Investment Club Information
By gathering a group of like-minded individuals to discuss investments in general and stocks in particular, investment clubs can harness the knowledge of many and have the potential to provide superior investment returns for their members.
Other People Are Reading
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The Attraction
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There are many reasons why a new or experienced investor would want to join--or start--an investment club. For new investors, joining an existing investment club is a great way to learn from others who have more experience investing in the stock market. Investing in stocks can be scary, especially when the market is in turmoil. By collaborating with others, new investors can take some of the burden of decision-making off themselves.
Investment clubs also provide members with the opportunity to pool funds. This can allow each member to build a bigger and more diversified basket of stocks than they would be able to create on their own.
A Disadvantage
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There is a potential disadvantage to investment clubs, especially for experienced investors who are used to making their own investment decisions. Investors who are uncomfortable giving up some control over the stocks in the portfolio may want to limit their exposure to the group's holdings to a small percentage of their overall portfolios.
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Research
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Some good sources of investment information--both for investment clubs and for individual investors--are Value Line, Morningstar and the Wall Street Journal. Members of an investment club may vote to pool their money to subscribe to any or all of these sources of information. In addition, the Internet can provide stock screening tools at online brokerages and information about annual reports and mutual fund returns.
Start Your Own
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If there are no suitable investment clubs in your area, you may want to start your own. The first step is to seek out others who are interested in stocks and stock market investments, including friends, work colleagues and others. If there is enough interest to go forward, you should research the laws governing investment clubs in your part of the country. Different states will have different rules and regulations, and it is important to understand those regulations and how they can affect your proposed organization.
After the applicable laws are thoroughly understood, the next step is to write a charter that lays out the goals of the investment club and the rules governing its use. Be sure that every member of the investment club signs the charter, and be sure to keep that charter in a safe place.
Software
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Software packages can make starting and running an investment club much easier. Programs such as Meridian Software, Updata PLC and Investor Ease can help club members screen potential investments and make the most of the ones they already hold. More information about software and investment clubs can be found at http://www.investmentclubhelp.com/Investment_Club_Software.html.
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