There we assumed you got $1k after month one as a fee and you're doing 0.5% a day. So after a year, about 200 trading days the original 1k fee's now $2711.52.
That is in the clients account. Not yours. Your fee for month 1 was and still is 1k. But the client is now sitting on your compounding, the other $1700 which is more than your original fee.
He has your fee plus growth. Of course you get a fee for growing your fee, $1 711.52 x portion of fee. So you lose and lose.
Now that was for month one. Times that by client times by time....1000 clients 10 years later. You take the cents you can get on the day and add it to your trading account so it can compound for you. The way you're doing it you get a fee of the compounding of your fee...which you don't have, because the clients got it...
Pipsology posted: hello people, i just want to know, we both signed a contract of only withdrawing yearly, is there any bad in it?
As manager, i dont think you have any disadvantages. You manage as long as you can for your clients.
As client, then depend on the terms stated in the contract. Normally i will not signed it if it only allow me to withdraw after a year. It is simply too long for me. I need higher liquidity for my money. And what happen if the manager does not meet your expectation of performance? But you still need to wait until year end, this is too bad.
High water mark, no profit no fee, Monthly or Bi weekly. Broker collects. That's a fair deal.
If the client declares a dispute and closes his account, contract or not, what chance does the MM have of collecting? Paypal won't even handle an money sent last week dispute, never mind a year old fee.
And if you use banks, and the fee is only a grand for the last 12 months for that client?
No ladies, it makes every sense to settle often, via a third party, from a financial point of view and from a fair point if view.
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