Should I Start An Investment Club?
The definition of an investment club is simple: a group of
people who share an interest in the stock market pooling their
resources into one large investment. Defining how an investment
club works is more complicated.
In most cases the investment club will be registered as a
partnership and the members of the club will make decisions
together on what stocks they consider to be a good investment
risk. The majority of the time the investment decisions will be
made after some research has been done regarding the stock that
is under consideration. This will be discussed at length further
in this book. An important feature of an investment club is
that the members are there to have fun as they invest their
money and learn about the stock market. Making a profit isn't
the only goal of the club and members are encouraged to have fun
as they invest their money. An investment club isn't for those
people who are looking for a fast way to make some easy money.
People who want a quick turn around are discouraged from joining
an investment group and investing on their own. A main feature
of the investment group is to start to learn how to invest your
money and to invest for a long term rather than a short one.
There are several things that you should keep in mind if you are
thinking about starting an investment club or have in interest
in joining one that already exists.
Make sure that you understand all the reasons why you should
start an investment group:
Be realistic. If you're starting an investment club to make a
killing in the stock market, you'll most likely be very
disappointed. The goal of an investment club is to learn more
about the stock market and if you have dreams of becoming rich
you'll be starting the club for the wrong reasons. Joining an
investment club means joining for a long period of time.
Expect to be an amateur. Starting an investment club doesn't
mean that you have to be an expert on the stock market. In fact,
an investment club is ideal for a group of amateurs who want to
learn about how the stock market works and what it can do for
them. An investment club is a safe environment in which you can
invest a little bit of money and not worry about losing a large
amount of your hard earned dollars when something unexpected
happens.
Amount of money to invest. Don't think that you need a lot of
money for investment purposes to start an investment club. The
opposite is in fact true: you don't need to have a lot of money
to invest to start an investment club. You can set a minimal fee
for each month's contribution that is fits into your budget.
You'll have the chance to determine what the minimum monthly
contribution should be each month when you have your first
meeting of the investment club.
Combined investment money. On your own you may not have enough
money to invest in the stock market in a way in which you may be
able to realize a profit. However, when you combine your
investment dollars with the dollars of others in the club you'll
have a significant amount of money to invest in the stocks that
you've been watching and think may be successful. Keep in mind
that just as there is strength in numbers there is also a shared
sense of security when you're not investing alone.
Diplomacy. One thing that you should keep in mind is that your
voice will be part of the larger group and you may not always
have a say in which stocks you want to invest in. If you're
unable to sit back and let another decision take the place of
something that you would rather see, then an investment club
might not be for you. You'll need to have the ability to let the
majority rule whenever a decision is made.
Learning experience. You should be prepared to be satisfied to
never realize a profit from the stock market. One of the
important goals and features of an investment club is that you
benefit from the learning experience of being with other people
with the same interests in the stock market. If you never make a
penny you should still be pleased with your participation as
part of an investment group.
Starting your own investment club will be a pleasurable, and
perhaps profitable, way to spend time with other people that
share the same investment passion that you do. You'll be able to
learn about the stock market in a safe and secure environment
with other people that understand your fascination with the
stock market.