Should you join an investment club?

Many times investors consider joining an investment club, in order to become familiar with the world of investing. This leads to an opportunity to meet with friends, learn about investing and hopefully make some money. Investment clubs have become a popular way for people to learn about investing, in an environment that is supportive and helpful. Many of these investing clubs have begun in places of employment or even school. Most often the base of the investment club begins through members being in the same location. In some circumstance investment clubs have even become extracurricular activities for students who interested in learning about the world of investing.

Most investment clubs are made of a group of investors who put their money together, in order to make investments that they would unable to do on their own. It should be noted that they do extensive research before making any actual purchases. For purposes of tax returns, investors should be aware that investment clubs are considered small businesses. If you are looking at investing, and would like to do it with other investors of a similar mind set, then an investing club just might be right for you.

Most investment clubs are run by a democratic order. Members of the investment club will elect their offices. These officers usually consist of a president or spokesperson and a treasurer. The club will also vote on all prospective investments, whether they are stocks, bonds or securities. The investment club member will most often focus on the following aspects of the investing-

• What type of investment vehicles they want to purchase


• How much of the investment they want to buy


• Whether or not they want to sell an investment


• Whether or not the interest rate is conducive to long term growth


• What level of risk the investment has, and whether it fits with the group's acceptable level of risk

Research is also an integral part of the investment club. The club officers will usually delegate to member who will research, each investment vehicle. This research may include a variety of different methods. This can include but is not limited to:

• Stock market profiling


• Looking at or visiting the individual companies (if they are local) in which you may be interested in investing


• Using historical comparisons.

The purchase of each investment is usually made by the money that investment club members contribute on a regular basis. Most investment clubs have a set schedule for the contribution of capital. This can be done on a weekly, bi weekly, monthly or even bimonthly schedule. The payment schedule will vary from club to club. In addition, the required amount from investment club members will vary as well. Some clubs require as little as $25 while other may go as high as $150 dollars a month.

It is advised that before you join an investment club, that you take a close look at your finances. Remember that you should never use money for investing, that you will need in the short term. This means that if you are considering purchasing a home, funding an education, or taking care of some other significant expense, this is not the funds that you should use for investing. In addition, you should never invest any money that you cannot afford to lose. Statistics show that most likely you will lose money, for a long time, before you begin making nay. This means that if you have significant debt, or bills to be paid, you should take care of those before considering joining an investment club. This way if you do join an investment club, you can know that the money you are spending is a sound investment, no matter the return.

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