What Is An Investment Club?

An investment club is a small group of people interested in learning about and investing in the stock market. As a whole they agree to a few goals and principles, and agree to each take on the reponsibility of research. Every month, each member invests in a modest, predetermined sum. It may not seem like much to the individual, but as a group an investment club can become a powerful investing force.

An investment club is a great way for a beginning investor, or someone without a lot of ready-cash, to invest. You can also make some new friends (or reaquaint with some old ones), and, if you are just starting out, you can learn a lot, and have a sounding board for your investment ideas and questions. It is a lot easier to trust the instincts of fellow investors who are also investing their money along with yours, then perhaps a new broker (looking out for his commission), or someone looking for you to invest in them.

Now, should you join an existing club or start your own? Well, an existing club may be hard to find. Most already have the maximum amount of members that they want to join, or if there is a space, it is likely that a close friend or family member of the group will be asked to join. If you are that close friend or family member, by all means, join in, but if you're not, and there is a space open in a local club be sure to attend a meeting or two before making any committments. Remember, you will have to make decisions and "hang out" with these people every month, and in order to make your venture into an investment club successful you should commit to at least five or more years involvement with the club. That way your money will have time to grow and contribute to the fund already established by the club you are joining. Don't fret about having to come up with as much money as the members of the club have already contributed though, if their accounting procedures are based on The National Association of Investors Corporation (NAIC), http://www.better-investing.org, they will already have allowed for the possibility of new members.

Starting your own club is, obviously a little more involved...especially for you. The NAIC has listed in their official guide, Starting and Running a Profitable Investment Club, three things that can make your investment club successful. First, this needs to be fun folks! You need to make sure you find committed members, but make sure you all have fun together, too. Just because it's finance doesn't mean it has to be boring! Investing is a journey, make sure everyone is (or becomes) well prepared for the ride. You will need to function as a team so make sure there are plenty of motivators (and at least two or three people who will always bring the "good" snacks!) Second, you will need to agree (at least to some extent) on the philosophies of the club.

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