Jewish World Review May 30, 2000 /25 Iyar, 5760
Keep mother-daughter loan simple
DEAR BRUCE: My 25-year-old daughter has started selling items at craft shows, and her challenge has become to find the financial resources for the initial purchase of the items she sells. I am contemplating investing in this in one of two ways. I would either lend her the money as a loan, which she could repay in installments until she has enough capital to make the purchases herself, or I would put up the money for the inventory each time, four or five times a year, and then take a percentage of her take. Her investment is the booth and rental time, and we are estimating that she will make between $1,000 and $2,500. I thought 10 percent would be a good percentage -- S.W., via e- mail
DEAR S.W.: It seems to me that since the amount of money is so modest, a straight loan to your daughter, under whatever terms you two agree on, would be the easiest and cleanest way to handle this. You might wish to make it open-ended, and, assuming that your daughter is a responsible person, that should work for both of you.l
I would not get involved in a percentage deal. First of all, that might encourage her to shave the numbers, and who needs that between mother and daughter?
DEAR BRUCE: About two years ago I started investing in a couple of mutual funds on a monthly basis. One is doing OK in terms of growth, which is my goal, but the other one has done nothing. There has been no growth at all and maybe even a slight loss. What would be the best action to take in this situation? -- S.S., Rochester, N.Y.
DEAR S.S.: I'm not sure what the best action would be, but if it were me and I had a nonperforming asset, I would unload it and try another. With over 8,000 mutual funds to choose from, you should know that a great many of them are not making money. You have done well with your other fund, and I am sure that you can find another that will perform reasonably well. While past growth is no guarantee of future success, it surely is an indicator, so look at the growth history of the funds you are interested in and also consider their managers. Then make your judgment from that.
DEAR BRUCE: I recently received $25,000 as a payoff on a mortgage that I had carried. I have absolutely no need for the money, and I am making the maximum IRA contributions. The question is now what do I do with the money? -- E.M., via e-mail
DEAR E.M.: It's a nice problem to have. You didn't indicate your age or how much you have stashed away. Given the fact that you have no shelters available to you, simply invest the money as anyone else would in whatever you feel has the possibility of growth with a reasonable degree of safety. This could be in stocks, mutual funds, possibly bonds or even more real estate. The choice is yours, so go with your
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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