LIFESTYLE Retirement  >  How to Start an Investment Club

How to Start an Investment Club

How to Start an Investment Club, investing in middle age, investment over 50
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BY MARY JANE HORTON

The theory: several heads are better than one when putting your money on the line.

We all know people who have made a killing in the stock market, and wonder how they did it. Even without making a proverbial killing, with the right tactics, there is money to be made. Investment clubs are popping up all over the country to this end, the theory being that if one person can research and come up with good investments, than a group of people – all with individual insights to offer – can do even better. It’s easy to start a group and it can be a fun, enlightening, and profitable activity.

How to start

Here are some steps to start the process:

–Ask around and see who’s interested. You may have one or two friends who you see and the discussion always turns to money. Those people are a good bet. They will probably have friends who are interested as well.  Shoot for less than 20 people to keep it manageable.

–Don’t worry about the investment skill level of the group. Even if you are all “green,” it’s okay. You can get plenty of help online and in newspapers and magazines. One good source is the Motley Fool, a resource for investment education, www.fool.com.

–Once you have a group of people who are interested, invite them to get together for an informal planning meeting. It’s good to have all of the participants weigh in about what they expect. Work out the details during this meeting. Talk about how you want to proceed and how you want the club to be run. It’s important that you have similar investing goals. If some people want to double their money and others just want a reasonable return, rethink. After the meeting you will have a sense about whether or not personalities gel.

–Assign everyone a job before the next meeting: some people can research investments; another person can come up with a schedule; some people can be thinking about brokers to use.

Go home and do your homework

Every group needs a leader, and as a leader of an investment group, you will have a great deal of homework to do before the next meeting. You should come up with a rough estimate of how much people should be expected to invest on a monthly basis – from $30 to $300 or more — by coming up with some tentative first investments to run by the group. Other people from the group who are interested in researching investments can be working on this as well.  It’s a good idea to come up with a list of research sources to distribute at the next meeting, so that you are reading the same material. You can all subscribe to the same magazine or newsletter so that you are – literally and figuratively – on the same page.

Here are some more things to think about before the next meeting to discuss with the group:

–A fun name. Every group needs one. Think about the people involved, where you will meet, perhaps how you know one another – for inspiration.

–How the group should be organized legally – you need to fill out some forms if you want the group to be a legal investment entity.

–Figure out what kinds of officers you will have – president, vice president, secretary, treasurer – and either elect them or decide on them during the next meeting.

–Think about what kind of broker you will use – full service or discount.

Finally, before many of these decisions are made at the next meeting, and now that you have a better idea of the group, make up a questionnaire to be distributed at the second meeting. It should ask questions about the interests and qualities of the members that will help the group to move forward. For instance, if you have a fashionista in the group, perhaps she will already be well educated on clothing companies you might invest in. It is always a good idea to uncover any hidden talents in any group.

Second meeting

During the second meeting you may want to decide on your first set of investments, or you may decide that you, as a group, want to have a bit more time for research. This is the time to get the nitty gritty details taken care of.

–Will there be food or drinks offered during meetings, or will this just be “business.”

–Will each member have a chance to host, or will the same person host each time?

–Will you meet at the same time and place each month or decide on the next meeting as you go along?

After a while, the meetings, the investment strategies – all of it – will all be old hat, and the group should run like a well-oiled machine.  And, in case it doesn’t, it is always a good idea to have someone designated beforehand, as the group “fixer.” This person should be the ultimate diplomat who gets along with everyone and can help people talk things out. At some point you may be thankful that you have that person around.

And now, as Dr. Spock would say, “Live long and prosper,” with your freshly minted investment club.

 

 

 

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