Investing in a New Business

GDB2222

If you want to help your step son, just give him the £20k with no strings attached, except that you would quite like it back when/if he can afford it. Your reward will hopefully be that he is doing well. Don’t look for a financial reward.

Sea_Shell

Have you been asked to be any sort of Guarantor yet?  

Don't agree to that.    That could end up costing you a lot more than £20k.   

If you can afford to GIVE £20k, give, but if you can't and will be upset if the money is lost (all or in part), or you don't get any return from it, then don't "invest".

killie77

Thanks for all the comments.  I should have mentioned in my original Post. My brother who resides in South Africa and is an individually wealthy person, due to owning a Mining company for the last 40 years..Had offered the money to invest in my Stepson's business..He's doing it as he thinks it will provide me a small income.Nice of him to offer. As he has been a Businessman for so many years, he is advising me to draw up a contract between myself and my Stepson..I don't have a problem with that neither does my Stepson. I've looked around the Web to try and find some kind of template. RE: Business Investment Proposal, but have not found anything.
Thanks
Ian

killie77

I had a reply all typed up. Now it’s vanished anyway I can find it/bring it back. Getting to be like Hard work..

boingy

killie77 said:

tell me if this is a good way to invest £20000.

No, it's almost certainly not a good way.

Sea_Shell

killie77 said:

Thanks for all the comments.  I should have mentioned in my original Post. My brother who resides in South Africa and is an individually wealthy person, due to owning a Mining company for the last 40 years..Had offered the money to invest in my Stepson's business..He's doing it as he thinks it will provide me a small income.Nice of him to offer. As he has been a Businessman for so many years, he is advising me to draw up a contract between myself and my Stepson..I don't have a problem with that neither does my Stepson. I've looked around the Web to try and find some kind of template. RE: Business Investment Proposal, but have not found anything.
Thanks
Ian

Just because your Brother is wealthy enough to risk investing in your Stepson's business, doesn't give you any guarantees about YOUR £20k, and whether you'll get any return.    Or are you now saying that brother is funding the whole thing, and doesn't now need your financial input?

As others have said, another £20k to him is probably peanuts, in the grand scheme of things.

As I said upthread, be very careful about not creating any sort of guarantor relationship, in this "contract" that you're being "advised" to create.   

If this is still something you're going to do, regardless of what any of us say, then get proper, paid for, independent legal advice.

Malthusian

killie77 said:

My brother who resides in South Africa and is an individually wealthy person, due to owning a Mining company for the last 40 years..Had offered the money to invest in my Stepson's business..He's doing it as he thinks it will provide me a small income.Nice of him to offer.

I'm confused; is this £20,000 coming from your brother's money or yours? Your first post indicated it was your own money.

If he wants to use £20,000 to provide you with a small income, why not just put it in a bank and pay you say £800 a year? If he also wants to support his nephew's business then he should do that with a separate chunk of money. As others have said, there's a good chance that your stepson's business will not have enough spare profit to pay you any income for many years, if ever. The two objectives here (to provide you with a small income and to invest in the stepson's business) are incompatible. 

If I was your brother I would not be blathering on about contracts, I would be telling you to keep the £20,000 and to leave investing in the garage to me, because I am the one with money I can afford to lose.

comeandgo

A first year profit of £125,000 is unbelievable.  Do you have two too many zeros in that figure?    If that was an achievable amount then any bank would be willing to loan him the money.  If you need your £20,000 then I’d stay out of it, if you are willing it see it go then I’d take a chance.