Serious Business Inside

[IndianStig]

Should I take out a student loan to take advantage of the insanely shitty stock market and hope that buy 2014 I make enough to pay off the loans and have a nice wad of cash to start off life after I finish education?

[hondachik]

Ehhh...No.

[IndianStig]

Ehhh...No.

Well to put it in perspective, a friend of mine who made $100k net over three months out of $25k initial investment is going to be managing my portfolio.

[hondachik]

Well to put it in perspective, a friend of mine who made $100k net over three months out of $25k initial investment is going to be managing my portfolio.

Well...depends on how he made it. If you've been watching the stock closely the past few months then do it, but I just wouldn't because its already unpredictable.

[IndianStig]

Well...depends on how he made it. If you've been watching the stock closely the past few months then do it, but I just wouldn't because its already unpredictable.

He told me his portfolio is exactly the same as on his virtual portfolio. His virtual portfolio was ranked very high for low risk index among other virtual portfolio's.

[hondachik]

lost me. therefore I will stfu.

[trundog]

Buy a house.

[SampaGuy]

He told me his portfolio is exactly the same as on his virtual portfolio. His virtual portfolio was ranked very high for low risk index among other virtual portfolio's.


1. He has to tell you a little more about it then that. Make sure he breaks down and explains his portfolio. Then do your own research, to then make a judgement. Both of my mutual fund accounts let me read online exactly in what stocks the fund is divided up into, the trading philosophy and resume of the manager, etc. so that you know exactly what you are getting into. Is he going to invest and let it sit, or will he be actively trading?

2. I would take out $5k at the most! So that it doesn't completely ruin your life if it goes bad. How long has he been trading?

3. The low risk ranking of his virtual portfolio is kind of useless because a lot of people fuck around and take enormous risks in the virtual accounts which they would not take in real life.

[Verik]

First rule of investing, don't ever invest money you can't afford to lose. Dependence on the money you invest will negatively affect your portfolio choices. Even if you're not making your investment decisions, you need to be financially stable even if you lose all your money (there always is that possibility and it needs to be accepted before you invest).

Secondly, risk is assessed by the companies you invest in, not your decisions. Like plv stated, it doesn't mean that he isn't making risky decisions in a low risk pool.

[IndianStig]

Yah, I understand about the don't invest money you can't afford to lose but I should be good even if I lose this money 100%. I think I'm going to go ahead and fill out the Wachovia Student Loan Application for Living Expenses and invest 75% of what I get.

[SampaGuy]

Another thing, when in business with friends/family, there is always a risk of your relationship going sour when things go bad, and even if things go well your friend might not be your friend 5 years from now... maybe you can write some sort of contract, I don't know how that works in this case. I have a friend in Spain that formed a company/incorporated just so that he could invest other people's money.

[IndianStig]

Another thing, when in business with friends/family, there is always a risk of your relationship going sour when things go bad, and even if things go well your friend might not be your friend 5 years from now... maybe you can write some sort of contract, I don't know how that works in this case. I have a friend in Spain that formed a company/incorporated just so that he could invest other people's money.

Yah there is def going to be a notarized contract lol.

[aguynamedpat]

No offense dude, but it sounds like you came in here with your mind made up. People are giving you feedback about why they would be weary about it, but you come back with responses that make me feel like this decision was made before you posted this thread.

Why post the thread if you had your mind made up? Just curious.

[IndianStig]

Just wanted some opinions, I still haven't made my mind up. The poll says go for it, my gut feeling says no, but my longterm thinking says whats to lose? As long as I don't go more then $45k in debt before I leave college I am absolutely fine with taking out loans cause $45k is about what I would make in the first year outta college doing what I will hopefully be doing.

[aguynamedpat]

Just wanted some opinions, I still haven't made my mind up. The poll says go for it, my gut feeling says no, but my longterm thinking says whats to lose? As long as I don't go more then $45k in debt before I leave college I am absolutely fine with taking out loans cause $45k is about what I would make in the first year outta college doing what I will hopefully be doing.

Keyword has been bolded/italicized/underlined. I dont think risking $45,000 is worth it because what if that hope falls through and your career plan doesnt pan out? Then what?

[IndianStig]

Keyword has been bolded/italicized/underlined. I dont think risking $45,000 is worth it because what if that hope falls through and your career plan doesnt pan out? Then what?

Then I take over the 3 family businesses and soon to be chain of gyms and victoria secrets in India and ball with my dad.

[Crazy Asian]

Then I take over the 3 family businesses and soon to be chain of gyms and victoria secrets in India and ball with my dad.

And let me help you co-manage along with the gold stores in GA.

[mm2654]

One more thing to consider is that you can not bankrupt against student loans and if you loose everything in the stock market then you will still have to pay it back. Secondly, there is no way to make a 4 fold return in 3 month and have a low risk, if it were truly that easy everyone would be doing it. I will also note that the best traders make on average somewhere in the neighborhood of 20% annually, and you are probably looking at paying 10-15% interest on a student with good credit. At those rates I would say that the risk reward ratio is not in your favor. The last thing that I would add is how well do you know this person, it seems to me that they may be lying or at least misrepresenting the facts. You should also look at what the person will be gaining from help you(nothings free). And always remember if it sounds to good to be true it probably is.

