brought to you by the every dollar app start budgeting for free today. So I have some money that a couple years ago I put in with a family member who has some investment stuff that he was doing and it's not a huge part of like my savings or anything but it's just a little bit and I guess it wasn't really worked out in the initial agreement like what his cut of the money was going to be as he managed the investments and so working on that now and what was mentioned to me was like a two and twenty structure with like a 10% hurdle so I could get the first 10% and then anything above that he would get a 20% and then somebody else into the 25% and to me those that kind of. Is he a financial advisor or is this some back alley deal? It's just a family member who talked with some finance people and worked out some investment thing and he's been doing that make sure you money like.
This sketchy all around. What kind of investment is it in the market like index funds or mutual funds? Yeah it's in yeah it's in yeah it's well it's based on the S&P 500 for the most part. So this is highway robbery the standard in the industry is around a 1% AUM fee that's assets under management sometimes it's one and a quarter maybe upwards of two in a crazy scenario and he wants to hit him.
But 20%? Yeah that's just anything above 10% but anything above the 10% if we make it happen. Like over 10% profit on here. You get 25% of that.
As you should though. Does he work for an actual like registered investment advisor like an actual firm? No. He's got some guys like he's like a middleman and he's really get your money away from this guy ASAP.
Who's this family man is it an actual like a cousin a brother? Yeah. And I'm going to run it through anybody else. He's able to call himself but it's just something that he's a DIY investor and he's just offering his services to you for a steep fee.
I mean we haven't really agreed on a fee yet that's kind of what happens. So what happens if he loses all your money? So if I lose that money but it's not it's not a huge part of my. How much are we talking?
How much have you given them so far? It's only 10 grand. Okay so what I would probably do Dan when did you give him this money to invest? About two and a half years ago.
Okay how old is he? 40. And does he do this regularly? Like is this like a side?
He'd been working on it with his own money for a while before he like opened up anybody else. And again is he using like a fidelity or a vanguard like does he have a broker? Yeah it's your broker. I think it's trade.
Okay so basically it's something you could be doing because he's not really moving money around does he? He just picked an investor and put it in. You'd be better off just doing this with an actual professional who's licensed. Right okay.
So how much money did you originally put into and a half years ago? I put 10 grand into and a half years ago. I thought they're like 15 grand now. Okay I was gonna say I was like if it's still a 10 grand this guy needs to go to a price.
I mean the market has done really well the last few years. Yeah so number one I would untangle this whole deal. It's just you know the whole money family minutiae it's not it just never really ends up good. So I would just say hey bro I just want our relationship to be clear of any level of entanglement when it comes to money.
I'm starting not to feel great about it. You've done nothing wrong. I freely chose to do this but I've been you know reading some books doing some stuff and I just think are you married? Yes.
Yeah you know me and you know my wife we've been looking at our entire financial picture and so we're gonna kind of consolidate some stuff move things around so I probably will just catch up with you move on. That's what I would do and not even worry about it but if you feel like you can't do that and all of it then I would charge him what the average market rate is if you had an investment professional look at that which is 1%. Or just say hey I've got it I've got my wife and I would decide we're gonna work with an actual financial advisor at XYZ firm and we're gonna move our money over there. And if he gets real upset that's a good clue that this was a bad idea to begin with.
Okay. But I'm glad you are at least upright now. Curls and 20% is crazy. Usually this call ends with and all the money's gone and I can't get touched with him.
Now that would be weird but that would not be crazy. Dan if you went and told us. It sounds like he likes this stuff and he does DIY and he came up with some deal that was like all right I'll make a little bit of money to manage this for you. I don't even know if this is legal.
This sounds crazy. I think it's kind of like an investment club type thing so it's mostly fine. I have input into it but yeah. Why don't you just do it Dan?
Well I don't know exactly what it is. Like I don't know how to do whatever you do. He's not just putting it in a stock and leaving it. He's doing like some kind of call type stuff I think.
Oh boy. Okay. There's some more risk here. I personally I would jump on ramsysolutions.com click on SmartVestorPro and you'll sleep better at night knowing that all the money can disappear.
Well that and don't. You can lose it all and you have no stake in the game. Yeah and the fact you can't explain what he's doing never put your money in something you don't understand. So you gotta figure out what he's doing.
Okay. So just for your own sake Dan don't give someone 10 grand to be like I don't really understand what he's doing. You don't know what he's doing. Did he make any promises?
Was he like hey man I'll do it with money? No no nothing like that. I mean he gave up like yeah he just said it was doing pretty well for him and he's been making I don't know what the percentage of what he said at the time but he said it was like okay like I'm like I put all my money I like that's fine. Sure.
Well at least you're not too late. Hopefully we talk to you after a little edge to get out of this weird situation. It's always a family member. That's the part that I'm glad at least it wasn't a whole life insurance thing where he's like he said he's managing my money and it's really just a life insurance sales person who wants to suck you into this deal totally.
Yeah it could be totally fine Dan we may be being dramatic but from the relational aspect I would not. Yeah I just want to come in go money and family. I'd rather be a stranger I can yell at. You just put it in an index fund and you'll probably be getting I would think the same returns is what he's doing honestly.
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