Do you have a great money management systems that your friends are jealous of? If you do, you may have had your friends come to you and ask if you could make investments on their behalf. Hopefully you turned them down, because if you didn’t you could get into trouble and find yourself in need of a good lawyer.
Not only are there possible legal ramifications, but you could find yourself out of a friendship id your system doesn’t work out as well for them as it did for you. You also know how long it took to master the world of investments, and just because you’ve already been successful doesn’t mean your friend shouldn’t take their own baby steps to financial freedom.
The Law
You don’t really manage your own investments. You have a professional that you go through. Professionals that work with investments for a living need to be registered or may need to have a federal license, depending on where you live. These rules and the regulations that govern them help keep you protected. If you invest on their behalf you are putting yourself in control of their money which is likely an illegal move.
Your Friendship
Think of the ramifications if you were to lose your friend’s money. I could affect your friendship. They could expect you to pay them back out of pocket, since, after all you were the “expert.” Even if they don’t expect you to pay the money back, you may still feel guilty for losing their money. Even if you always get great returns, there are never any guarantees and is it really worth losing a friendship over?
What You Could Do
Just because it isn’t wise, and is likely illegal, to help your friend out by investing on their behalf, it doesn’t mean that you can’t do something to help them out. Instead of making a mistake with their money that you feel obligated to fix, give them some lessons and tips that can help them getting into investing on their own.
You can spend some time with your friend and teach them everything you know about investing. Start from the beginning, before you were getting such great returns. While what happens with one persons investments isn’t guaranteed to happen with the next persons that doesn’t mean your friend can’t benefit from your words of advice.
Share with them the pitfalls you’ve learned to avoid. Explain to them why it’s beneficial to get the help of a professional. Give them advice on online trading and show them the best sources you’ve found online. You can also teach them how to analyze their own financial statement. Your friend can take your advice and start their own investing venture without the chance of ruining your friendship.
