Should I take out a loan for a friend to invest on my behalf?












15















A family friend of mine is an accountant and his company allows him to buy discount shares. He is asking me for $7000 to invest, and we will split the profits 50-50.



I don't have $7000, but I can get it as a loan with a much lower interest rate than him because I have a better credit rating.



He says there is minimal risk and that the returns are guaranteed to be 25%.



Should I take out a loan and give it to my friend to invest on my behalf?





Edit: By "family friend" I mean a good friend that I and my family have known for a long time (not a stranger)










share|improve this question




















  • 23





    You may want to consider why you have a better credit rating before believing his promise that there is "minimal risk" and a guaranteed return of 25%. (By the way, if there is any risk involved, there is no "guaranteed" return, only an expected return.)

    – chepner
    8 hours ago






  • 31





    "Accountant with bad credit rating" is like saying "fitness instructor with an obesity problem".

    – DJClayworth
    6 hours ago






  • 3





    It's just anecdotal evidence, this is why I post it here: I know of someone who made a very shady business deal with the mob which failed horribly, and so he ended up with a huge debt to them. He then proceeded to borrow the money from friends and family under very similar pretexts as in this question. He even asked them to not tell it to anyone else, so he managed to borrow a lot of money from many of them, several thousand at a time. He was fearing for his very life, so he rather risked alienating his friends and family, they would maybe shun or at most sue him, but probably not murder him.

    – vsz
    5 hours ago








  • 1





    DJ - I’ll be using that one in the future, IRL, it’s brilliant, but I will not give you credit. Just being honest.

    – JoeTaxpayer
    4 hours ago






  • 1





    @DJClayworth : I don't know, I heard the story from some of those family members and friends complaining, after he later admitted why he was loaning all that money. Given that he was financially utterly ruined, I doubt he payed them back the money anytime soon, if at all.

    – vsz
    4 hours ago


















15















A family friend of mine is an accountant and his company allows him to buy discount shares. He is asking me for $7000 to invest, and we will split the profits 50-50.



I don't have $7000, but I can get it as a loan with a much lower interest rate than him because I have a better credit rating.



He says there is minimal risk and that the returns are guaranteed to be 25%.



Should I take out a loan and give it to my friend to invest on my behalf?





Edit: By "family friend" I mean a good friend that I and my family have known for a long time (not a stranger)










share|improve this question




















  • 23





    You may want to consider why you have a better credit rating before believing his promise that there is "minimal risk" and a guaranteed return of 25%. (By the way, if there is any risk involved, there is no "guaranteed" return, only an expected return.)

    – chepner
    8 hours ago






  • 31





    "Accountant with bad credit rating" is like saying "fitness instructor with an obesity problem".

    – DJClayworth
    6 hours ago






  • 3





    It's just anecdotal evidence, this is why I post it here: I know of someone who made a very shady business deal with the mob which failed horribly, and so he ended up with a huge debt to them. He then proceeded to borrow the money from friends and family under very similar pretexts as in this question. He even asked them to not tell it to anyone else, so he managed to borrow a lot of money from many of them, several thousand at a time. He was fearing for his very life, so he rather risked alienating his friends and family, they would maybe shun or at most sue him, but probably not murder him.

    – vsz
    5 hours ago








  • 1





    DJ - I’ll be using that one in the future, IRL, it’s brilliant, but I will not give you credit. Just being honest.

    – JoeTaxpayer
    4 hours ago






  • 1





    @DJClayworth : I don't know, I heard the story from some of those family members and friends complaining, after he later admitted why he was loaning all that money. Given that he was financially utterly ruined, I doubt he payed them back the money anytime soon, if at all.

    – vsz
    4 hours ago
















15












15








15


2






A family friend of mine is an accountant and his company allows him to buy discount shares. He is asking me for $7000 to invest, and we will split the profits 50-50.



I don't have $7000, but I can get it as a loan with a much lower interest rate than him because I have a better credit rating.



He says there is minimal risk and that the returns are guaranteed to be 25%.



Should I take out a loan and give it to my friend to invest on my behalf?





Edit: By "family friend" I mean a good friend that I and my family have known for a long time (not a stranger)










share|improve this question
















A family friend of mine is an accountant and his company allows him to buy discount shares. He is asking me for $7000 to invest, and we will split the profits 50-50.



I don't have $7000, but I can get it as a loan with a much lower interest rate than him because I have a better credit rating.



He says there is minimal risk and that the returns are guaranteed to be 25%.



Should I take out a loan and give it to my friend to invest on my behalf?





Edit: By "family friend" I mean a good friend that I and my family have known for a long time (not a stranger)







investing friends






share|improve this question















share|improve this question













share|improve this question




share|improve this question








edited 7 hours ago







Mirror318

















asked 10 hours ago









Mirror318Mirror318

1946




1946








  • 23





    You may want to consider why you have a better credit rating before believing his promise that there is "minimal risk" and a guaranteed return of 25%. (By the way, if there is any risk involved, there is no "guaranteed" return, only an expected return.)

    – chepner
    8 hours ago






  • 31





    "Accountant with bad credit rating" is like saying "fitness instructor with an obesity problem".

    – DJClayworth
    6 hours ago






  • 3





    It's just anecdotal evidence, this is why I post it here: I know of someone who made a very shady business deal with the mob which failed horribly, and so he ended up with a huge debt to them. He then proceeded to borrow the money from friends and family under very similar pretexts as in this question. He even asked them to not tell it to anyone else, so he managed to borrow a lot of money from many of them, several thousand at a time. He was fearing for his very life, so he rather risked alienating his friends and family, they would maybe shun or at most sue him, but probably not murder him.

    – vsz
    5 hours ago








  • 1





    DJ - I’ll be using that one in the future, IRL, it’s brilliant, but I will not give you credit. Just being honest.

    – JoeTaxpayer
    4 hours ago






  • 1





    @DJClayworth : I don't know, I heard the story from some of those family members and friends complaining, after he later admitted why he was loaning all that money. Given that he was financially utterly ruined, I doubt he payed them back the money anytime soon, if at all.

    – vsz
    4 hours ago
















  • 23





    You may want to consider why you have a better credit rating before believing his promise that there is "minimal risk" and a guaranteed return of 25%. (By the way, if there is any risk involved, there is no "guaranteed" return, only an expected return.)

    – chepner
    8 hours ago






  • 31





    "Accountant with bad credit rating" is like saying "fitness instructor with an obesity problem".

    – DJClayworth
    6 hours ago






  • 3





    It's just anecdotal evidence, this is why I post it here: I know of someone who made a very shady business deal with the mob which failed horribly, and so he ended up with a huge debt to them. He then proceeded to borrow the money from friends and family under very similar pretexts as in this question. He even asked them to not tell it to anyone else, so he managed to borrow a lot of money from many of them, several thousand at a time. He was fearing for his very life, so he rather risked alienating his friends and family, they would maybe shun or at most sue him, but probably not murder him.

    – vsz
    5 hours ago








  • 1





    DJ - I’ll be using that one in the future, IRL, it’s brilliant, but I will not give you credit. Just being honest.

