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138

Sorry if it seems to be nitpicking, but what does “family friend” mean? I have come to understand the spectrum of friendship to be; an acquaintance will send you an email congratulating you on your move. A friend will bring you a house-warming gift. A good friend will help you move. Your best friend will help you move a body. With all the questions that we ...


121

As a general rule of thumb, when lending anything to a friend or colleague, never lend more than you would be willing to give as a gift. If it gets repaid, that's great. If it doesn't, chalk it up to the cost of learning a lesson about this person's character, and never lend anything to them again. In Dave's case, your comments indicate that you still ...


114

In general, borrowing money to invest is a risky proposition for a very simple reason: investments can go down in value, while the loans you had to take to make the investment absolutely do not go down in price if the investment didn't work out. So you have a guaranteed cost, but never a guaranteed return. That said, there are a number of red flags here ...


63

If you didn't expressly discuss terms I would recommend a gift in lieu of interest. Lending between friends can be complicated and change relationships unexpectedly. Some people are offended by the idea of interest paid between friends. A gift acknowledges the benefit you've received, but doesn't monetize your friendship.


59

In poker, you do a thing called "counting outs". That is, you count the number of cards that are still in the deck that, if you draw one of them, you will have a winning hand. "There are four 4s that will give me a straight, there are nine hearts, including the 4 of hearts, that will give me a flush, so there are 12 'outs' of the 47 cards lefts." In life, ...


52

I assume the goal here is for both he and you to feel some progress is being made toward repaying the loan, even if in practice very little is done towards achieving the final goal of total repayment. Realistically, you may need to write this off as uncollectible, depending on your actual relationship with Dave. Half his salary (let's assume his girlfriend ...


12

Think about it for a minute. There is no such thing as a guaranteed 25% return on a legit investment. Besides, it's actually 12 1/2% with you two splitting. And why does this savvy accountant have a crummy credit rating? The only thing guaranteed here, and it's 100% guaranteed, is that $7000 is going out the door, plus interest. What do you suppose the ...


12

When you agree to co-sign a loan, you are agreeing to make any payments that the borrower fails to make. And you do not get any claim against the money borrowed or anything bought with it. That's how co-signing works. So whether co-signer or borrower, you agreed to make any payments she failed to make, and you agreed that the bed would be hers.


10

No. You agreed to cosign for the loan, which means you are fully responsible for the loan. But it does not (generally) give you a right to the bed. Note that you seem to misunderstand what "co-signing" is. Co-signing a loan always means you are responsible for the loan. Essentially, the loan company thought your friend wasn't sufficiently financially ...


10

What kind of interest did the two of you agree upon when you borrowed the money? If you didn't discuss this in advance, what kind of interest do the two of you now agree would be fair? If your friend is now insisting that interest isn't needed, but you feel you owe something, you will have to decide for yourself what kind of gift would appropriately ...


8

I used to help large banks set up arbitrage centers to help them make "free money" based on timeliness and technical advantages. Your story though makes no sense. This might have been a thing 20 years ago, maybe even 10. But now this is so common that when companies do have arbitrage situations (less do to extreme tech competition in the financial ...


6

Pool their money into my own brokerage account and simply split the gains/losses proportional to the amount of money that we've each contributed to the account. I'm wary of this approach due to the tax implications and perhaps other legal issues so I'd appreciate community insight here. You're right to be wary. You might run into gift tax issues, as ...


6

He says there is minimal risk and that the returns are guaranteed to be 25%. Walk away. Should I take out a loan and give it to my friend to invest on my behalf? No, you shouldn't. Since it sounds like you are going to do this anyway, here's some advice that might help mitigate the damage... At a minimum: Make sure you know the rate of return....


6

So, I am in the situation of having a friend who can’t return the money now, he and his girlfriend ask me for patience, and I don’t see any plan from them to return the money. I would just let it go and write it off. Dave can't pay you back or he would have addressed it already The fact that you can't cite a reason for the loan (i.e. Dave broke his leg ...


