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Tips for Starting A Successful Investment Club

Starting an investment club should be an easy process. Many people have started and run successful investment clubs. Use their experiences to make your club more successful and fun.

• Make sure all members understand the risks of investing. Many people who invest think they are going to be very successful, and are not prepared to lose all of their money. Unfortunately, there are no guarantees when it comes to the stock market. No one should invest money they are not willing to lose.
• Take turns filling in each role. One member filling each role forever can cause the club to get stuck in a "rut". Trading roles allows everyone to stay more involved in the group, as well as allowing new ideas and perspectives to flow more freely.
• Make sure all members of the group actually agree to the partnership agreement and any other rules.
• Join the NAIC to get advice on starting an investment club and investing, as well as to take advantage of discounts.
• Should you decide to use a full service broker, keep in mind that some brokers will reduce their fees for investment clubs, in hopes of getting business from individual members.
• Make sure everyone agrees on the monthly contribution. A common level of contribution is $20 a month, although some clubs may contribute as much as $100 a month per member.
• It is possible to have some members have higher contribution levels than others, and then those members would have a greater share in any profits, but it can be more comfortable for everyone in the long run if every member contributes the same amount.
• Set up a message board for communication. This allows for an open feeling to communication, and for people to chat about things other than stocks if they wish. It also means that emails will not get lost, or inadvertently deleted.
• Keep your club small. While a larger club means more money to invest and more shares to own, it also means that people begin to lose connections to each other, and, in any large group, a small disagreement can lead to factions or other social problems.
• One of your club's main goals should be education. An investment club made up of educated investors will be more successful and cohesive than an investment club which is solely focused on making a profit.
• Remember that for the first few years, the amount of money in stocks your club actually owns may be less than the total amount members have contributed. It takes time for stocks to grow in value, and you need to balance between giving stocks time and not going down with a sinking ship…er, company.

Starting an investment club should go smoothly. With the right members, everyone will have fun and learn enough about investing to become comfortable with the stock market.

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