    – JoeTaxpayer
    4 hours ago






  • 1





    @DJClayworth : I don't know, I heard the story from some of those family members and friends complaining, after he later admitted why he was loaning all that money. Given that he was financially utterly ruined, I doubt he payed them back the money anytime soon, if at all.

    – vsz
    4 hours ago










23




23





You may want to consider why you have a better credit rating before believing his promise that there is "minimal risk" and a guaranteed return of 25%. (By the way, if there is any risk involved, there is no "guaranteed" return, only an expected return.)

– chepner
8 hours ago





You may want to consider why you have a better credit rating before believing his promise that there is "minimal risk" and a guaranteed return of 25%. (By the way, if there is any risk involved, there is no "guaranteed" return, only an expected return.)

– chepner
8 hours ago




31




31





"Accountant with bad credit rating" is like saying "fitness instructor with an obesity problem".

– DJClayworth
6 hours ago





"Accountant with bad credit rating" is like saying "fitness instructor with an obesity problem".

– DJClayworth
6 hours ago




3




3





It's just anecdotal evidence, this is why I post it here: I know of someone who made a very shady business deal with the mob which failed horribly, and so he ended up with a huge debt to them. He then proceeded to borrow the money from friends and family under very similar pretexts as in this question. He even asked them to not tell it to anyone else, so he managed to borrow a lot of money from many of them, several thousand at a time. He was fearing for his very life, so he rather risked alienating his friends and family, they would maybe shun or at most sue him, but probably not murder him.

– vsz
5 hours ago







It's just anecdotal evidence, this is why I post it here: I know of someone who made a very shady business deal with the mob which failed horribly, and so he ended up with a huge debt to them. He then proceeded to borrow the money from friends and family under very similar pretexts as in this question. He even asked them to not tell it to anyone else, so he managed to borrow a lot of money from many of them, several thousand at a time. He was fearing for his very life, so he rather risked alienating his friends and family, they would maybe shun or at most sue him, but probably not murder him.

– vsz
5 hours ago






1




1





DJ - I’ll be using that one in the future, IRL, it’s brilliant, but I will not give you credit. Just being honest.

– JoeTaxpayer
4 hours ago





DJ - I’ll be using that one in the future, IRL, it’s brilliant, but I will not give you credit. Just being honest.

– JoeTaxpayer
4 hours ago




1




1





@DJClayworth : I don't know, I heard the story from some of those family members and friends complaining, after he later admitted why he was loaning all that money. Given that he was financially utterly ruined, I doubt he payed them back the money anytime soon, if at all.

– vsz
4 hours ago







@DJClayworth : I don't know, I heard the story from some of those family members and friends complaining, after he later admitted why he was loaning all that money. Given that he was financially utterly ruined, I doubt he payed them back the money anytime soon, if at all.

– vsz
4 hours ago












7 Answers
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34














Sorry if it seems to be nitpicking, but what does “family friend” mean? I have come to understand the spectrum of friendship to be; an acquaintance will send you an email congratulating you on your move. A friend will bring you a house-warming gift. A good friend will help you move. Your best friend will help you move a body. With all the questions that we get here that talk about scams, I may be overreacting to your expression, “family friend“, but to me it is a bit ambiguous. I’ll set that aside for now.



A return of 25% and the phrase “minimum risk“ do not go hand-in-hand. If the friend has access to buying his own company shares at a discount but somehow is unable to make an investment that will return 25%, he is not an accountant I would ever want to go to. Please pardon my sarcasm, but if I ever had such an investment I would not need to ask anybody for help to fund it.



For the sake of full understanding, look at other recent questions that talk about ESPP, employee stock purchase program. If one is able to buy shares at a 15% discount, and sell the very day that shares hit the account there is, in fact, is 17% return on the money invested over that three-month average holding. One invests $85 to purchase the $100 in stock, so the return is 100÷85= 1.176 or 17.6%. And the money is typically accumulated over six months for an average holding time of just about three months. This is the one time that I can make the case that a high return actually does follow a minimum risk situation if that is what your friend is suggesting. But he also misrepresents or misunderstands how to annualize such a return.



TLDR – I would stay away from mixing money and friends.






share|improve this answer





















  • 11





    You had me at "Your best friend will help you move a body."

    – TTT
    7 hours ago



















29














In general, borrowing money to invest is a risky proposition for a very simple reason: investments can go down in value, while the loans you had to take to make the investment absolutely do not go down in price if the investment didn't work out. So you have a guaranteed cost, but never a guaranteed return.



That said, there are a number of red flags here beyond the general facts of investment.



For one, a "family friend" is always a warning sign, because its an overly optimistic way of saying "someone I don't personally know very well". If there are people in the family who know them personally enough to be a "friend", and not a "family friend", then they are in a far better position to judge if they should lend money to them - so let them be on the hook for $7k if they are so trustworthy.



Second, an accountant is a professional position, and should be making a large enough salary on their own that investing or getting loans on the order of a few thousand dollars should not be a stretch. If they need to ask you for $7,000 to invest, this strongly suggests they are not in a position to be trusted to handle your money.



Third, "guaranteed return" is a huge red flag, because in this situation there is 0% meaning to this statement. Even if they had access to an Employee Stock Purchase Plan where they could purchase stock at a discount (and the guarantee is not on the return on investment here either, and any guaranteed is only to them - there is no possible guarantee to you, other than their promise to pay you).



If their promise to pay was of so much value they could get a loan from a bank, or cash advance on their credit cards, for this amount of money as an unsecured loan and then they would get to keep 100% of the profits. That they have exhausted easier sources of funding suggests anything they promise you is likely to be based purely on "gee, I hope they pay me back" and that's about it.



Given this, it is extremely disturbing that a financial professional such as an accountant would claim that lending them money in such an unsecured fashion could be called having minimal risk or a guaranteed return, and this suggests they are either incompetent or fraudulent. Sure, there is probably little risk to them, but that's clearly not how you were supposed to interpret any such statement. In neither case would it be a good idea to give the person money.



Finally, never risk money you cannot afford to lose. Given the fact that you do not have $7,000 to invest, you cannot afford to lose such a sum by definition because you do not have it - and borrowing it is not the same as having it. If the deal goes bad, how long will it take you to pay off that loan - how unpleasant would that be, and how long would you need to be reminded of their dishonesty and your mistake?



I can think of an awful lot of better things to do with $7,000, and I bet you can too!






share|improve this answer



















  • 1





    Nice. You typed a bit faster than I could dictate a response, but you hit great points including the “friend” issue. Very happy to see that here, great minds think a like.

    – JoeTaxpayer
    8 hours ago











  • I like your point that if this is such a sure thing then "Why isn't the account borrowing the money and keeping 100% of the profits?"

    – MaxW
    6 hours ago






  • 1





    And the obvious answer is, @MaxW, is because then he, and not Joe, would be absorbing the supposedly non-existent risk.

    – Malvolio
    6 hours ago



















8














In poker, you do a thing called "counting outs". That is, you count the number of cards that are still in the deck that, if you draw one of them, you will have a winning hand. "There are four 4s that will give me a straight, there are nine hearts, including the 4 of hearts, that will give me a flush, so there are 12 'outs' of the 47 cards lefts."



