if you make money then your parents are going to have to pay taxes on it because it is in their name. If you lose money, then you parents could write off those losses on taxes but that would be illegal if it was someone else's money. It could turn into a real financial mess. Plus there is regulations for real hedge funds. I would strongly suggest against it. No offense, but at 16 I would not be using other people's money yet.
Also a hedge fund is an aggressive investment fund that usually includes shorting stocks, buying on margin, and stock options. Considering you need an margins and or options account to do this (which I am guessing you do not have because they usually require a $25k balance) then you would not really be a hedge fund. It would be a mutual fund.
Best of luck!
I think I heard that a guy started a hedge fund or something similar (I can't remember exactly what it was but it was financial and asset management esque) in his dorm room at college and is now earning megabucks. This tells me that potentially your plan is possible.
However the sector will be regulated so that when people invest or trade in markets, they know that they are dealing with people who have the requisite registrations or qualifications in place for handling money. Because these safeguards are taken so seriously I would be careful of doing anything illegal as you could subsequently face a ban from trading on these markets when you are older, not to mention possible jail for your parents. I am surprised that you seem to think that you could do this anonymously, but then again I don't know have detailed knowledge or this business, just a loose understanding of the purposes of legal regulation; possibly your parents know what the risks are and are okay with doing it or may even guide your learning.
It is good to start getting a practical understanding of this because being young you are more brave in your decisions (rather than person who hesistates because if a gamble goes wrong he risks making his family poor) and may be a big success.
I would start to network and find people who could explain to you what is appropriate for a beginner and how to capitalise on your skills in an area that interests you. You may have to be vague about the fact that you are using this account because they may want no association with you - also if you say it is in your dads name they might wonder why you don't gather basic information from him instead. Anyway luckily you are in the age of information and there are web forums for everything which can provide you with a wealth of knowledge.
You also want to consider the reality of your 16 year old buds investing stocks. Just because you want them to put money into your system does not mean that they will have the money or want to put it into something with they may not understand. But if you’re a salesman and they are whimsical as 16 year olds are it could be rather easy to begin with. Good luck in any case, if you do something that develops you intuition and confidence it will serve you well because I think financial markets is all about making sound judgement calls.
The problem is that a hedge fund is professionally manged account and you would have to be responsible for all of your friends money. As far as if you would be allowed to do so, I have never heard of anything like it but is an interesting question.
there's a BAD idea.
It's good that you are thinking and having ideas - but throw this one out for now.
Once you know what you are doing, which will take some time, and have some serious capital that you have earned - then you start looking for others to give you their money. It's not all learn as you go.
I don't really care what sort of under the table stuff you want to do, but dragging your parents along for the legal ride - NOT cool.
Just go back to learning what you can about trading AND INVESTING.
GOOD LUCK, hope this helps.
my parents recently assisted me in starting a stock trading account. if my buds wanted to invest stocks could i start a under the table company that did trading for them or managed their money legally. remember the account is not a custodial its under one of my parents name. thanks. and no i wasnt inspired by wolf of wall street and now all of a sudden want to be a billionaire.
