Is it legal to trade using friend’s/relative’s money and share the profit/loss?
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Yes, of course it is, as long as no one knows about it. But, I would discourage doing so, everything will be good till you make profits, once you start making losses, it will be difficult for you to pacify your folks.
You can take money from your friend into your bank, then use this money to trade or any other purpose you wish to. However, you will have to pay interest to your friend for the money borrowed from him. Not sure about the interest rate, best to talk to a chartered accountant on this. Ask your CA more about 'Unsecured creditors'.
If you wish to have it on profit sharing basis, ask your CA if trading can be done on partnership basis.
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Borrowed money is always “borrowed money” .They will all smile when u give them the returns…once u have book losses u will have to still make them smile giving them the returns as they dont want to know or hear about losses. Trust me its not worth it…its a head ache
Don’t do this! because the thumb rule in trade is don’t trade with that money which you not affordable to lose.
if you have your won money no one can question you when you make loss or profit.
if you tell you friend that frankly they can lose what they invest in markets, i think no one can make that partnership with you.
after that they want to invest just refer them to zerodha to trade on won risk, because money make best friends to worst enemy.
and if you make your friends greedy show star in day light and take money from them to trade, i think that will be illegal and you create a very big problem to your self if you not succeeded
Yes, it is not illegal to trade using borrowed money. But it is upto you to decide whether to take a risk by doing this or not.
If you are a profitable trader, why not take the risk? After all every trader takes Calculated Risk. This is what so called Asset Management Companies do, take your money and trade. Same with Mutual Funds too!
You need to keep some points in mind, if you are doing this-
1. You need to be sure that you are going to end up profitable over a period of time. In other words, you should have a set, profitable strategy/ position sizing etc. and of course, total control on your emotions.
2. It should be done on mutual consent and mutually agreed upon Profit/ Loss sharing.
3. The lender of money has to be made fully aware of all the risk involved in trading as well as the risk involved in lending money to you for trading :)
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