In life, you often need to count the ways you can lose:




  • this person might be scamming you. The most obvious possibility is that he is launching a Ponzi scheme, but there are many others. For all you know, he's planning to simply keep the money and tell you the investment didn't work out.

  • the person might legitimately believe he has a good opportunity, but he could be wrong. Anyone who says "minimal risk / guaranteed returns", if he isn't scamming you, is obviously not very bright.

  • even if, by some miracle, the investment pays off (or just returns your money without interest), how exactly do you force this person to give it to you?



I don't have $7000, but I can get it as a loan with a much lower interest rate than him because I have a better credit rating.




Accountants in the US earn an average salary of $77,920. This one is promising to pay you 12.5% interest (over an unspecified amount of time), because no one will lend him money at that rate?



If the investment will take a year, that's more than a credit-card would charge someone with good credit.



So institutions like banks and credit-card companies don't trust this guy much. Why should you?






share|improve this answer

































    4














    There's something else others have not yet mentioned:



    You are taking the financial risk and he wants to split the profits fifty-fifty?



    If he does not even have the insight that this is very un-bussineslike, that's another reason not to go into business with him.



    And what about guarantees like you getting your money back first in case X, Y, Z...? But maybe you left that out of the question.






    share|improve this answer































      2














      At best you are being told half the story, and he's hiding the bits you aren't supposed to discover till after you have been stung.



      The return on this "investment" is supposedly guaranteed to be 25%. How long does it take for that to materialize? A typical "low-grade-employee share purchase scheme" in the UK says you can lock into a discounted purchase price now, but you can't actually sell the shares till later, and that may sometimes by 5 years later. Even if the "25%" is realistic, "5% per year" doesn't sound quite so impressive.



      If the 25% is a short term gain, is your friend (and an accountant, no less) really unable to get a loan at less than 25% from anywhere? Why does he want to give up half the profits to you - except to avoid putting any of his own money at risk, or course.



      If you already had the $7,000, I would suggest that you withdraw the money in cash, make a bonfire somewhere, and use the banknotes to light it. That will probably give you as good a financial return as this "investment", and you also get the fun of lighting a bonfire, which you won't have when your "friend" loses your money for you.



      IMO the only thing you are going to get out of this "investment" is the cost of paying back a $7,000 loan that you don't need. Oh, and you will probably lose your so-called friend as well - but from what your OP tells us about him, that doesn't sound like much of a loss to me.






      share|improve this answer



















      • 2





        I want to point out that that a 25% gain over five years is not "5% a year". It's 4.6% a year. You don't divide 0.25 by 5 — you take the fifth-root of 1.25, yielding 1.045634.

        – Malvolio
        6 hours ago











      • "The various bridges up as high as Chelsea Reach. Let's see; there's London, one; Southwark, two; Blackfriars, three; Waterloo, four; Westminster, five; Vauxhall, six. There's as many as six, you see, to choose from. Choose your bridge, and take a walk upon your bridge, and pitch your money into the Thames over the centre arch of your bridge, and you know the end of it. Serve a friend with it, and you may know the end of it too - but it's a less pleasant and profitable end." — Mr. Wemmick, Great Expectations

        – Malvolio
        6 hours ago



















      2














      Think about it for a minute. There is no such thing as a guaranteed 25% return on a legit investment. Besides, it's actually 12 1/2% with you two splitting. And why does this savvy accountant have a crummy credit rating? The only thing guaranteed here, and it's 100% guaranteed, is that $7000 is going out the door, plus interest. What do you suppose the guarantee of a profit is?
      If you want to remain friends with this guy, walk away now.






      share|improve this answer

































        0














        You certainly can do this.



        What you do is make this an official loan, with him signing a note, with a promised return of 25% at the end of one year in a balloon payment.



        Of course, 25% may well be considered usury, so you need to check this out.



        And this, of course, raises a very interesting question: why hasn't he simply take out a loan? Interest rates are very low these days, so he should have no trouble getting a home equity loan and profiting handsomely.



        The fact that he has not done so suggests that you need to be very, very careful here.



        While I said that you can certainly do this, I did not say it's a good idea.






        share|improve this answer






















          protected by JoeTaxpayer 5 hours ago



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          7 Answers
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          7 Answers
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          34














          Sorry if it seems to be nitpicking, but what does “family friend” mean? I have come to understand the spectrum of friendship to be; an acquaintance will send you an email congratulating you on your move. A friend will bring you a house-warming gift. A good friend will help you move. Your best friend will help you move a body. With all the questions that we get here that talk about scams, I may be overreacting to your expression, “family friend“, but to me it is a bit ambiguous. I’ll set that aside for now.



          A return of 25% and the phrase “minimum risk“ do not go hand-in-hand. If the friend has access to buying his own company shares at a discount but somehow is unable to make an investment that will return 25%, he is not an accountant I would ever want to go to. Please pardon my sarcasm, but if I ever had such an investment I would not need to ask anybody for help to fund it.



          For the sake of full understanding, look at other recent questions that talk about ESPP, employee stock purchase program. If one is able to buy shares at a 15% discount, and sell the very day that shares hit the account there is, in fact, is 17% return on the money invested over that three-month average holding. One invests $85 to purchase the $100 in stock, so the return is 100÷85= 1.176 or 17.6%. And the money is typically accumulated over six months for an average holding time of just about three months. This is the one time that I can make the case that a high return actually does follow a minimum risk situation if that is what your friend is suggesting. But he also misrepresents or misunderstands how to annualize such a return.



          TLDR – I would stay away from mixing money and friends.






          share|improve this answer





















          • 11





            You had me at "Your best friend will help you move a body."

            – TTT
            7 hours ago
















          34














          Sorry if it seems to be nitpicking, but what does “family friend” mean? I have come to understand the spectrum of friendship to be; an acquaintance will send you an email congratulating you on your move. A friend will bring you a house-warming gift. A good friend will help you move. Your best friend will help you move a body. With all the questions that we get here that talk about scams, I may be overreacting to your expression, “family friend“, but to me it is a bit ambiguous. I’ll set that aside for now.



          A return of 25% and the phrase “minimum risk“ do not go hand-in-hand. If the friend has access to buying his own company shares at a discount but somehow is unable to make an investment that will return 25%, he is not an accountant I would ever want to go to. Please pardon my sarcasm, but if I ever had such an investment I would not need to ask anybody for help to fund it.



          For the sake of full understanding, look at other recent questions that talk about ESPP, employee stock purchase program. If one is able to buy shares at a 15% discount, and sell the very day that shares hit the account there is, in fact, is 17% return on the money invested over that three-month average holding. One invests $85 to purchase the $100 in stock, so the return is 100÷85= 1.176 or 17.6%. And the money is typically accumulated over six months for an average holding time of just about three months. This is the one time that I can make the case that a high return actually does follow a minimum risk situation if that is what your friend is suggesting. But he also misrepresents or misunderstands how to annualize such a return.



          TLDR – I would stay away from mixing money and friends.






          share|improve this answer





















          • 11





            You had me at "Your best friend will help you move a body."

