How To Start an Investment Club
Investing in the share market can be scary if you are new to investing. However, if done correctly, it can be very lucrative. You can always start out with a small amount until you get a bit more experience and feel a bit more comfortable. An investment club is a good way to get that experience and is becoming a more and more popular way to invest money.
An investment club is where a group of people pool their money and knowledge and invest in the share market or the property market. They learn from each other as well as from their joint experiences. The goal is to learn and make money but it is also a friendly social gathering. You can also use the knowledge you gain in the investment club to build your own share portfolio.
Starting an investment club lets you be part of the action from the beginning. This will also allow you to have more control over the direction and goals of the club as well as to who can join. However, it does involve more risk than an established club with a strong existing portfolio. Either are viable options.
An investment clubs involves both money and like minded friends and/or relatives. If you don’t do your research then you risk losing at least part of your initial outlay. When starting an investment club each member must contribute start up cash and then they generally contribute a set sum on a monthly (or regular) basis. This will enable your portfolio to grow and hopefully become more diversified and thus less risky. The difficulty is finding members who agree on how much to invest and how often. Members must also be aware that they can lose money. Share markets go up and down and the short term risk is considerable, especially for those with little experience. Investing in the share market or the property market is a long term investment requiring plenty of patience.
The steps for starting an investment club are:
- Find compatible members
- Make a plan
- Arrange monthly meetings
- Set up a partnership agreement
- Open a bank account
- Research the stock market
- Research different sectors
- Research individual companies
- Decide how you will invest
- Set up an account with a stock broker
Success is most likely to be achieved by a club with committed members who do plenty of research and have a plan for the bad times as well as the good.
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