What considerations are there for making investments on behalf of a friend?
Pool their money into my own brokerage account and simply split the gains/losses proportional to the amount of money that we've each   contributed to the account. I'm wary of this approach due to the tax   implications and perhaps other legal issues so I'd appreciate   community insight here. You're right to be wary. You might run into gift tax issues, as well as income tax liability and appropriation of earnings. Not a good idea at all. Don't do this. Have them set up their own brokerage account and have them give me the   login credentials and I manage the investments for them. This is   obviously the best approach from a tracking and tax perspective, but   harder for me to manage; to be honest I'm already spending more time   than I want to managing my own investments, so option 1 really appeals   to me if the drawbacks aren't prohibitive. That would also require you to be a licensed financial adviser, at least to the best of my understanding. Otherwise there's a lot of issues with potential liability (if you make investments that lose money - you might be required to repay the losses). You should do this only with a proper legal and tax advice - from an attorney and/or CPA/EA licensed in your state. There are proper ways to do this (limited partnership or LLC, for example), but you have to cover your ass-ets with proper operating agreements in place that have to be reviewed by legal counsel of each of the members/partners, how many transactions per year do you intend? Mixing the funds is an issue for the reasons stated.  But. I have a similar situation managing money for others, and the solution was a power of attorney. When I sign into my brokerage account, I see these other accounts and can trade them, but the owners get their own tax reporting. There's a sizable community of people and fiscal advisers who advocate not managing the money at all. Set your passive investor friend with automatic bank draft into a simple three/four fund portfolio of low cost index funds and never never ever trade.  See https://www.bogleheads.org/RecommendedReading.php You might be able to beat the stock market for a few years, but probably not over the long term.  Most mutual fund professionals don't.  Playing with your own money is one thing: playing with other people's money is a whole other ball game. "If you want to do #1, then you should form an ""investment club."" This is an entity that is recognized by the SEC and the IRS.  From the SEC: An investment club is a group of people who pool their money to make investments. Usually, investment clubs are organized as partnerships and, after the members study different investments, the group decides to buy or sell based on a majority vote of the members. Club meetings may be educational and each member may actively participate in investment decisions. https://www.sec.gov/investor/pubs/invclub.htm You should do your own legal research on how to organize, but I believe that a common way is to form a formal partnership, which then provides the legal structure for distributing gains, tax liability, income, and other costs to the members.  IRS publication 550 has a section on Investment Clubs from a tax perspective, but I'd definitely recommend get professional help on this in addition to whatever you can read yourself. As for #2, I believe that's illegal unless you're licensed."
Angels are different from venture capitalists because they use their own personal money to invest in a business. Venture capitalists invest from a fund which they manage on behalf of those who invest in the fund. If you are interested in connecting with an angel investor right now, you can find one using Angel Investment Network. "2010 - What $20M looks like with hindsight of 7 years  Friend: ""Dude there is this new thing, you should grab some, it is $0.10 per.""  Me: ""So like a penny stock? Nah im good that seems like a waste.""  Friend: ""No man this is going to blow up and is the future.  Take like $500 buy some and it will be worth like $1000 next year.""  Me: ""Nah ill keep putting my $500 in safe investments making me 5-10% a year.""  Edit: I am aware I probably made the ""smart"" choice but turning $500 into even $200,000 would have been nice" "There is no one solution to every project finance problem. Two models might make sense in this situation, however. In this case, you would count all the money that you give to your friend as a loan which he will pay back with interest. The interest rate and loan amounts will have to be agreed on by both of you. One one hand, the interest should be high enough to reward you in a successful outcome for the amount of risk that you take on if things don't work out. On the other, the interest rate needs to be low enough where his earnings after loan repayment justify your friend's effort, in addition to being competitive to ant rate your friend could secure from a bank. The downside to this plan is you don't directly benefit from the franchise's profits. In this model, you will record the cash that each of you invests. Since your friend is also adding ""sweat equity"" by setting up and operating the franchise, you will need to quantify the work that your friend and you invest into the franchise. Then you can determine how much each of you has invested in terms of dollars and split any franchise profits based on those proportions. The downside of this plan is that it is difficult to estimate how much time each of you invests and how much that time is worth." To add to @michael's solid answer, I would suggest sitting down and analyzing what your priorities are about paying off the student loan debt versus investing that money immediately. (Regardless, the first thing you should do is, as michael suggested, pay off the credit card debt) Since it looks like you will be having some new expenses coming up soon (rent, possibly a new car), as part of that prioritization you should calculate what your rent (and associated bills) will cost you on a monthly basis (including saving a bit each month!) and see if you can afford to pay everything without incurring new debt. I'd recommend trying to come up with several scenarios to see how cheaply you can live (roommates, maybe you can figure out a way to go without a car, etc).  