            – TTT
            7 hours ago














          34












          34








          34







          Sorry if it seems to be nitpicking, but what does “family friend” mean? I have come to understand the spectrum of friendship to be; an acquaintance will send you an email congratulating you on your move. A friend will bring you a house-warming gift. A good friend will help you move. Your best friend will help you move a body. With all the questions that we get here that talk about scams, I may be overreacting to your expression, “family friend“, but to me it is a bit ambiguous. I’ll set that aside for now.



          A return of 25% and the phrase “minimum risk“ do not go hand-in-hand. If the friend has access to buying his own company shares at a discount but somehow is unable to make an investment that will return 25%, he is not an accountant I would ever want to go to. Please pardon my sarcasm, but if I ever had such an investment I would not need to ask anybody for help to fund it.



          For the sake of full understanding, look at other recent questions that talk about ESPP, employee stock purchase program. If one is able to buy shares at a 15% discount, and sell the very day that shares hit the account there is, in fact, is 17% return on the money invested over that three-month average holding. One invests $85 to purchase the $100 in stock, so the return is 100÷85= 1.176 or 17.6%. And the money is typically accumulated over six months for an average holding time of just about three months. This is the one time that I can make the case that a high return actually does follow a minimum risk situation if that is what your friend is suggesting. But he also misrepresents or misunderstands how to annualize such a return.



          TLDR – I would stay away from mixing money and friends.






          share|improve this answer















          Sorry if it seems to be nitpicking, but what does “family friend” mean? I have come to understand the spectrum of friendship to be; an acquaintance will send you an email congratulating you on your move. A friend will bring you a house-warming gift. A good friend will help you move. Your best friend will help you move a body. With all the questions that we get here that talk about scams, I may be overreacting to your expression, “family friend“, but to me it is a bit ambiguous. I’ll set that aside for now.



          A return of 25% and the phrase “minimum risk“ do not go hand-in-hand. If the friend has access to buying his own company shares at a discount but somehow is unable to make an investment that will return 25%, he is not an accountant I would ever want to go to. Please pardon my sarcasm, but if I ever had such an investment I would not need to ask anybody for help to fund it.



          For the sake of full understanding, look at other recent questions that talk about ESPP, employee stock purchase program. If one is able to buy shares at a 15% discount, and sell the very day that shares hit the account there is, in fact, is 17% return on the money invested over that three-month average holding. One invests $85 to purchase the $100 in stock, so the return is 100÷85= 1.176 or 17.6%. And the money is typically accumulated over six months for an average holding time of just about three months. This is the one time that I can make the case that a high return actually does follow a minimum risk situation if that is what your friend is suggesting. But he also misrepresents or misunderstands how to annualize such a return.



          TLDR – I would stay away from mixing money and friends.







          share|improve this answer














          share|improve this answer



          share|improve this answer








          edited 5 hours ago

























          answered 8 hours ago









          JoeTaxpayerJoeTaxpayer

          145k22235468




          145k22235468








          • 11





            You had me at "Your best friend will help you move a body."

            – TTT
            7 hours ago














          • 11





            You had me at "Your best friend will help you move a body."

            – TTT
            7 hours ago








          11




          11





          You had me at "Your best friend will help you move a body."

          – TTT
          7 hours ago





          You had me at "Your best friend will help you move a body."

          – TTT
          7 hours ago













          29














          In general, borrowing money to invest is a risky proposition for a very simple reason: investments can go down in value, while the loans you had to take to make the investment absolutely do not go down in price if the investment didn't work out. So you have a guaranteed cost, but never a guaranteed return.



          That said, there are a number of red flags here beyond the general facts of investment.



          For one, a "family friend" is always a warning sign, because its an overly optimistic way of saying "someone I don't personally know very well". If there are people in the family who know them personally enough to be a "friend", and not a "family friend", then they are in a far better position to judge if they should lend money to them - so let them be on the hook for $7k if they are so trustworthy.



          Second, an accountant is a professional position, and should be making a large enough salary on their own that investing or getting loans on the order of a few thousand dollars should not be a stretch. If they need to ask you for $7,000 to invest, this strongly suggests they are not in a position to be trusted to handle your money.



          Third, "guaranteed return" is a huge red flag, because in this situation there is 0% meaning to this statement. Even if they had access to an Employee Stock Purchase Plan where they could purchase stock at a discount (and the guarantee is not on the return on investment here either, and any guaranteed is only to them - there is no possible guarantee to you, other than their promise to pay you).



          If their promise to pay was of so much value they could get a loan from a bank, or cash advance on their credit cards, for this amount of money as an unsecured loan and then they would get to keep 100% of the profits. That they have exhausted easier sources of funding suggests anything they promise you is likely to be based purely on "gee, I hope they pay me back" and that's about it.



          Given this, it is extremely disturbing that a financial professional such as an accountant would claim that lending them money in such an unsecured fashion could be called having minimal risk or a guaranteed return, and this suggests they are either incompetent or fraudulent. Sure, there is probably little risk to them, but that's clearly not how you were supposed to interpret any such statement. In neither case would it be a good idea to give the person money.



          Finally, never risk money you cannot afford to lose. Given the fact that you do not have $7,000 to invest, you cannot afford to lose such a sum by definition because you do not have it - and borrowing it is not the same as having it. If the deal goes bad, how long will it take you to pay off that loan - how unpleasant would that be, and how long would you need to be reminded of their dishonesty and your mistake?



          I can think of an awful lot of better things to do with $7,000, and I bet you can too!






          share|improve this answer



















          • 1





            Nice. You typed a bit faster than I could dictate a response, but you hit great points including the “friend” issue. Very happy to see that here, great minds think a like.

            – JoeTaxpayer
            8 hours ago











          • I like your point that if this is such a sure thing then "Why isn't the account borrowing the money and keeping 100% of the profits?"

            – MaxW
            6 hours ago






          • 1





            And the obvious answer is, @MaxW, is because then he, and not Joe, would be absorbing the supposedly non-existent risk.

            – Malvolio
            6 hours ago
















          29














          In general, borrowing money to invest is a risky proposition for a very simple reason: investments can go down in value, while the loans you had to take to make the investment absolutely do not go down in price if the investment didn't work out. So you have a guaranteed cost, but never a guaranteed return.



          That said, there are a number of red flags here beyond the general facts of investment.



          For one, a "family friend" is always a warning sign, because its an overly optimistic way of saying "someone I don't personally know very well". If there are people in the family who know them personally enough to be a "friend", and not a "family friend", then they are in a far better position to judge if they should lend money to them - so let them be on the hook for $7k if they are so trustworthy.



          Second, an accountant is a professional position, and should be making a large enough salary on their own that investing or getting loans on the order of a few thousand dollars should not be a stretch. If they need to ask you for $7,000 to invest, this strongly suggests they are not in a position to be trusted to handle your money.



          Third, "guaranteed return" is a huge red flag, because in this situation there is 0% meaning to this statement. Even if they had access to an Employee Stock Purchase Plan where they could purchase stock at a discount (and the guarantee is not on the return on investment here either, and any guaranteed is only to them - there is no possible guarantee to you, other than their promise to pay you).