[aneel]

Then I take over the 3 family businesses and soon to be chain of gyms and victoria secrets in India and ball with my dad.

lmao.. good idea might have to do something like that in paki..

aneeL

[mm2654]

One more thing, while in general investing with borrowed money is not a bad thing, people do it everyday mostly through their broker for short term loans, you should never borrow money for the intent of investing if you can not pay it back. I think one years salary for career that you might not ever get into is way too much.
Please don't take this next statement as a diss, but the fact you came here to ask that question tells me that you are not ready to make a $45000 decision on whether or not you should enter the stock market. If you do decide to do this I would recommend that you use a small amount of money such as the before mentioned $5000, and if after 6 months or so it is working really well for you then you could consider adding a little more money(another $5000) into your portfolio.

[Verik]

I have a friend in Spain that formed a company/incorporated just so that he could invest other people's money.

I don't know about international law but in regards to the US, in order to act as a investment advisor representative then he'd have to pass his series 66 exam (and thats provided he is only investing in stocks... securities, mutual funds and equities require a sleu of other exams to be passed). Lucky he is in spain i guess but that contract would prove to be void and unenforceable due to it's illegal stature here in america. The friend in this situation could sign a contract and simply walk away with the money, never fullfilling his part of the contract and the OP would never see a dime of that back. He might be able to charge him with fraud, but a civil court would never uphold the contract unless the friend was already certified to financially represent the interests of the OP.



Just wanted some opinions, I still haven't made my mind up. The poll says go for it, my gut feeling says no, but my longterm thinking says whats to lose? As long as I don't go more then $45k in debt before I leave college I am absolutely fine with taking out loans cause $45k is about what I would make in the first year outta college doing what I will hopefully be doing.

I'm going to tell you straight out, 45k is plain stupid. 4 years in college at an avg rate of 6% (lol you'd be lucky to see those rates on student loans atm) will leave you with 56k in debt, not to mention you start paying 6 months after your schooling ends, regardless of whether you have found yourself a job or not. You really haven't woken up to the world of finance have you? 45k is way too big of a decision for you to be making and its evident by the approach you have taken (asking IA lol).

You say your gut says no but you defend the idea whenever healthy and mature criticism is brought to the table, you debate the issue as if it's a surefire win and you've already decided to go through with it. The markets have been incredibly unstable and created massive ups and downs to capitalize on, those however have settled out and stabilized. As they always say, previous performance is not indication of future results. This is true with the investing skills of your friend as well. His profit could have been as simple as being lucky with citi when they dropped to 3$ a share and the next week were at 9$ back in november. It sure as hell does not indicate his performance, knowledge, or expertise. you are being allured and become drunk with the thought of making serious bank in short time for doing nothing, thats the new american dream is it not?

[SampaGuy]

I don't know about international law but in regards to the US, in order to act as a investment advisor representative then he'd have to pass his series 66 exam (and thats provided he is only investing in stocks... securities, mutual funds and equities require a sleu of other exams to be passed). Lucky he is in spain i guess but that contract would prove to be void and unenforceable due to it's illegal stature here in america. The friend in this situation could sign a contract and simply walk away with the money, never fullfilling his part of the contract and the OP would never see a dime of that back. He might be able to charge him with fraud, but a civil court would never uphold the contract unless the friend was already certified to financially represent the interests of the OP.




I'm going to tell you straight out, 45k is plain stupid. 4 years in college at an avg rate of 6% (lol you'd be lucky to see those rates on student loans atm) will leave you with 56k in debt, not to mention you start paying 6 months after your schooling ends, regardless of whether you have found yourself a job or not. You really haven't woken up to the world of finance have you? 45k is way too big of a decision for you to be making and its evident by the approach you have taken (asking IA lol).

You say your gut says no but you defend the idea whenever healthy and mature criticism is brought to the table, you debate the issue as if it's a surefire win and you've already decided to go through with it. The markets have been incredibly unstable and created massive ups and downs to capitalize on, those however have settled out and stabilized. As they always say, previous performance is not indication of future results. This is true with the investing skills of your friend as well. His profit could have been as simple as being lucky with citi when they dropped to 3$ a share and the next week were at 9$ back in november. It sure as hell does not indicate his performance, knowledge, or expertise. you are being allured and become drunk with the thought of making serious bank in short time for doing nothing, thats the new american dream is it not?



Amen

LOL @ notarized contract

[BanginJimmy]

1. A 2-300% return is definately possible on several stock investments right now, especially in the last 3 months. That will most likely happen again in the enxt 3 months also.

2. Unless you are using a certified CFA and broker, a contract means nothing.

3. If the guy just knows what he is doing, then leave the money in your name and use his advise to invest. If he knows what you buy and when, its not like he wouldnt know how you are doing. If money is supposed to trade hands between you 2 then it is a simple matter to figure out, even if he has no control over the cash.