5

At best you are being told half the story, and he's hiding the bits you aren't supposed to discover till after you have been stung. The return on this "investment" is supposedly guaranteed to be 25%. How long does it take for that to materialize? A typical "low-grade-employee share purchase scheme" in the UK says you can lock into a discounted purchase ...


5

The answers here are way too kind. The "family friend" is a con artist. Anyone offering "guaranteed 25% returns" on an "investment" that puts the person they're asking in a risky financial position is a con artist. Don't just decline to take out the loan and participate in the scheme. Cut this person out of your life.


5

Keep in mind that even if you were a co-signer as you believed, the loan would still be your responsibility and the bed would be her property. I think the only way you could take the bed would be if you had made a loan to her with the bed as collateral, or otherwise had a contract that you could take the bed if she didn't pay. Effectively, you made a gift ...


5

The standard approach is to reach an agreement and put it in writing. What you agree upon is up to you, but in the US if you want to avoid gift taxes larger loans need to be properly documented and must charge at least a certain minimal interest rate. (Or at least you must declare and be taxed upon that minimal income even if you don't actually charge it. ...


5

Sounds like you are starting an investment club. What you need is an investment club partnership agreement. Have a look at this free document. EDIT Based on OP's comments, it appears that the OP will be acting as an adviser/manager of a private investment fund. If the fund is not open to the public, it may still be treated as a type of investment club, ...


5

how many transactions per year do you intend? Mixing the funds is an issue for the reasons stated. But. I have a similar situation managing money for others, and the solution was a power of attorney. When I sign into my brokerage account, I see these other accounts and can trade them, but the owners get their own tax reporting.


3

There's a sizable community of people and fiscal advisers who advocate not managing the money at all. Set your passive investor friend with automatic bank draft into a simple three/four fund portfolio of low cost index funds and never never ever trade. See https://www.bogleheads.org/RecommendedReading.php You might be able to beat the stock market for a ...


3

You have to register with the SEC as an Investment Company. The SEC has a "Investment Company Regulation and Registration Package", available here: http://www.sec.gov/divisions/investment/invcoreg121504.htm I found that off their overall page for funds and advisors: http://www.sec.gov/divisions/investment.shtml Finally, bear in mind that your state may ...


3

Taking a loan on someone's behalf puts you in a situation which is very similar to cosigning for a loan. Technically, it's even worse because in your case you alone are on the hook for the payments, but since your friend's credit score is already trashed, there's no practical difference. Pretty much all the arguments against cosigning also apply to your ...


3

As you say, Dave makes €1000/week. Best case, his plan of €500/week only leaves 50% of his income. If that is pre-tax then it's an even greater percentage. From this and all the other things going on in his life it's clear that was going to be very difficult for him to follow through with. However, the fact that he came up with this plan (even though he ...


2

You certainly can do this. What you do is make this an official loan, with him signing a note, with a promised return of 25% at the end of one year in a balloon payment. Of course, 25% may well be considered usury, so you need to check this out. And this, of course, raises a very interesting question: why hasn't he simply take out a loan? Interest rates ...


2

As others have said, the short answer is probably "no". What contracts do you have with your friend and with the loan company? Loaning somebody money, or agreeing to pay somebody else's loan, doesn't of itself give you any right to any property. There has to be a contract specifically giving you such rights. The whole point of a contract is that it spells ...


2

No. You've taken an obligation to repay the loan if your friend fails to do so, what's not clear is what kind of agreement is between you and your friend. In any case, unless you have it in writing (or had a verbal agreement in front of witnesses), it's not enforceable. Even if you could take possession of the bed (I assume you don't have access to your ...


2

Should is a very "strong" word. You do what makes most sense to you. Should I be making a single account for Person and crediting / debiting that account? You can do that. Should I be creating a loan for Person? And if so, would I make a new loan each month or would I keep all of the loans in one account? You can create a loan account (your asset), ...


2

I could be wrong about this, but I don't believe you have any legal recourse in the UK to get your money back. I believe this would be called a 'social debt' and legally is secured only on the borrower's good name and word if nothing was signed.


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