          If their promise to pay was of so much value they could get a loan from a bank, or cash advance on their credit cards, for this amount of money as an unsecured loan and then they would get to keep 100% of the profits. That they have exhausted easier sources of funding suggests anything they promise you is likely to be based purely on "gee, I hope they pay me back" and that's about it.



          Given this, it is extremely disturbing that a financial professional such as an accountant would claim that lending them money in such an unsecured fashion could be called having minimal risk or a guaranteed return, and this suggests they are either incompetent or fraudulent. Sure, there is probably little risk to them, but that's clearly not how you were supposed to interpret any such statement. In neither case would it be a good idea to give the person money.



          Finally, never risk money you cannot afford to lose. Given the fact that you do not have $7,000 to invest, you cannot afford to lose such a sum by definition because you do not have it - and borrowing it is not the same as having it. If the deal goes bad, how long will it take you to pay off that loan - how unpleasant would that be, and how long would you need to be reminded of their dishonesty and your mistake?



          I can think of an awful lot of better things to do with $7,000, and I bet you can too!






          share|improve this answer



















          • 1





            Nice. You typed a bit faster than I could dictate a response, but you hit great points including the “friend” issue. Very happy to see that here, great minds think a like.

            – JoeTaxpayer
            8 hours ago











          • I like your point that if this is such a sure thing then "Why isn't the account borrowing the money and keeping 100% of the profits?"

            – MaxW
            6 hours ago






          • 1





            And the obvious answer is, @MaxW, is because then he, and not Joe, would be absorbing the supposedly non-existent risk.

            – Malvolio
            6 hours ago














          29












          29








          29







          In general, borrowing money to invest is a risky proposition for a very simple reason: investments can go down in value, while the loans you had to take to make the investment absolutely do not go down in price if the investment didn't work out. So you have a guaranteed cost, but never a guaranteed return.



          That said, there are a number of red flags here beyond the general facts of investment.



          For one, a "family friend" is always a warning sign, because its an overly optimistic way of saying "someone I don't personally know very well". If there are people in the family who know them personally enough to be a "friend", and not a "family friend", then they are in a far better position to judge if they should lend money to them - so let them be on the hook for $7k if they are so trustworthy.



          Second, an accountant is a professional position, and should be making a large enough salary on their own that investing or getting loans on the order of a few thousand dollars should not be a stretch. If they need to ask you for $7,000 to invest, this strongly suggests they are not in a position to be trusted to handle your money.



          Third, "guaranteed return" is a huge red flag, because in this situation there is 0% meaning to this statement. Even if they had access to an Employee Stock Purchase Plan where they could purchase stock at a discount (and the guarantee is not on the return on investment here either, and any guaranteed is only to them - there is no possible guarantee to you, other than their promise to pay you).



          If their promise to pay was of so much value they could get a loan from a bank, or cash advance on their credit cards, for this amount of money as an unsecured loan and then they would get to keep 100% of the profits. That they have exhausted easier sources of funding suggests anything they promise you is likely to be based purely on "gee, I hope they pay me back" and that's about it.



          Given this, it is extremely disturbing that a financial professional such as an accountant would claim that lending them money in such an unsecured fashion could be called having minimal risk or a guaranteed return, and this suggests they are either incompetent or fraudulent. Sure, there is probably little risk to them, but that's clearly not how you were supposed to interpret any such statement. In neither case would it be a good idea to give the person money.



          Finally, never risk money you cannot afford to lose. Given the fact that you do not have $7,000 to invest, you cannot afford to lose such a sum by definition because you do not have it - and borrowing it is not the same as having it. If the deal goes bad, how long will it take you to pay off that loan - how unpleasant would that be, and how long would you need to be reminded of their dishonesty and your mistake?



          I can think of an awful lot of better things to do with $7,000, and I bet you can too!






          share|improve this answer













          In general, borrowing money to invest is a risky proposition for a very simple reason: investments can go down in value, while the loans you had to take to make the investment absolutely do not go down in price if the investment didn't work out. So you have a guaranteed cost, but never a guaranteed return.



          That said, there are a number of red flags here beyond the general facts of investment.



          For one, a "family friend" is always a warning sign, because its an overly optimistic way of saying "someone I don't personally know very well". If there are people in the family who know them personally enough to be a "friend", and not a "family friend", then they are in a far better position to judge if they should lend money to them - so let them be on the hook for $7k if they are so trustworthy.



          Second, an accountant is a professional position, and should be making a large enough salary on their own that investing or getting loans on the order of a few thousand dollars should not be a stretch. If they need to ask you for $7,000 to invest, this strongly suggests they are not in a position to be trusted to handle your money.



          Third, "guaranteed return" is a huge red flag, because in this situation there is 0% meaning to this statement. Even if they had access to an Employee Stock Purchase Plan where they could purchase stock at a discount (and the guarantee is not on the return on investment here either, and any guaranteed is only to them - there is no possible guarantee to you, other than their promise to pay you).



          If their promise to pay was of so much value they could get a loan from a bank, or cash advance on their credit cards, for this amount of money as an unsecured loan and then they would get to keep 100% of the profits. That they have exhausted easier sources of funding suggests anything they promise you is likely to be based purely on "gee, I hope they pay me back" and that's about it.



          Given this, it is extremely disturbing that a financial professional such as an accountant would claim that lending them money in such an unsecured fashion could be called having minimal risk or a guaranteed return, and this suggests they are either incompetent or fraudulent. Sure, there is probably little risk to them, but that's clearly not how you were supposed to interpret any such statement. In neither case would it be a good idea to give the person money.



          Finally, never risk money you cannot afford to lose. Given the fact that you do not have $7,000 to invest, you cannot afford to lose such a sum by definition because you do not have it - and borrowing it is not the same as having it. If the deal goes bad, how long will it take you to pay off that loan - how unpleasant would that be, and how long would you need to be reminded of their dishonesty and your mistake?



          I can think of an awful lot of better things to do with $7,000, and I bet you can too!







          share|improve this answer












          share|improve this answer



          share|improve this answer










          answered 8 hours ago









          BrianHBrianH

          8,09422729




          8,09422729








          • 1





            Nice. You typed a bit faster than I could dictate a response, but you hit great points including the “friend” issue. Very happy to see that here, great minds think a like.

            – JoeTaxpayer
            8 hours ago











          • I like your point that if this is such a sure thing then "Why isn't the account borrowing the money and keeping 100% of the profits?"

            – MaxW
            6 hours ago






          • 1





            And the obvious answer is, @MaxW, is because then he, and not Joe, would be absorbing the supposedly non-existent risk.

            – Malvolio
            6 hours ago














          • 1





            Nice. You typed a bit faster than I could dictate a response, but you hit great points including the “friend” issue. Very happy to see that here, great minds think a like.

            – JoeTaxpayer
            8 hours ago











          • I like your point that if this is such a sure thing then "Why isn't the account borrowing the money and keeping 100% of the profits?"

            – MaxW
            6 hours ago






          • 1





            And the obvious answer is, @MaxW, is because then he, and not Joe, would be absorbing the supposedly non-existent risk.

            – Malvolio
            6 hours ago








          1




          1





          Nice. You typed a bit faster than I could dictate a response, but you hit great points including the “friend” issue. Very happy to see that here, great minds think a like.

