Asked on 10 Mar 2019
It's tough, I admit. Hahha. But what I did, is literally just purchase stock using my parents' money (I didn't ask for permission), and I just told them I bought it, and explain my rationale on buying. Specifically for my parents, it's better to ask for permission rather than forgiveness hahah. But anyway, for my parents, they have went through different experiences, like MLM, scam investments etc, so it's very understandable why they are resistant - often times I tell myself like why are they so resistant even though I have done my research. It's really about looking from their point of view, accepting that, and sharing with them your POV. And what's better than that, is showing results of the investment making results. That creates the trust between yourself and your parents that hey, my kid knows what he/she is doing!
For the payout, usually I just keep it as it is. But what I promised myself is no matter what happens, the capital they have initially gave to me, I will give it back, and more. Nothing to calculate exactly between family, just give because there is something more than $. Personal take by the way!
As an advisor, I'm manging my parent's stock and UT portfolio directly.
It actually started with SSB, which my mom is very happy with also. I don't manage that for her, but I convinced her to put her money in it rather than leave it in the bank. She's very happy with the coupon payouts.
I pass on all dividend payouts to them for their stocks/UT, and will guarantee the capital they put in, they are my parents after all. It's not a very huge amount, but my mom is very excited when it's time to get her dividends. I wish she'd started earlier, but at least I convinced her to start now.
End of the day, I would say its about communicating your strategy to show that its logical (to do this, I would think value investing helped me a lot as its a very scientific way of analysing businesses) and when results come, they will have higher confidence in you and invest more in you.
So you could start with asking for seed money like 100, 200. If you could make 20% on 200, your parents will start trusting you more.
Then again.. you have to make sure you are good at it. Because if you screw up.. you might end up harming kinship..
So till today, I have still decided that managing money for family members might not be too good if you're just a beginner because you will have a lot of blind spots.
My parents really pushing me invest on their behalf (as I did degree in finance) but I wasn't comfortable with the potential for losses and awkward situations that could arise so ended up passing
By showing that you have conviction when you put money in a stock.
And of course, when you produce good returns! When I did a 2X2Y, my dad was like, come I give you money you help me invest.
Of course the big caveat is: past results are not indicative of future performance ;)
I did Singapore Savings Bonds (SSB) for the sum of money my parents are comfortable for me to manage on their behalf.
Next, I give them some projected numbers (ie. the interest sum gain or dividends in this case) and showed them that the profits will be transferred back to their savings accounts via recurring payments from my OCBC 360 account (up to 24 months per setup).
Review every 2 years from date of set-up, rinse and repeat.
Responsible track record.
The best way to allow your parents to be confident with you on their money is to prove to them that you are responsible enough to handle their money and you have the knowledge, skills, and experience not to lose them.
Use an excel to track it. That is what I did. Simple. 😉
Here is everything about me and what I do best.
When I was learning about investing in school, I decided to put my own money into work.
I was too young to have my own brokerage account and I passed my money to my mum. I started performing quite well in the earlier days where I invested in Starhub, Valuetronics, Longcheer, and SingPost. They've performed well.
I was very serious in what I do and I explained the rationale behind every investment decisions.
Bit by bit, with more performance, my mum was more comfortable passing me her money to manage.
As agreed with my mom, I will take 10% of the profits and the excess belongs to her.
To convince parents to manage their money, the easiest way is to prove to them that you can provide stable returns. You can do this by starting with a small sample portfolio, and once they are convinced of your abilities, they will be comfortable with letting you manage the rest. However, do consider that if you take up the entire money to manage for them, it will come with the additional burden of keeping ther capital safe and providing safe returns.
I work at Kristal.AI, and it's my passion to evaluate various upcoming investment opportunities.
My parents are more comfortable with a guaranteed sum of money at their age, so I set a guaranteed amount/yield like 5% or something and keep the rest. I also have to pay them during losses though, but it all works out like leverage.
There are similar strategies you can adopt from me if youre interested.