What possibilities does a private person has to merge his capital (mostly stocks) with 2-3 more different private persons? Apart from having lesser transaction costs, which advantages or disadvantages could we have?
You can form an investment club with other people.
Some of the benefits include:
Education
Sharing ideas
Spreading costs
Social interaction
Drawbacks:
Inexperienced members and poor results
Investment clubs tend not to be regulated by the SEC but in some cases they are
Disagreement on how to trade/invest
Difficulty withdrawing money if you want to leave the club
Loss of autonomy
Theft
answered Apr 23 '20 at 20:08
In the U.S., the LLC or partnership for investing must be a non-issuer company or else it would be subject to regulation as an investment company. But personnel running the LLC or partnership, or party to it, might be subject to broker/dealer regulation or to investment advisor regulation.
Now if the non-issuer company is claiming investing as its core operation then I suppose that it is not subject to capital-gain tax but to one of two methods of corporate income tax. Also, expenses could be charged against earnings.
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Then an investment club is a partnership, with investing as its core operation, that is obviously subject to capital-gain tax. So there are three different methods of taxation. – S Spring Apr 23 '20 at 21:01
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Oh, if a company with 100 or fewer beneficial owners is claiming to be a non-regulated investment company, then pass-through taxation would probably be required. Then an issuer C-corp is actually possible if with 100 or fewer shareholders and if electing pass-through taxation. – S Spring Apr 24 '20 at 21:21
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A hedge fund requires the 100 or fewer beneficial owners to be accredited investors. I suppose the difference is that the administration of the hedge fund are themselves not beneficial owners but are investment advisors. – S Spring Apr 24 '20 at 21:28
