Investing in real estate and the stock market can be daunting for beginners. An investment club is a great way to learn more about finance while hopefully making money with like-minded individuals. It allows people to pool limited individual resources to invest in ways they could not on their own. Starting an investment club in Canada is relatively simple.
Things You'll Need
- Accountant (optional)
It is important at the first meeting to discuss and clarify the goals of the group. Make sure that everyone is in for the long haul and not for a quick financial fix. A commitment of three to five years is needed for steady financial growth. Set a meeting schedule; most clubs meet monthly. Elect the leadership for the group, such as a president and vice-president.
Most investment clubs require a minimum monthly contribution. How much and how often contributions are made depends on your group's comfort level. It is important to create a set of bylaws for your group to deal with late payments, absentee voting, fees, early withdrawal penalties, etc.
Most clubs consist of five to 20 members. In Canada, the club should be set up as a legal partnership for taxation purposes. While you do not legally need a lawyer to set this up, consulting with one is recommended. Every group needs a treasurer to take care of the books. If no one in the group is qualified, hire an accountant.
Do not set up an account with a bank without shopping around. Most banks have brokerage services. See which one best suits your group. Whether you use a full-service or a discount broker depends on the club's preferences.
Continue to educate members. The more the group learns, the better off it will be. Encourage the members to share their research. The key is to maximize returns while minimizing risk. Do not place all your eggs in one basket. Diversify your investments.