25 Sep I have a chance to invest in a new business. Should I?

Q. My daughter is in college in an entrepreneur program. One of her friends has a business plan for an app that I think is a slam dunk success. They are looking for investors. We’re not made of money, but we have some. How can I decide if it’s a good risk, or at least worth it — I guess it’s money we can afford to lose, but if it’s a success, the upside could be really big. Give me the red flags, the language we’d want as investors — what should we do!?
— Thinking about it

A. This is an exciting — and potentially risky — opportunity.

It’s great that your daughter has the entrepreneur spirit and hopefully it is a slam duck success.

Without knowing the particulars of your financial circumstances, it is hard to provide specific guidance to you, said Michael Maye, a certified financial planner and certified public accountant with MJM Financial in Gillette.

He said the first question to consider is how would you be financially impacted if the business ends up worth nothing and you lost your total investment?

“To keep things simpler, maybe a better idea is to make a gift to your daughter, no strings attached, to support her endeavor,” he said, noting you and your spouse could each gift her $19,000. If you do this, make sure to work with your tax advisor to properly keep track of any gifts and gift tax forms that could one day be needed.

“More critically, I recommend your daughter seek her own financial and legal advisors to make sure she is set up for success from both a legal and financial perspective,” he said. “It’s much easier to set up things properly on the front end versus on the back end.”

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This story was originally published in September 2025.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.