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Started By
Message
Putting money in mutual fund acct with relatives
Posted on 2/23/13 at 9:54 pm
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?
Posted on 2/23/13 at 10:03 pm to LaFBfan
quote:
Close relative will be no disputes
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.
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.
Posted on 2/23/13 at 10:53 pm to LaFBfan
HORRIBLE IDEA! STEER CLEAR!
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?
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 2/23/13 at 11:07 pm
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.
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.
Posted on 2/24/13 at 6:15 am to SLafourche07
Ok thats why I consulted first...no go
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?
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.
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.
Posted on 2/24/13 at 8:48 am to LaFBfan
quote: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.
Ok thats why I consulted first...no go
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
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.
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 2/24/13 at 9:18 am
Posted on 2/24/13 at 9:47 am to JPLSU1981
See my post above
I think it explains it
I think it explains it
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.
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.
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 2/24/13 at 10:49 am
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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