|
|
| *Ostroff, Fair and Company>>>Investing |
Open an investment company - How to take the profits -? |
Hypothetical question If one person, like a daily trader can make about 5% profit a month in buying and selling many stocks, decides to open an investment office, wich people would deposit money in his company and he would buy and sell stocks under his business. Let's say he has 10 clients who deposited $100,000.00 in total, and he made 5% profit in one month. It is legal for him instead of earning comission or other fees from customers, get, let's say about 3% of the profits and give the remaining 2% for the clients? I have limited knowlegde on trading and SEC rules but in general business, if I ask you to invest $100000 in me and promise you in some type of contract that I will take 60% (that's what your 3% amounts to) of the profit and you take the remaining 40% that your money will make, there is nothing illegal about that. The 'contract' mentioned above would be some type of prospectus explaing the risk and so forth. You should contact the SEC to find out how to do that. Structured correctly, there is no reason this wouldn't be "legal", but where would you find any clients? There just aren't very many people with $100K in investable assets that are dumb enough to put it at risk for a 2% monthly return! Current 6-month T-Bills (which have basically NO risk) currently yield 4.93%. SPYs or DIAs (which basically have no risk over 5 years or more) average 10%-12% annually. Study after study has shown it is IMPOSSIBLE to consistently beat the S&P by "day-trading" unless you are "insider trading", which IS illegal! Not to mention the fact that if you have $1M in clients money "at risk", you would need another $1M of your own money on-hand as "insurance" to cover bad trades/clients that wanted out! |
| Tags |
| Renting & Real Estate Personal Finance Investing Insurance Credit |
Finance Categories--Copyright/IP Policy--Contact Webmaster |