How investment clubs can help you make a fortune

Investment clubs are growing in popularity. They provide people with the opportunity to expand their knowledge about stocks and increase their revenue through advice of their new friends. If you are new to the investment world, an investment club can really help you get stated and increase your buying power.

What is an investment club?
Investment clubs are used to collect a group of people together that can pool their money to make stock purchases and other investments. Since most people don't have an extra $10,000 to $20,000 lying around, an investment club can help you buy-in to some big stocks that you may not have been able to afford on your own. An investment club is created as a partnership and everyone involved in the group is in charge of making different decisions. All the big decisions are made as a group and then the majority of the vote will determine the decision.

Normally the investors each come with knowledge on different parts of the stock market sectors. There could be some people that are well-informed with the technology sector, others with real estate, and some with general stock market knowledge. Each member will participate and study different companies and investments to make. Once you find a solid investment, you will pitch it to the investment club and everyone will take a vote on whether or not to buy or sell stock. Some members will be in charge of collecting financial reports and organizing them for other members. If you don't have a lot of stock knowledge, an investment club will really help you learn a lot.

Why use an investment club?
There are a lot of reasons to use an investment club. Besides the ability to learn more about the stock market, there are several other benefits. One of the best benefits is that you will reduce your risk. If you are generally a low-risk person, you will be able to take on a larger amount of stock for a low-risk. This is because there are normally about 8 people involved in the investment club and the risk is equally divided. When you pool your money, it makes it easier for everyone to get a fair-share and a nice increase in your investment, more than you could get on your own.

Investment clubs provide you with a big opportunity to do a lot of research. If you are new to the investing world, this will really help you expend your knowledge. Since it is hard to learn things independently, your partners in the group will help you figure out some things you couldn't find in your research. This is a great way to help you gear up for some larger investments down the road.

Another reason to join an investment club is to expand your network. Since you will be working with the club closely, you will get to know your fellow contacts. Some of these people may even help you find a new job or offer other opportunities to you. If anything else, this is a great way to make friends with other people that are looking to invest a little money.

Legal Matters and Investment Clubs
The U.S. Securities and Exchange Commission does not require every investment club to register with them. To make sure you are staying within legal limitations, check the SEC.gov web site for more information about legal matters pertaining to investment clubs. They have a complete question and answer section dedicated to investment clubs and the federal laws you need to follow. Make sure you read the Securities Act of 1993 and the Investment Company Act of 1940 to check and see if you are within the guidelines.