Investment Clubs – An Opportunity to Learn and Invest
Many people are intimidated by the prospect of investing in the stock market. While the prospect of making money certainly intrigues them, they may be put off by the risk involved. Everyone likes to make money; no one likes to lose it. Also, some people who want to invest are held back by a lack of capital. They have some small amount of money to invest, but it’s not enough to invest seriously. If you are like any of these people, an investment club may be just what the financial analyst ordered.
Investment clubs are simply groups of people who come together to pool their resources and make investments that benefit all of the members. A good investment club is structured, professional, and serious. If you’re interested in joining one of these clubs, there are things to look for.
Structure & Legality
An investment club needs to be a legally defined partnership or limited liability company (LLC). This is not the same as a bunch of office workers participating in a lottery pool and giving their money to one member who is trusted to run down to the local Gas & Sip to purchase Lotto tickets. By being a legal entity unto itself, the investment club can assure that its members all have a voice and access to the decision making process. You do not want to be a part of a group of fifteen people who each gave a thousand dollars to Larry’s cousin Bubba because Bubba knows a stock broker. By the time you start wondering what the cub has invested in, Bubba is on a beach in Mexico sipping Margaritas.
Professionalism & Assistance
The overall purpose of an investment club is for its members to profit from the club’s investments, but many may join simply to learn about how the stock market works. By investing smaller amounts of money with the club they learn how to invest larger amounts on their own later on. To this end the club should have an account set up in its name with a brokerage firm. Working with a professional broker is the best way to learn how the stock exchange and investment market works. It also assures that vital investment decisions are not being made by any one club member.
If you’re interested in joining or starting an investment club, speaking with someone already involved may be a good start. Try a Google search for ‘investment clubs’ for more information.