INVESTMENT CLUBS

An investment club usually consists of a small group of individuals who pool their money to make joint investments. this can provide those who have limited funds with a vehicle thorough which they can have access to investments that may otherwise be beyond their capacity. Not only can pooling money create better investing opportunities, but members also save on transaction costs by sharing the costs and fees associated with buying and selling stocks as a group. Here are some issues associated with buying and selling stocks as a group. Here are issues to consider should you wish to set up an investment club.

 HOW MANY MEMBERS

It is common to have between 5 and 20 members, often groups of friends, neighbours, colleagues, church members, or relatives, who have diverse interests and experiences. if the group is too small, you may not accumulate enough money to make significant investments. Yet, if there are too many people, it can become unwieldy and awkward to have regular meetings or to reach a consensus regarding investment options. A number of between 6  to 15 people keeps group discussions  manageable. A balance between some novice investors along with some experienced investors will ensure that you have the right mix.

PUT SOME STRUCTURE IN PLACE

It is important to recognize that an investment club isn't just a group of friends who come together to invest-Money matters can be sensitive and if not handled right can damage relationships. Club matters should thus be formalised and a solid structure be put in place to guide a club's activity and ensure that its agenda is carried out efficiently and without friction.  A limited liability company or a legal partnership tends to be the most common structure, a formal agreement in place broadly stating roles and responsibilities. it should also include information and provide a record of the club's investment philosophy, of when, where and how often the group will meet, initial membership contributions and ongoing dues. it will also state how the club will also manage membership, how members can liquidate" To pay off (a debt, a claim, or an obligation" their investments, how dividends will distributed, divesting from and dissolution of the investment club. this vital bit of paperwork is absolutely essential to protect members should things not work out. all members must be in agreement of the clubs legal and operational framework and understand the risks before committing.

A COMMON INVESTMENT PHILOSOPHY

A common investment philosophy and an adherence to to its processes are essential ingredients for an investment club's success. Ideally , a clearly defined investment style should include some restrictions or at least quantifiable rules or limitations on the club's investment portfolio to ensure a minimum level of diversification always exists.

individual risk profiles and financial situations vary; members who are more aggressive  short-term investors or speculators may not partner well with the more conservative members who would rather wait to benefit from long-term capital appreciation. Members should have similar or at least compatible investment styles and objectives and should be prepared to support its approach.