showing people what to do with actual real money

god help us all


no offence intended but geez i been reading school edumaceted opinons for years that are great on paper but useless as tiits on a bull when it comes to the real world and the financial wizardry games that ACTUALLY happen

have a nice day

 

[Krusty the Klown]

Nothing will be done until I am licensed (RG 146) or before July 1 so plenty of time to think more about it.

Bear in mind with RG146, that if you pass the course you become "RG146 compliant", it does not mean you have a financial services license.

You can receive remuneration for giving advice only if you are working as an Authorised Represenative of a licensee. Gaining a license is costly and very complicated, for example you must have public indemnity insurance in place to comply. And think about how much those premiums are now. It is rare for an adviser to have their own license.

RG146 really only teaches you about the laws and regulations involved in giving advice, most of the advice you can give is determined by the licensee, and if you give advice outside of what they say you can, it could be costly for them and you.

 

[Largesse]

Bear in mind with RG146, that if you pass the course you become "RG146 compliant", it does not mean you have a financial services license.

You can receive remuneration for giving advice only if you are working as an Authorised Represenative of a licensee. Gaining a license is costly and very complicated, for example you must have public indemnity insurance in place to comply. And think about how much those premiums are now. It is rare for an adviser to have their own license.

RG146 really only teaches you about the laws and regulations involved in giving advice, most of the advice you can give is determined by the licensee, and if you give advice outside of what they say you can, it could be costly for them and you.

Surely this is only applicable to giving advice to the public though...
I'm giving advice to my grandmother for crying out loud...

 

[Trembling Hand]

Largesse are you mad??

What kind of record do you have for doing this over a long term? like 5 years and many many round trips?

Bump??

Care to comment Largesse?

 

[Largesse]

Bump??

Care to comment Largesse?

less than 5 years.
less experience than you.

 

[Trembling Hand]

less than 5 years.
less experience than you.

Come on how much? How have you gone so far?

 

[Krusty the Klown]

Regardless of who receives the advice, if you get paid for advice, you have to be licensed.

Even if it is your grandmother, if you seek and receive payment for advice, and you are not working under a license, the law has been broken.

If you do help her out with advice don't accept a fee, maybe she could just give you a cash gift for your birthday?????

 

[Largesse]

Come on how much? How have you gone so far?

2 years.

Up 40% since inception on personal folio of less than 30k.

Total trades made: less than 100.


I get the point you are trying to make.

 

[investorpaul]

To be honest this sounds like a recipe for disaster.

Although they have said "i wont be annoyed at you if i lose money" just wait until they really are down on their inital investment. Losing money has a strange way of affecting people, you dont know how they will act or what they will do until its too late.

If you still want to give advice, I would not handle the transactions for her, distance yourself as much as possible and get her to instruct her broker/real estate agent/account/etc.

In my opinion there is no problem giving general advice i.e. like you can diversify your investments by buying blue chip stocks such as .......

but let them make the final decision.

Edit: Another thing to consider is any family members who one day will get the inheritance, they may not like you playing round/having access to her accounts (family members can get jealous) and if money was lost they would view that as money you lost them not her.

 

[beamstas]

Going from backyard cricket to playing for the Aussie Cricket team

It ain't gonna happen

 

[awg]

To be honest this sounds like a recipe for disaster.


Edit: Another thing to consider is any family members who one day will get the inheritance, they may not like you playing round/having access to her accounts (family members can get jealous) and if money was lost they would view that as money you lost them not her.

Important point, seen it happen.

I have been in the position several times, family members, or friends, wanted financial advice, but I decline, other than to answer any question they ask me, ( and I always tell them they need to seek independant advice), it is not legal to charge money, i would not charge my granny even if it was.

I say to you finally, that some remarks you made on another thread, indicate to me that you should not do what you are considering, sorry, no offense intended.

 

[Gerkin]

best thing you could do would be to accompany her to an independent, hourly fee based planner. This way she wont get ripped off, and two you are getting your face into an industry your interested in.