          – JoeTaxpayer
          8 hours ago





          Nice. You typed a bit faster than I could dictate a response, but you hit great points including the “friend” issue. Very happy to see that here, great minds think a like.

          – JoeTaxpayer
          8 hours ago













          I like your point that if this is such a sure thing then "Why isn't the account borrowing the money and keeping 100% of the profits?"

          – MaxW
          6 hours ago





          I like your point that if this is such a sure thing then "Why isn't the account borrowing the money and keeping 100% of the profits?"

          – MaxW
          6 hours ago




          1




          1





          And the obvious answer is, @MaxW, is because then he, and not Joe, would be absorbing the supposedly non-existent risk.

          – Malvolio
          6 hours ago





          And the obvious answer is, @MaxW, is because then he, and not Joe, would be absorbing the supposedly non-existent risk.

          – Malvolio
          6 hours ago











          8














          In poker, you do a thing called "counting outs". That is, you count the number of cards that are still in the deck that, if you draw one of them, you will have a winning hand. "There are four 4s that will give me a straight, there are nine hearts, including the 4 of hearts, that will give me a flush, so there are 12 'outs' of the 47 cards lefts."



          In life, you often need to count the ways you can lose:




          • this person might be scamming you. The most obvious possibility is that he is launching a Ponzi scheme, but there are many others. For all you know, he's planning to simply keep the money and tell you the investment didn't work out.

          • the person might legitimately believe he has a good opportunity, but he could be wrong. Anyone who says "minimal risk / guaranteed returns", if he isn't scamming you, is obviously not very bright.

          • even if, by some miracle, the investment pays off (or just returns your money without interest), how exactly do you force this person to give it to you?



          I don't have $7000, but I can get it as a loan with a much lower interest rate than him because I have a better credit rating.




          Accountants in the US earn an average salary of $77,920. This one is promising to pay you 12.5% interest (over an unspecified amount of time), because no one will lend him money at that rate?



          If the investment will take a year, that's more than a credit-card would charge someone with good credit.



          So institutions like banks and credit-card companies don't trust this guy much. Why should you?






          share|improve this answer






























            8














            In poker, you do a thing called "counting outs". That is, you count the number of cards that are still in the deck that, if you draw one of them, you will have a winning hand. "There are four 4s that will give me a straight, there are nine hearts, including the 4 of hearts, that will give me a flush, so there are 12 'outs' of the 47 cards lefts."



            In life, you often need to count the ways you can lose:




            • this person might be scamming you. The most obvious possibility is that he is launching a Ponzi scheme, but there are many others. For all you know, he's planning to simply keep the money and tell you the investment didn't work out.

            • the person might legitimately believe he has a good opportunity, but he could be wrong. Anyone who says "minimal risk / guaranteed returns", if he isn't scamming you, is obviously not very bright.

            • even if, by some miracle, the investment pays off (or just returns your money without interest), how exactly do you force this person to give it to you?



            I don't have $7000, but I can get it as a loan with a much lower interest rate than him because I have a better credit rating.




            Accountants in the US earn an average salary of $77,920. This one is promising to pay you 12.5% interest (over an unspecified amount of time), because no one will lend him money at that rate?



            If the investment will take a year, that's more than a credit-card would charge someone with good credit.



            So institutions like banks and credit-card companies don't trust this guy much. Why should you?






            share|improve this answer




























              8












              8








              8







              In poker, you do a thing called "counting outs". That is, you count the number of cards that are still in the deck that, if you draw one of them, you will have a winning hand. "There are four 4s that will give me a straight, there are nine hearts, including the 4 of hearts, that will give me a flush, so there are 12 'outs' of the 47 cards lefts."



              In life, you often need to count the ways you can lose:




              • this person might be scamming you. The most obvious possibility is that he is launching a Ponzi scheme, but there are many others. For all you know, he's planning to simply keep the money and tell you the investment didn't work out.

              • the person might legitimately believe he has a good opportunity, but he could be wrong. Anyone who says "minimal risk / guaranteed returns", if he isn't scamming you, is obviously not very bright.

              • even if, by some miracle, the investment pays off (or just returns your money without interest), how exactly do you force this person to give it to you?



              I don't have $7000, but I can get it as a loan with a much lower interest rate than him because I have a better credit rating.




              Accountants in the US earn an average salary of $77,920. This one is promising to pay you 12.5% interest (over an unspecified amount of time), because no one will lend him money at that rate?



              If the investment will take a year, that's more than a credit-card would charge someone with good credit.



              So institutions like banks and credit-card companies don't trust this guy much. Why should you?






              share|improve this answer















              In poker, you do a thing called "counting outs". That is, you count the number of cards that are still in the deck that, if you draw one of them, you will have a winning hand. "There are four 4s that will give me a straight, there are nine hearts, including the 4 of hearts, that will give me a flush, so there are 12 'outs' of the 47 cards lefts."



              In life, you often need to count the ways you can lose:




              • this person might be scamming you. The most obvious possibility is that he is launching a Ponzi scheme, but there are many others. For all you know, he's planning to simply keep the money and tell you the investment didn't work out.

              • the person might legitimately believe he has a good opportunity, but he could be wrong. Anyone who says "minimal risk / guaranteed returns", if he isn't scamming you, is obviously not very bright.

              • even if, by some miracle, the investment pays off (or just returns your money without interest), how exactly do you force this person to give it to you?



              I don't have $7000, but I can get it as a loan with a much lower interest rate than him because I have a better credit rating.




              Accountants in the US earn an average salary of $77,920. This one is promising to pay you 12.5% interest (over an unspecified amount of time), because no one will lend him money at that rate?



              If the investment will take a year, that's more than a credit-card would charge someone with good credit.



              So institutions like banks and credit-card companies don't trust this guy much. Why should you?







              share|improve this answer














              share|improve this answer



              share|improve this answer








              edited 5 hours ago

























              answered 6 hours ago









              MalvolioMalvolio

              1,59598




              1,59598























                  4














                  There's something else others have not yet mentioned:



                  You are taking the financial risk and he wants to split the profits fifty-fifty?



                  If he does not even have the insight that this is very un-bussineslike, that's another reason not to go into business with him.



                  And what about guarantees like you getting your money back first in case X, Y, Z...? But maybe you left that out of the question.






                  share|improve this answer




























                    4














                    There's something else others have not yet mentioned:



                    You are taking the financial risk and he wants to split the profits fifty-fifty?



                    If he does not even have the insight that this is very un-bussineslike, that's another reason not to go into business with him.



                    And what about guarantees like you getting your money back first in case X, Y, Z...? But maybe you left that out of the question.






                    share|improve this answer


























                      4












                      4








                      4







                      There's something else others have not yet mentioned:



                      You are taking the financial risk and he wants to split the profits fifty-fifty?



                      If he does not even have the insight that this is very un-bussineslike, that's another reason not to go into business with him.



                      And what about guarantees like you getting your money back first in case X, Y, Z...? But maybe you left that out of the question.






                      share|improve this answer













                      There's something else others have not yet mentioned:



                      You are taking the financial risk and he wants to split the profits fifty-fifty?



