October 24, 2013   by

imagesFor many of us, when we think about forming a Chama, the first people we think of inviting in are our close friends and family members; perhaps your brother, sister, cousin or even parent. Whilst bringing a family member or friend on board as a part of your Chama may seem like a fine idea; the relationship can prove tricky at some point, if things don’t go well. That means you need to take a step back and think carefully before investing with a close friend or relative. Here are some things to consider:


Be clear about your goals. Do you want your Chama to be a pure investment vehicle or will it serve as a social contact point as well? The mistake is not being clear about what your intentions are. If you don’t have the same goals for the Chama, you’ll have a hard time making plans or coming to a consensus on big decisions.

What is this person bringing to the Chama?

Don’t let your relationship color how well suited for the Chama your potential partner might be. Think about the level of commitment you would expect from anyone in your Chama.

When you can’t agree

Resolving conflicts with family and close friends can be particularly challenging because personal feelings can easily get mixed up with Chama decisions. With friends and family you might make more drastic reactions. Thus, you will need to figure out a way to remain professional by taking personal feelings out of decision-making and focusing instead on objective measurements and standards.

Risk tolerance

Despite your personal connections, you and a family member or friend may feel very differently about taking risks. For example, a friend may be averse to take many risks with money and tend to stick to conservative investments whilst you may want to be more adventurous with investments. Determine how in sync you are on such vital decisions as Chama investment decisions or trying out new forms of investments with potential to earn you lots of money. While you can certainly disagree from time to time, you don’t want to constantly argue with your Chama members.

Keep personal and Chama issues separate

When in a Chama with family or close friends, the boundaries between your personal and the Chama are bound to blur. But you can maintain some balance if you establish a few rules. For example, you might agree not to discuss the Chama issues during family meals or to refrain from talking about personal matters during Chama meetings.

If it doesn’t work out

It isn’t unusual to want to change Chamas, but when you’re in in a Chama with a close friend or family member, you might feel you can’t leave because it will hurt your personal relationship. Before asking a family member or friend to become a member of your Chama, consider what might happen if one or both of you wants out. How will you handle the exiting member’s shares? What will this do to your personal relationship?

Think about your relationship

One thing people often don’t think about when forming a Chama with a friend is the relationship itself. You’re going to invest as friends. You want to remain friends. Investment is full of surprises. Discuss the possible surprises upfront, before you mix friendship and money, so you can keep your relationship strong while investing together. You may think your friendship is really strong and you’re probably right. But when you go into investing together, your friendship will be tested more than it ever has been before. It’s wise to prepare for it beforehand, so you already have a lot of the answers when you’re in the middle of a tough situation.

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