38: Should You Trade Other Peoples Money?
Ok so I got a question today from one of our Thinktank members that I thought was a really good question for those that are already profitable traders. The question was on whether or not they should take money from friends and family to trade. Kind of like a friends and family fund.
I didn’t answer the question right away, instead I thought about it for a while before answering it Because I have quite a bit of experience with it.
And here is why.
I’m going to be really honest with you here and talk about something that happened to me a while ago. A long time ago I took money from a very good friend of mine in order to trade for them. But due to having to travel a lot and doing so many other things, I was not able to keep an eye on the account and literally lost everything over a period of time.
It was horrible. I now had to tell one of my best friends that I lost all of their money. After a bit, I gathered up my nerves and finally told them. But I was not expecting what happened. I was met with so much anger. I expected them to be mad, but not like this.
I received emails and threats that they were going to sue me and that I was pretty much the most horrible person in the world type stuff. I did not expect this from this person. I mean, they were one of my best friends after all.
I came to them with my head down, tail between my legs and was honest with what happened. I even told them that I would do everything I could to pay them back, but was met with an attitude I had never seen from this person.
Needless to say, they unfortunately are not my friend anymore. They won’t talk to me anymore, and I am not sure if I want to talk to them anymore either. For someone to treat me like that simply over money is not cool with me. I mean, this was not their life savings and they didn’t need this money to live off of. It was a very small amount of money. And they gave it to me to trade for them knowing full well that, like any investment could be lost to the market.
And even after me saying to them that I would pay them back out of my own pocket, didn’t help the situation.
Uggghh, I still don’t know what to think about it all honestly.
I am sorry that I had so many other things going on at that time that I lost their money. And I hate not having my friend in my life. We used to talk for hours every single day.
But moving on from this, my recommendation to you is this. If you can afford to loose a good friend or family member, then go ahead and take their money to trade.
Now I am not a licensed investment advisor or an attorney. I am not giving you legal advice here. Just talking about choices. Opening up a discussion on the topic on should we take others money.
If you are a really good trader and you decide to be a hedge fund manager or something along those lines and you want to take other peoples money and trade with it, that is fine. Do it if that is what you want to do.
But be very cautious whos money you take. I now have a rule that I will never take money from a friend. No matter how much money they have, no matter whatever, I will not do it. I don’t want to loose any more friends.
So I guess I am just telling you to be careful.
Now after I told them the story they asked:
Do I take other peoples money now?
Now -a-days, since trading is my only real job, I will manage money for others. But I will only take money from accredited investors who are not long time personal friends of mine. Our relationship is business based. Not personal. And now-a-days, I am so much better at my trading and money management than I was back then, there is no way I am going to loose someones money now. And I haven’t since then either.
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