If, for whatever reason, you find you can't afford everything, then I would suggest taking a portion of your inheritance to at least pay off enough of your student loans so that you can afford all of your costs per month, and then save or invest the rest. (You can invest all you like, but if you don't live within your means, it won't do you any good.) Finally -- be aware that you may have other factors that come into play that may override financial considerations. I found myself in a situation similar to yours, and in my case, I chose to pay off my debts, not because it necessarily made the best financial sense, but that because of those other considerations, paying off that debt meant I had a significant level of stress removed from my life, and a lot more peace of mind. "Just to go against the grain here. Sometimes, loaning money to friends is the right thing to do. For example, they had a loved one die, and need the money to cover funeral expenses until the life insurance pays out. Here, you may consider it your ethical duty to loan the money (or you may not). It does not make sense from a financial point of view (you are unlikely to charge interest and you are taking all the risk), but sometimes you put your financial prudence aside because ""being a good person and a great friend"" is more important. It is true that the general rule should be not to loan money to friends, and particularly never loan money you cannot afford to lose. But there are exceptions to every rule. I'll note that you may be best off with a plain-english, non-lawyery contract. Make it absolutely as simple as possible. As others have pointed out, specify a repayment date or schedule. Note what happens if they miss the deadline. Specify interest, if appropriate. Get it signed by you and the other person. And make sure you consider what happens if your friend doesn't honour the agreement. For that kind of money, it is also worth considering collateral." John Bogle never said only buy the S&P 500 or any single index Q:Do you think the average person could safely invest for retirement and   other goals without expert advice -- just by indexing? A: Yes, there is a rule of thumb I add to that. You should start out   heavily invested in equities. Hold some bond index funds as well as   stock index funds. By the time you get closer to retirement or into   your retirement, you should have a significant position in bond index   funds as well as stock index funds. As we get older, we have less time   to recoup. We have more money to protect and our nervousness increases   with age. We get a little bit worried about that nest egg when it's   large and we have little time to recoup it, so we pay too much   attention to the fluctuations in the market, which in the long run   mean nothing. How much to pay Q: What's the highest expense ratio that one should pay for a   domestic equity fund? A: I'd say three-quarters of 1 percent maybe.   Q: For an international fund?  A: I'd say three-quarters of 1 percent.   Q: For a bond fund? A: One-half of 1 percent. But I'd shave that a little bit. For   example, if you can buy a no-load bond fund or a no-load stock fund,   you can afford a little more expense ratio, because you're not paying   any commission. You've eliminated cost No. 2.... Assuming that your friend is residing in India, any money that he returns to you cannot be deposited into your NRE (NonResident External) account; it must go into your NRO (NonResident Ordinary) account. You don't have an NRO account, only ordinary savings accounts in India that you established before leaving the country and becoming an NRI (NonResident Indian) ? Well, you are in violation of FEMA regulations and need to convert all those ordinary savings accounts into NRO accounts as soon as possible. Your bank will help you in doing this (by letting you hold ordinary accounts while you have NRI status, the bank too is in violation of FEMA regulations). With regard to taxation, unless you have created a paper trail by documenting the money sent to the builder as a loan to your friend, the entire amount (less INR 50,000 exemption) that your friend will return to you will be considered a gift from your friend to you, and it will be taxable income to you in India, and possibly taxable income to you in your country of residence, though there may be tax treaties that will let you pay taxes in one country only. If you do have a paper trail, then only the excess of what your friend returns to you is interest income to you; the bulk is just repayment of the loan principal, and is nontaxable. If you are residing in the US, I do hope that you have reported the fact that you had foreign bank account(s) totaling more than US$10K in value to the IRS and the US Treasury as per FBAR regulations; because if not, you have many more tax issues to worry about. The fines for not filing these reports are onerous. "(Since you used the dollar sign without any qualification, I assume you're in the United States and talking about US dollars.) You have a few options here. I won't make a specific recommendation, but will present some options and hopefully useful information. Here's the short story: To buy individual stocks, you need to go through a broker. These brokers charge a fee for every transaction, usually in the neighborhood of $7. Since you probably won't want to just buy and hold a single stock for 15 years, the fees are probably unreasonable for you. If you want the educational experience of picking stocks and managing a portfolio, I suggest not using real money. Most mutual funds have minimum investments on the order of a few thousand dollars. If you shop around, there are mutual funds that may work for you. In general, look for a fund that: An example of a fund that meets these requirements is SWPPX from Charles Schwabb, which tracks the S&P 500. Buy the product directly from the mutual fund company: if you go through a broker or financial manager they'll try to rip you off. The main advantage of such a mutual fund is that it will probably make your daughter significantly more money over the next 15 years than the safer options. The tradeoff is that you have to be prepared to accept the volatility of the stock market and the possibility that your daughter might lose money. Your daughter can buy savings bonds through the US Treasury's TreasuryDirect website. There are two relevant varieties: You and your daughter seem to be the intended customers of these products: they are available in low denominations and they guarantee a rate for up to 30 years. The Series I bonds are the only product I know of that's guaranteed to keep pace with inflation until redeemed at an unknown time many years in the future. It is probably not a big concern for your daughter in these amounts, but the interest on these bonds is exempt from state taxes in all cases, and is exempt from Federal taxes if you use them for education expenses. The main weakness of these bonds is probably that they're too safe. You can get better returns by taking some risk, and some risk is probably acceptable in your situation. Savings accounts, including so-called ""money market accounts"" from banks are a possibility. They are very convenient, but you might have to shop around for one that: I don't have any particular insight into whether these are likely to outperform or be outperformed by treasury bonds. Remember, however, that the interest rates are not guaranteed over the long run, and that money lost to inflation is significant over 15 years. Certificates of deposit are what a bank wants you to do in your situation: you hand your money to the bank, and they guarantee a rate for some number of months or years. You pay a penalty if you want the money sooner. The longest terms I've typically seen are 5 years, but there may be longer terms available if you shop around. You can probably get better rates on CDs than you can through a savings account. The rates are not guaranteed in the long run, since the terms won't last 15 years and you'll have to get new CDs as your old ones mature. Again, I don't have any particular insight on whether these are likely to keep up with inflation or how performance will compare to treasury bonds. Watch out for the same things that affect savings accounts, in particular fees and reduced rates for balances of your size."