                      If he does not even have the insight that this is very un-bussineslike, that's another reason not to go into business with him.



                      And what about guarantees like you getting your money back first in case X, Y, Z...? But maybe you left that out of the question.







                      share|improve this answer












                      share|improve this answer



                      share|improve this answer










                      answered 3 hours ago









                      Jan DoggenJan Doggen

                      1599




                      1599























                          2














                          At best you are being told half the story, and he's hiding the bits you aren't supposed to discover till after you have been stung.



                          The return on this "investment" is supposedly guaranteed to be 25%. How long does it take for that to materialize? A typical "low-grade-employee share purchase scheme" in the UK says you can lock into a discounted purchase price now, but you can't actually sell the shares till later, and that may sometimes by 5 years later. Even if the "25%" is realistic, "5% per year" doesn't sound quite so impressive.



                          If the 25% is a short term gain, is your friend (and an accountant, no less) really unable to get a loan at less than 25% from anywhere? Why does he want to give up half the profits to you - except to avoid putting any of his own money at risk, or course.



                          If you already had the $7,000, I would suggest that you withdraw the money in cash, make a bonfire somewhere, and use the banknotes to light it. That will probably give you as good a financial return as this "investment", and you also get the fun of lighting a bonfire, which you won't have when your "friend" loses your money for you.



                          IMO the only thing you are going to get out of this "investment" is the cost of paying back a $7,000 loan that you don't need. Oh, and you will probably lose your so-called friend as well - but from what your OP tells us about him, that doesn't sound like much of a loss to me.






                          share|improve this answer



















                          • 2





                            I want to point out that that a 25% gain over five years is not "5% a year". It's 4.6% a year. You don't divide 0.25 by 5 — you take the fifth-root of 1.25, yielding 1.045634.

                            – Malvolio
                            6 hours ago











                          • "The various bridges up as high as Chelsea Reach. Let's see; there's London, one; Southwark, two; Blackfriars, three; Waterloo, four; Westminster, five; Vauxhall, six. There's as many as six, you see, to choose from. Choose your bridge, and take a walk upon your bridge, and pitch your money into the Thames over the centre arch of your bridge, and you know the end of it. Serve a friend with it, and you may know the end of it too - but it's a less pleasant and profitable end." — Mr. Wemmick, Great Expectations

                            – Malvolio
                            6 hours ago
















                          2














                          At best you are being told half the story, and he's hiding the bits you aren't supposed to discover till after you have been stung.



                          The return on this "investment" is supposedly guaranteed to be 25%. How long does it take for that to materialize? A typical "low-grade-employee share purchase scheme" in the UK says you can lock into a discounted purchase price now, but you can't actually sell the shares till later, and that may sometimes by 5 years later. Even if the "25%" is realistic, "5% per year" doesn't sound quite so impressive.



                          If the 25% is a short term gain, is your friend (and an accountant, no less) really unable to get a loan at less than 25% from anywhere? Why does he want to give up half the profits to you - except to avoid putting any of his own money at risk, or course.



                          If you already had the $7,000, I would suggest that you withdraw the money in cash, make a bonfire somewhere, and use the banknotes to light it. That will probably give you as good a financial return as this "investment", and you also get the fun of lighting a bonfire, which you won't have when your "friend" loses your money for you.



                          IMO the only thing you are going to get out of this "investment" is the cost of paying back a $7,000 loan that you don't need. Oh, and you will probably lose your so-called friend as well - but from what your OP tells us about him, that doesn't sound like much of a loss to me.






                          share|improve this answer



















                          • 2





                            I want to point out that that a 25% gain over five years is not "5% a year". It's 4.6% a year. You don't divide 0.25 by 5 — you take the fifth-root of 1.25, yielding 1.045634.

                            – Malvolio
                            6 hours ago











                          • "The various bridges up as high as Chelsea Reach. Let's see; there's London, one; Southwark, two; Blackfriars, three; Waterloo, four; Westminster, five; Vauxhall, six. There's as many as six, you see, to choose from. Choose your bridge, and take a walk upon your bridge, and pitch your money into the Thames over the centre arch of your bridge, and you know the end of it. Serve a friend with it, and you may know the end of it too - but it's a less pleasant and profitable end." — Mr. Wemmick, Great Expectations

                            – Malvolio
                            6 hours ago














                          2












                          2








                          2







                          At best you are being told half the story, and he's hiding the bits you aren't supposed to discover till after you have been stung.



                          The return on this "investment" is supposedly guaranteed to be 25%. How long does it take for that to materialize? A typical "low-grade-employee share purchase scheme" in the UK says you can lock into a discounted purchase price now, but you can't actually sell the shares till later, and that may sometimes by 5 years later. Even if the "25%" is realistic, "5% per year" doesn't sound quite so impressive.



                          If the 25% is a short term gain, is your friend (and an accountant, no less) really unable to get a loan at less than 25% from anywhere? Why does he want to give up half the profits to you - except to avoid putting any of his own money at risk, or course.



                          If you already had the $7,000, I would suggest that you withdraw the money in cash, make a bonfire somewhere, and use the banknotes to light it. That will probably give you as good a financial return as this "investment", and you also get the fun of lighting a bonfire, which you won't have when your "friend" loses your money for you.



                          IMO the only thing you are going to get out of this "investment" is the cost of paying back a $7,000 loan that you don't need. Oh, and you will probably lose your so-called friend as well - but from what your OP tells us about him, that doesn't sound like much of a loss to me.






                          share|improve this answer













                          At best you are being told half the story, and he's hiding the bits you aren't supposed to discover till after you have been stung.



                          The return on this "investment" is supposedly guaranteed to be 25%. How long does it take for that to materialize? A typical "low-grade-employee share purchase scheme" in the UK says you can lock into a discounted purchase price now, but you can't actually sell the shares till later, and that may sometimes by 5 years later. Even if the "25%" is realistic, "5% per year" doesn't sound quite so impressive.



                          If the 25% is a short term gain, is your friend (and an accountant, no less) really unable to get a loan at less than 25% from anywhere? Why does he want to give up half the profits to you - except to avoid putting any of his own money at risk, or course.



                          If you already had the $7,000, I would suggest that you withdraw the money in cash, make a bonfire somewhere, and use the banknotes to light it. That will probably give you as good a financial return as this "investment", and you also get the fun of lighting a bonfire, which you won't have when your "friend" loses your money for you.



                          IMO the only thing you are going to get out of this "investment" is the cost of paying back a $7,000 loan that you don't need. Oh, and you will probably lose your so-called friend as well - but from what your OP tells us about him, that doesn't sound like much of a loss to me.







                          share|improve this answer












                          share|improve this answer



                          share|improve this answer










                          answered 6 hours ago









                          alephzeroalephzero

                          2,1653812




                          2,1653812








                          • 2





                            I want to point out that that a 25% gain over five years is not "5% a year". It's 4.6% a year. You don't divide 0.25 by 5 — you take the fifth-root of 1.25, yielding 1.045634.

