My friends and family constantly ask me for investment
advice and stock tips. The investments I have made for them
have done allright. So they keep coming back for more =)

I dont mind helping but I was looking for a way to manage
all their investments easier.

So I thought of an approach where I'd start an investment
club and have them pool their money in. However, in the
partnership papers it would state that only I would be
allowed to make investment decisions regarding the clubs
portfolio. So in effect I will have created a mutual fund of
sorts where they can invest in.

They are also ok with me drawing an annual fee for my
assistance.

My question to you all is -
a) Is this legal ? I assume so since all my paperwork will
clearly state my credentials and risks with investingi n
general.
b) How do I withdraw the annual fee ? For example if I have
to sell shares to get the cash needed to take the fee, then
should the taxes involved with that transaction be a burden
of the investors ? How would it impact the club finances ?
c) Are there any other things I havent considered with my
poor mans "mutual fund" idea ?

It may or may not be legal. You need to determine what the state securities laws are in the state where each of you is a resident. You may be considered an investment advisor, subject to various registration and licensing requirements.

 

Ira Smilovitz