4. It is still a VERY bad idea to take on debt in this manner to invest. It is one thing to use secured debt, such as a margin loan, to invest. It is a very different thing to take an unsecured loan to do so.

5. I dont know if you were BS'ing about your dad balling in India, but if he is, bring this up to him and take an intrest free loan from him if you really want to do it. If it doesnt work out then you owe your family back, not a corporation. Family tends to be MUCH more lenient in its payment schedule in a bad economy.

6. Lastly, most of the economic forecasts I have seen say that the economy, and the markets, are reacting to the stimulus plans. That will be a short term boom and many economists I've read say the bottom could fall further than before when the bills for this bailout start coming due.

[Verik]

1. A 2-300% return is definately possible on several stock investments right now, especially in the last 3 months. That will most likely happen again in the enxt 3 months also.

By all menas those kinds of returns are possible but not in a low risk portfolio.


2. Unless you are using a certified CFA and broker, a contract means nothing.

Actually, a CFA is not required for trading in the nyse or any american market for that matter, its simply a qualification which makes a charterholder more marketable for positions in the finance industry.


Amen ith the rest of your post though

[BanginJimmy]

By all menas those kinds of returns are possible but not in a low risk portfolio.

Depends on what you consider low risk then. I call just about any large cap security to be a low risk. My current portfolio is based heavily in banking stocks with the majority in Citi and BoA. Both very large cap stocks that were trading far lower than they were really worth.




Actually, a CFA is not required for trading in the nyse or any american market for that matter, its simply a qualification which makes a charterholder more marketable for positions in the finance industry.

Should have made myself more clear. A CFA because of the contractual duties of a CFA. I know a CFA cannot protect your money from loss on the markets, but you do have some protection from fraud. Then a broker for obvious reasons. They are licensed to actually make trades in your name.

[eraser4g63]

Did we not learn this lesson a while back with the great depression?

[GIXXERDK]

Then I take over the 3 family businesses and soon to be chain of gyms and victoria secrets in India and ball with my dad.

Better off borrowing from your family. At least when you lose all the money your dad will say, "At least you tried."

[TIGERJC]

taking a loan out to go gambling, sounds like a great idea. You're gambling since someone else is playing with your borrowed money. If you're passionate about this, you will read and do virtually trading before jumping into the stock market with real money. Run this by your dad, and if he is such a great business man he will tell you this is a bad idea

[IndianStig]

One more thing, while in general investing with borrowed money is not a bad thing, people do it everyday mostly through their broker for short term loans, you should never borrow money for the intent of investing if you can not pay it back. I think one years salary for career that you might not ever get into is way too much.
Please don't take this next statement as a diss, but the fact you came here to ask that question tells me that you are not ready to make a $45000 decision on whether or not you should enter the stock market. If you do decide to do this I would recommend that you use a small amount of money such as the before mentioned $5000, and if after 6 months or so it is working really well for you then you could consider adding a little more money(another $5000) into your portfolio.


I am not going to take out $45k and invest it, thats forsure. I will probably do no more then $10k. I've decided I am going to use the money I can get directly from the government instead of through Wachovia, that money I am getting at 6.75%. Who knows, I might not go through with any of this but right now seems the time to do something like this if I were to do it, you know? Cause we are about to hit rock bottom and go back up.

[IndianStig]

1. A 2-300% return is definately possible on several stock investments right now, especially in the last 3 months. That will most likely happen again in the enxt 3 months also.

2. Unless you are using a certified CFA and broker, a contract means nothing.

3. If the guy just knows what he is doing, then leave the money in your name and use his advise to invest. If he knows what you buy and when, its not like he wouldnt know how you are doing. If money is supposed to trade hands between you 2 then it is a simple matter to figure out, even if he has no control over the cash.

4. It is still a VERY bad idea to take on debt in this manner to invest. It is one thing to use secured debt, such as a margin loan, to invest. It is a very different thing to take an unsecured loan to do so.

5. I dont know if you were BS'ing about your dad balling in India, but if he is, bring this up to him and take an intrest free loan from him if you really want to do it. If it doesnt work out then you owe your family back, not a corporation. Family tends to be MUCH more lenient in its payment schedule in a bad economy.

6. Lastly, most of the economic forecasts I have seen say that the economy, and the markets, are reacting to the stimulus plans. That will be a short term boom and many economists I've read say the bottom could fall further than before when the bills for this bailout start coming due.

I have talked to my dad about him letting me borrow some money from him but all his assets are still in Europe from when we lived there and those are going to be used to develop in India. I mean its not like he's balling, balling but hes doing decent in this country he just doesn't play the stock market, he buys businesses instead and the way things are right now he doesn't have any capital to waste, just businesses that aren't preforming 100%.

And guys, I truly do appreciate your advice, like I said in my last post I'm just going to take whatever money i get through my subsidized and unsubsidized loans for the next two semesters, have my parents pay for school, get the refund check for the loan and invest that. Heck maybe even use the pell grant this year cause I filed independently for the first time this year with a whopping $594.66 as my income! lol.

[mad3nch1na]

What would an Indian do?