                            – Malvolio
                            6 hours ago











                          • "The various bridges up as high as Chelsea Reach. Let's see; there's London, one; Southwark, two; Blackfriars, three; Waterloo, four; Westminster, five; Vauxhall, six. There's as many as six, you see, to choose from. Choose your bridge, and take a walk upon your bridge, and pitch your money into the Thames over the centre arch of your bridge, and you know the end of it. Serve a friend with it, and you may know the end of it too - but it's a less pleasant and profitable end." — Mr. Wemmick, Great Expectations

                            – Malvolio
                            6 hours ago














                          • 2





                            I want to point out that that a 25% gain over five years is not "5% a year". It's 4.6% a year. You don't divide 0.25 by 5 — you take the fifth-root of 1.25, yielding 1.045634.

                            – Malvolio
                            6 hours ago











                          • "The various bridges up as high as Chelsea Reach. Let's see; there's London, one; Southwark, two; Blackfriars, three; Waterloo, four; Westminster, five; Vauxhall, six. There's as many as six, you see, to choose from. Choose your bridge, and take a walk upon your bridge, and pitch your money into the Thames over the centre arch of your bridge, and you know the end of it. Serve a friend with it, and you may know the end of it too - but it's a less pleasant and profitable end." — Mr. Wemmick, Great Expectations

                            – Malvolio
                            6 hours ago








                          2




                          2





                          I want to point out that that a 25% gain over five years is not "5% a year". It's 4.6% a year. You don't divide 0.25 by 5 — you take the fifth-root of 1.25, yielding 1.045634.

                          – Malvolio
                          6 hours ago





                          I want to point out that that a 25% gain over five years is not "5% a year". It's 4.6% a year. You don't divide 0.25 by 5 — you take the fifth-root of 1.25, yielding 1.045634.

                          – Malvolio
                          6 hours ago













                          "The various bridges up as high as Chelsea Reach. Let's see; there's London, one; Southwark, two; Blackfriars, three; Waterloo, four; Westminster, five; Vauxhall, six. There's as many as six, you see, to choose from. Choose your bridge, and take a walk upon your bridge, and pitch your money into the Thames over the centre arch of your bridge, and you know the end of it. Serve a friend with it, and you may know the end of it too - but it's a less pleasant and profitable end." — Mr. Wemmick, Great Expectations

                          – Malvolio
                          6 hours ago





                          "The various bridges up as high as Chelsea Reach. Let's see; there's London, one; Southwark, two; Blackfriars, three; Waterloo, four; Westminster, five; Vauxhall, six. There's as many as six, you see, to choose from. Choose your bridge, and take a walk upon your bridge, and pitch your money into the Thames over the centre arch of your bridge, and you know the end of it. Serve a friend with it, and you may know the end of it too - but it's a less pleasant and profitable end." — Mr. Wemmick, Great Expectations

                          – Malvolio
                          6 hours ago











                          2














                          Think about it for a minute. There is no such thing as a guaranteed 25% return on a legit investment. Besides, it's actually 12 1/2% with you two splitting. And why does this savvy accountant have a crummy credit rating? The only thing guaranteed here, and it's 100% guaranteed, is that $7000 is going out the door, plus interest. What do you suppose the guarantee of a profit is?
                          If you want to remain friends with this guy, walk away now.






                          share|improve this answer






























                            2














                            Think about it for a minute. There is no such thing as a guaranteed 25% return on a legit investment. Besides, it's actually 12 1/2% with you two splitting. And why does this savvy accountant have a crummy credit rating? The only thing guaranteed here, and it's 100% guaranteed, is that $7000 is going out the door, plus interest. What do you suppose the guarantee of a profit is?
                            If you want to remain friends with this guy, walk away now.






                            share|improve this answer




























                              2












                              2








                              2







                              Think about it for a minute. There is no such thing as a guaranteed 25% return on a legit investment. Besides, it's actually 12 1/2% with you two splitting. And why does this savvy accountant have a crummy credit rating? The only thing guaranteed here, and it's 100% guaranteed, is that $7000 is going out the door, plus interest. What do you suppose the guarantee of a profit is?
                              If you want to remain friends with this guy, walk away now.






                              share|improve this answer















                              Think about it for a minute. There is no such thing as a guaranteed 25% return on a legit investment. Besides, it's actually 12 1/2% with you two splitting. And why does this savvy accountant have a crummy credit rating? The only thing guaranteed here, and it's 100% guaranteed, is that $7000 is going out the door, plus interest. What do you suppose the guarantee of a profit is?
                              If you want to remain friends with this guy, walk away now.







                              share|improve this answer














                              share|improve this answer



                              share|improve this answer








                              edited 5 hours ago









                              JoeTaxpayer

                              145k22235468




                              145k22235468










                              answered 6 hours ago









                              Ronnie ChildsRonnie Childs

                              511




                              511























                                  0














                                  You certainly can do this.



                                  What you do is make this an official loan, with him signing a note, with a promised return of 25% at the end of one year in a balloon payment.



                                  Of course, 25% may well be considered usury, so you need to check this out.



                                  And this, of course, raises a very interesting question: why hasn't he simply take out a loan? Interest rates are very low these days, so he should have no trouble getting a home equity loan and profiting handsomely.



                                  The fact that he has not done so suggests that you need to be very, very careful here.



                                  While I said that you can certainly do this, I did not say it's a good idea.






                                  share|improve this answer




























                                    0














                                    You certainly can do this.



                                    What you do is make this an official loan, with him signing a note, with a promised return of 25% at the end of one year in a balloon payment.



                                    Of course, 25% may well be considered usury, so you need to check this out.



                                    And this, of course, raises a very interesting question: why hasn't he simply take out a loan? Interest rates are very low these days, so he should have no trouble getting a home equity loan and profiting handsomely.



                                    The fact that he has not done so suggests that you need to be very, very careful here.



                                    While I said that you can certainly do this, I did not say it's a good idea.






                                    share|improve this answer


























                                      0












                                      0








                                      0







                                      You certainly can do this.



                                      What you do is make this an official loan, with him signing a note, with a promised return of 25% at the end of one year in a balloon payment.



                                      Of course, 25% may well be considered usury, so you need to check this out.



                                      And this, of course, raises a very interesting question: why hasn't he simply take out a loan? Interest rates are very low these days, so he should have no trouble getting a home equity loan and profiting handsomely.



                                      The fact that he has not done so suggests that you need to be very, very careful here.



                                      While I said that you can certainly do this, I did not say it's a good idea.






                                      share|improve this answer













                                      You certainly can do this.



                                      What you do is make this an official loan, with him signing a note, with a promised return of 25% at the end of one year in a balloon payment.



                                      Of course, 25% may well be considered usury, so you need to check this out.



                                      And this, of course, raises a very interesting question: why hasn't he simply take out a loan? Interest rates are very low these days, so he should have no trouble getting a home equity loan and profiting handsomely.



                                      The fact that he has not done so suggests that you need to be very, very careful here.



                                      While I said that you can certainly do this, I did not say it's a good idea.







                                      share|improve this answer












                                      share|improve this answer



                                      share|improve this answer










                                      answered 1 hour ago









                                      WhatRoughBeastWhatRoughBeast

                                      1372




                                      1372

















                                          protected by JoeTaxpayer 5 hours ago



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