If the alternative for your family member is a CD then it's worthwhile to at least think about from a business perspective. It's far from a handout when profit, even potential profit is involved. ____________________________________________________________________________ Doing business with friends and family is a bad idea which often destroys relationships - this a widely held view. As a trader I make my $ from the market - not from friends & family. I don't think it's doing them a favor since only 3-5% are going to beat the market anyway. To me doing them a favor is suggesting they consult with licensed & reputable processional investment advisor(s) since I am not that person. http://www.cbsnews.com/news/5-dangers-of-doing-business-with-family-and-friends/
If you are to borrow, not manage: borrow from financial institutions 1st. If you are managing, not borrowing: it's a pro/con tradeoff. You must all know each other very well and each others financial situations.
If there's a culture for doing business within the family, then it might be OK. There's usually some expectations of "making good again", or risk swimming with the fishes (joking! ) But not if you don't already make money, have a proper business plan and not properly informing that all / most money could be lost. This way you can magnify the pains of losing many many fold, which is just stupid and irresponsible. Let's face it: Most people are totally clueless about trading and its risks, so statistics is not on your side though there are always exceptions that "prove the rule" (ugh, hate that expression). Money is a very fast way of losing friends and family that have bad relationships with money and business. Even the most alternative free spirit can become very angry for you not disclosing all your trading secrets for free in the name of abundance and higher purpose, and won't hear a word that you're actually losing money. You learn alot about human nature though, so all is not lost .
So, like, none of you realize that most business are small, and that most small businesses (and ALL large businesses) are started with borrowed money, and most of that money comes from friends and family, and that ALL OF YOU are engaged in A BUSINESS called "trading" or "investing." Man. {head shaking back and forth and back.....} You're impugning your own livelihood and character. I don't get it.
most small businesses (and ALL large businesses) are started with borrowed money 31 percent of small business owners opt to borrow at least some of their capital from family and friends, a full 75 percent of startup capital comes from credit cards, bank loans and lines of credit. Friends & family are not a bank. If you need $ you can go to a bank and get a loan - or get a job, or a 2nd or 3rd job. Younger kids just starting out may able to get away with this if they are lucky - but not for long. https://www.debt.org/small-business/
What part of "most small businesses (and ALL large businesses) are started with borrowed money" are you contesting? Or do you just *have* to paint your own character or professional issues on everyone else, as if other small businesses are just brimming with high probabilities of success. (They are not.) Silly. And self-depreciating.
I would not consider securities speculation through a retail account with no "edge" (as an institutional portfolio manager would define it) a business.
I'm all for borrowing to start something up, but I don't believe friends and family money is the same as bank money. A person has a higher duty to F&F than to the bank. To that extent, 1st loss is to towards the institutions not F&F. Assuming it all goes sideways, which is highly likely.