Sounds like an awkward situation - I couldn’t quite tell from your post but it sounds like she’s not a very good listener, which would scare me off completely. I would refuse as gently as possible. If I’m reading that wrong, then perhaps instead of managing her money for her, you could offer to advise her - explain the various options, make recommendations, but let the final decision be hers. In other words, she would have to learn to manage her own money.

If this person’s friend is a young Warren Buffett, then it’s a great idea! Otherwise, I wouldn’t like the idea of mixing friendships and money and investments.

I think you should try to teach your family member about the benefits of boring index funds and maybe get her started on a good introductory book. I always try to pass on education rather than specific advice when it comes to investing.

@CFO:
It’s not so much that she’s a poor listener as that she’s not used to thinking that I might actually fundamentally know more than her about investing.

She wouldn’t be surprised if I had some great fund recommendations, but to actually have a different (and IMHO better) investing philosophy altogether is something else.

@FinanceAndFat:
I’d prefer to educate her and get her to DIY her investing. I’ll think about a book, after all, it is nearly Christmas.

Perhaps tell her about why you’ve chosen to go the more “boring” route because the odds are so much better and whatnot. I certainly wouldn’t want to manage anyone else’s investments…

Oh, and explain to her the fees involved with constantly shifting one’s stock portfolio. Because I think her friend may inadvertently cost her a lot of money.

I was just worried that she’d lose money by chasing performance, I’d forgotten about fees. I think I’ll try and work that in when I chat to her.

Do the book thing.

The problem with trying to teach someone about passive investment is that it requires a fair bit of education. Recommending “hot” funds is a lot quicker (and easier).

Mike

Ugghhh. Bad situation to be in, I think. The best thing I could recommend is the book idea, but explain the how and why about the book and be open to conversation. Let them know you are interested in discussing and teaching, but not doing the actual running of the books. That is a recipe for disaster!

I’m glad everyone thinks that my instinct to run away from managing someone else’s investments is a good one. Now just to let this person know…

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