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LaFBfan 
Washington Fan
Baton Rouge
Member since Jan 2013
651 posts
| Putting money in mutual fund acct with relatives (Posted on 2/23/13 at 9:54 pm)
Would you consider combining funds to a mutual fund acct with a relative in order to achieve a higher yield? For example I've got 30k and they have 20k to invest. Close relative will be no disputes, but does this accomplish anything better than having two seperate accts?
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AutoYes_Clown 
Alabama Fan
Baton Rouge, LA
Member since Oct 2012
654 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/23/13 at 10:03 pm to LaFBfan)
quote:
Close relative will be no disputes
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Beerinthepocket 
LSU Fan
Dallas
Member since May 2011
325 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/23/13 at 10:15 pm to LaFBfan)
How would combining the money into one account increase the yield? I see no advantage to this.
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Layabout 
UNO Fan
Baton Rouge
Member since Jul 2011
4477 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/23/13 at 10:17 pm to Beerinthepocket)
quote:
How would combining the money into one account increase the yield? I see no advantage to this.
This. Not to mention the nightmare of dividing up the 1099 at tax time.
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TyOconner 
Troy Fan
Georgia
Member since Nov 2009
8503 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/23/13 at 10:42 pm to LaFBfan)
Really. Bad. Idea.
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reb13 
Ole Miss Fan
Oxford, MS
Member since May 2010
7979 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/23/13 at 10:53 pm to LaFBfan)
HORRIBLE IDEA! STEER CLEAR!
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Bayou Tiger
LSU Fan
The Woodlands, TX
Member since Nov 2003
2939 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/23/13 at 11:05 pm to LaFBfan)
Ok. I'll bite.
What in the world is the selling point that you were given for this great idea? Anything more than "we can get a higher yield" or some details behind that?
This post was edited on 2/23 at 11:07 pm
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RedMustang 
Auburn Fan
Member since Oct 2011
2628 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/23/13 at 11:13 pm to LaFBfan)
Horrible idea. There isn't a single fund that I can think of where you'd get a better "yield" with $50K than $30K. BTY, I used to be in the investment business. DEFINITELY keep your accounts separate.
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SLafourche07 
USA Fan
Member since Feb 2008
855 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 1:09 am to LaFBfan)
quote:
higher yield
I do not think this word means what you think it means.
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LaFBfan
Washington Fan
Baton Rouge
Member since Jan 2013
651 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 6:15 am to SLafourche07)
Ok thats why I consulted first...no go
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Janky
LSU Fan
Team Primo
Member since Jun 2011
2523 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 7:01 am to LaFBfan)
He may be thinking of reaching a breakpoint on the load. Which brings up the question, why a loaded fund?
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Vols&Shaft83 
Tennessee Fan
Member since Dec 2012
3281 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 7:21 am to Janky)
That's the only reason I could think of, still not a good reason though.
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Lsut81
LSU Fan
Member since Jun 2005
54952 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 8:31 am to LaFBfan)
quote:
Close relative will be no disputes, but does this accomplish anything better than having two seperate accts?
So you think...
The mantra never go into business with family or friends def applies here.
Unless you get a lawyer involved and make a "Trust" and allocate 60% to you and 40% to them, I wouldn't do it.
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Bayou Tiger
LSU Fan
The Woodlands, TX
Member since Nov 2003
2939 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 8:48 am to LaFBfan)
quote:
Ok thats why I consulted first...no go
Props to you for asking around first. People end up making bad decisions with money because they don't bounce the idea off of a few people. I've found that this board is as good a place as any to get a quick variety of opinions.
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Powerman
LSU Fan
Corpus Christi, TX
Member since Jan 2004
115734 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 9:02 am to Bayou Tiger)
quote:
Ok. I'll bite.
What in the world is the selling point that you were given for this great idea? Anything more than "we can get a higher yield" or some details behind that?
I think some mutual fund stores require a 50K minimum to invest
He thinks he can get a good yield there but doesn't have enough liquid cash to invest yet
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JPLSU1981
LSU Fan
Baton Rouge
Member since Oct 2005
15917 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 9:10 am to LaFBfan)
So many people think that "combining accounts equals higher % return"...
If you invest seperately:
Acct1: 20,000 @10% ... end with $22,000
Acct2: 30,000 @10% ... end with $33,000
Total = $55,000
If you invest as one:
Acct1: 50,000 @10% ... end with $55,000
Total = $55,000
$55,000 = $55,000
All things being equal, and assuming you are not trying to use the money to allow for more diversification (which would negate the "all things being equal" anyway), it does not matter if you invest seperately or together. Therefore, unless there are other reasons, there is no reason to combine funds.
This post was edited on 2/24 at 9:18 am
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Powerman
LSU Fan
Corpus Christi, TX
Member since Jan 2004
115734 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 9:47 am to JPLSU1981)
See my post above
I think it explains it
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RedMustang
Auburn Fan
Member since Oct 2011
2628 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 10:36 am to Powerman)
I think someone else may have nailed it as well. There are break points for loaded funds. It depends in the fund company, but $50,000 is a common break point. My advice would be to invest in a no load fund and keep the accounts separate. Vanguard has some of the lowest fees in the business. I'd start with them first.
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JPLSU1981
LSU Fan
Baton Rouge
Member since Oct 2005
15917 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 10:47 am to RedMustang)
Even in the case of a breakpoint, I personally don't think the one-time 1-2% savings (if that) is worth the hassle that will come with a joint account.
Like you said, if breakpoint is the issue, then go with a no-load fund to begin with.
I'm guessing that breakpoint is not the issue, though...His OP reads that he thinks they can get a higher return by combining funds, a common misconception.
This post was edited on 2/24 at 10:49 am
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Ace Midnight
LSU Fan
Ball, LA - Home, Sweet Home
Member since Dec 2006
14890 posts
| re: Putting money in mutual fund acct with relatives (Posted on 2/24/13 at 10:54 am to LaFBfan)
quote:
Close relative will be no disputes, but does this accomplish anything better than having two seperate accts?
Nonononononononononononononononononono.
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